How to Invest in Property Without Buying a House
Most people think investing in property means saving for a deposit, taking out a big mortgage, and dealing with tenants, repairs, and endless unexpected costs. But there’s another way to invest in property, one that requires no mortgage, no maintenance, and no dealing with tenants.
It’s called a REIT.
A REIT (Real Estate Investment Trust) lets you invest in property without owning a building, giving you access to rental income and potential property growth through the stock market.
What Is a REIT?
A Real Estate Investment Trust is a company that owns or manages income-producing property such as:
Offices
Warehouses
Retail parks
Flats
Student accommodation
Hospitals and GP surgeries
Data centres
When you buy shares in a REIT, you’re buying a tiny slice of all the buildings it owns.
In return, you receive a share of the rental income through regular dividends.
Think of a REIT as a property portfolio you can buy on the stock market, without needing to buy a building yourself.
How REIT Investing Works
Here’s the simple version:
1. A REIT buys or builds property. For example, retail parks or logistics centres.
2. Tenants pay rent to the REIT.
3. By law, UK REITs must pay at least 90% of their property income back to investors as dividends.
4. You can buy and sell REIT shares through a Stocks & Shares ISA, trading app, or pension.
This means you can get exposure to property income without the costs and stress of being a landlord.
Example: How a REIT Investment Might Look
Let’s say you invest £1,000 into a REIT that owns UK commercial property.
If the REIT pays a 5% annual dividend, you’d receive roughly:
£50 per year in income, paid monthly or quarterly.
If the value of the REIT’s properties rises, the share price could go up, meaning you get:
Income from dividends
Growth if property values increase
Like all investments, values can fall too, but this gives you a clear picture of how REITs generate returns.
Benefits of REIT Investing
REITs offer several major advantages compared to buying a physical property.
1. No Property Management
No tenants, no boiler breakdowns, no 3am phone calls.
2. Low Minimum Investment
You can start from £25–£100 a month, or even less with fractional shares.
3. Diversification
A single REIT may own dozens or even hundreds of properties, spreading your risk.
4. Liquidity
You can sell your shares anytime. Unlike a house, which can take months to sell.
5. Tax Advantages
If held in an ISA or SIPP, your REIT dividends and any growth are completely tax-free.
Risks to Be Aware Of
Every investment carries risk. REITs are no different.
1. Market Volatility
REIT prices rise and fall like shares.
2. Dividend Cuts
If rental income drops, dividends may be reduced.
3. Interest Rate Sensitivity
Higher borrowing costs can impact profits and investment returns.
4. Sector Concentration Risk
Some REITs focus on a single area (e.g., retail), which can struggle if that sector declines.
5. Property Value Fluctuations
Property markets can fall during recessions or economic downturns.
REITs should be treated as part of a diversified investment portfolio, not your only investment.
Types of REITs in the UK
There are many types of REITs you can invest in depending on your goals:
Residential REITs
Student accommodation, rental homes, PRS (private rented sector).
Commercial REITs
Offices, shopping centres, retail parks.
Industrial & Logistics REITs
Warehouses, storage, fulfilment centres: a fast-growing sector.
Specialist REITs
Care homes, GP surgeries, data centres, hospitality.
Global REIT ETFs
Funds that invest in REITs worldwide, offering wide diversification.
Can You Hold REITs in a Stocks & Shares ISA?
Yes! most UK REITs and REIT ETFs can be held in a Stocks & Shares ISA.
That means:
Dividends are tax-free
Growth is tax-free
You can invest small amounts regularly
You can buy and sell whenever you need to
This makes REITs a popular choice for building long-term, tax-efficient property exposure.
Where to Get Started
You don’t need a special account. REITs can be bought on most UK investment platforms, including:
Investment apps
You don’t need a special account. REITs can be bought on most UK investment platforms, including:
Trading 212
Invest Engine
Freetrade
Traditional brokers
Hargreaves Lansdown
AJ Bell
Interactive Investor
Online banking platforms
Many high street banks now offer simple ISA investing options.
Examples of UK REITs
(For education only! not recommendations)
British Land
Segro
Tritax Big Box
Supermarket Income REIT
LXI REIT
Global REIT ETFs (for wider diversification)
iShares Global REIT ETF
Vanguard Global Real Estate ETF
These can give you exposure to hundreds of properties worldwide in one investment.
REITs are one of the easiest ways to invest in property without buying a house.
They offer:
Income
Diversification
Liquidity
Tax efficiency (inside an ISA)
They can be a great addition to a long-term investment strategy, especially if you want property exposure without the costs, stress, or commitment of owning real bricks and mortar.
Like all investments, REITs come with risk, so it’s important to understand what you’re buying and spread your investments across different areas.
Disclaimer
This article is for general educational purposes only and does not constitute financial, tax, or investment advice.
Investment values can go down as well as up, and income is not guaranteed.
Always carry out your own research and consider speaking to a qualified financial adviser before making investment decisions
