3 ways to start property investing in the UK with little or no money

Most people avoid property investing because they believe it takes a large amount of money to get started. The good news is that it isn’t necessarily true.

You can enter the UK property investment market with little to no money at all. Here’s how

#1 Rent out parts of your house

The easiest way to start property investing is to rent out parts of your home. 

The UK government’s rent a room scheme lets you earn up to 7,500 pounds of tax-free income each year from renting out furnished accommodation in your house.

Although the amount will reduce if you share the proceeds with a spouse or someone else, you have the freedom to rent out as much of your house as you want.

You can benefit from the scheme if you are a resident landlord (whether or not you own your home)

If you own a guest house or bread and breakfast. The tax exemption will apply automatically if you earn less than 7,500. However, you will need to file a tax return if you earn more than the non-deductible amount.


Besides the tax exemptions and extra income that comes with taking in a lodger, it offers other benefits;-security

Having a lodger, (especially if it’s someone you’ve carefully vetted) increases your personal safety. They’ll keep your home safe while you are away.

Ease of eviction

Unlike tenants, it’s relatively easy to evict lodgers, so the process won’t be long or expensive. There aren’t any minimum-length-of-stay requirements before you can ask him or her to leave.


Although it’s easy to evict lodgers, it is worth noting that the way you share your home affects the kind of tenancy they have, which in turn determines their rights and how you can end their tenancy.

Your lodger will be an excluded occupier if

  • they live within your home
  • They share a kitchen, bathroom, or living room with you or one of your family members.

In such situations, you will only need to give them reasonable notice (the length of the rental period) to end your agreement, and you won’t need a court order to evict them.

Your lodger will be considered an occupier with basic protection if

  • They live in your home
  • They do not share any living space with you or other members of your family.

If a lodger with basic protection chooses not to leave when you ask them, you will need a court order to execute an eviction.

#2 Seller financing

Seller financing or owner financing lets you acquire a new property with little-to-no upfront payment.  Instead of purchasing the property through a bank loan, you sign an agreement to make small regular payments directly to the seller at a predetermined interest rate.


No money down

The biggest benefit of seller financing is that you can do it without any money. While most sellers will ask for a down payment (about 20 percent of the property’s value), there are a few who will agree to a no-money-down transaction.


since there are only two parties involved, seller financing can happen faster and cost less than acquiring a property the usual way. You won’t need to wait on a bank loan, underwriter, officer, and legal department to complete the transaction.

It is also a useful strategy for situations where the buyer has a bad credit score or is finding it hard to acquire a mortgage.

Important considerations

Before you opt for seller financing, there are a few things you may want to consider about how it works;

Expect terms similar to a mortgage.

Your agreement with the seller must account for their financial needs, including the risk that you will default on the agreement, with the possibility of an expensive and complicated eviction process. For this reason, it is likely that you will pay a higher interest rate than the prevailing bank rates.

You may need to prove yourself to the seller

It helps to be honest about why you chose not to acquire a traditional mortgage. They might find that information anyway when they check your credit score and other background information, including employment history, financial claims, references, and assets.

Don’t forget to explain any restrictions on your ability to borrow (if any) that the seller is likely to miss. You may have started a new business, for example, and disclosing this information may help build confidence between you and the seller.

Be ready to propose

Sellers who offer buyer financing will usually advertise the fact to attract customers who can’t get mortgages.

That said, you shouldn’t hesitate to ask if you don’t see it mentioned anywhere in a listing. You might find a seller willing to finance the deal

You will need to confirm the seller can finance the deal

Buyer financing works best when the seller owns the property. A mortgage will complicate matters because it means the issuing institution has a claim to the property.

Most mortgages include a clause that prevents the home from changing ownership before its debt is paid off. So, if the seller accepts owner financing and the mortgage provider learns of what happened, they will demand a full payment of the debt.

#3 Purchase-lease options

A purchase lease option is a legal instrument that enables you to control a property and make money from it, with the right to buy the property at a later date, but not the obligation to do so.

A purchase lease option usually comprises three agreements

An option agreement: an option agreement is made between you (the potential buyer) and the property owner and it grants you the right to buy the property during a specific period (known as the “option period”)

Lease agreement: this document governs the management of the property during the option period. You may pay the owner a monthly fee, and in return, they’ll allow you to manage the property and rent it out.

Power of attorney: this document gives you the power to sign official documents (within the scope of the property transaction) if the owners are unwilling or unable to do so.


It’s inexpensive

  • The biggest benefit of a purchase lease option is that you can invest very little money at the start of the transaction. The option fee may be as low as 1 pound.

It’s a viable property investment strategy

  • You get a monthly income from renting out the property, and get to buy it at below market value if it appreciates over time

If this sounds good to you, there’s more in the video below

Other ways to get capital and start property investing in the UK

The methods we’ve discussed above aren’t the only way to start property investing. Over the years, we’ve identified several unique ways to raise the capital needed to purchase profitable real estate assets, and we discuss them in the video below


These strategies will help you profit from the real estate market with little to no upfront financial requirement. But, you may need expert guidance on how best to go about the investment process and protect yourself from risk. Momentum property education has a team of experienced mentors waiting to help. Join our community today! We’ll help you master the art of property investing