Types of Property –
An Investor Guide

Types of Flats

Flats will likely serve as the entry point for the residential market for many first-time buyers, renters, and property investors. Fortunately, even within this sub-sector, there are many types of properties to explore.

The Standard Options

Flats come in many shapes and sizes, but certain minimums must be adhered to size-wise. According to Urbanist Architecture[26], one-bedroom two-person (1b 2p) flats over a single storey must be at least 50 sqm, or 58 sqm over two storeys. They must also be able to accommodate at least 1.5 sqm of built-in storage.

Whereas two-bedroom flats over a single storey either need to have a footprint of 61 sqm to accommodate three bedspaces, or 70 sqm to accommodate four bedspaces. As flats get bigger, these minimums rise incrementally.

But there are options for those seeking properties that are smaller than one-bedroom flats.

Studio Flats

A studio flat has a single living space, with a separate bathroom. In a studio flat, the bedroom, kitchen, and living area will all be in one open space. With a one-bedroom flat, these areas will be separated into individual rooms.

The minimum gross internal area for a studio is either 39 sqm with a bathroom, or 37 sqm with a shower room. This must also include provision for at least 1 sqm of built-in storage.

Given their size, studio flats are typically the cheapest option available for many. As such, they may be popular with young professionals, and those moving to big cities such as London for work.

Maisonettes

Maisonettes are self-contained two-floor flats within a larger building, that have their own staircase and entrance[27]. They may also be referred to as “duplexes”, which is the American term for them.

For landlords, there may be untapped potential with maisonettes, and limited competition. A recent survey of landlords revealed that maisonettes are the least popular property type for aspirational landlords, with only 6% favouring them[28].

Penthouses

Penthouses are particularly desirable and luxurious apartments. They are typically situated on the top floor of an apartment building, offering the best views possible. They also tend to be more spacious than other units in the building, and feature high-end amenities.

Penthouses can be costly, but that cost sits behind their appeal. Demand for penthouses is driven by their luxurious allure, and they are often popular with high-net-worth individuals seeking exclusivity[29].

Lofts

Lofts, traditionally[30], are apartments that have been converted from formerly industrial properties. They typically include features such as exposed brick walls, steel columns, sash windows, and more, according to The Modern House[31].

Considered particularly stylish options for those they appeal to, lofts may tempt those who appreciate a sleek, minimalist style, or perhaps even an artistic, bohemian aesthetic.

Specialised/Niche Residential Types of Property

Outside of the standard or obvious UK property types, there are also those which can be targeted for specific needs or requirements. For property investors, these may offer a more strategic way forward.

New Builds

While there is no clear definition of exactly what a new build is, lenders tend to agree that a new build is a home that has been recently constructed or renovated to such an extent that a whole new dwelling has been created[32]. Although, slight variations may arise between lenders.

Much like mansions though, most people would likely be able to identify a new build property if they saw it. Demand for new builds has been boosted in recent years by several factors. For instance, new builds tend to be more environmentally friendly than their older counterparts, which is of increasing importance in the current market.

There are also incentives in place to encourage the purchase of new builds, such as the (recently closed) Help to Buy scheme. What’s more, new builds are set to become evermore important in the property market, with the government planning to get 1.5mn built over the coming years[33].

Converted Properties

A residential property investment doesn’t need to start with a residential property. Commercial properties can be converted into residential homes. In recent years, investments in unused or underutilised offices have been a driving force here.

Applications to convert commercial offices into residential units in England rose from 1,025 in 2022, to 1,235 in 2023 according to government planning data[34]. A jump of 20% in a single year. Although, offices aren’t the only option here. Shops, restaurants, and even gyms can be converted into residential assets.

There may be plenty of potential here. The pandemic hit the high street and forced many commercial properties to shut up shop. With new Permitted Development Rights available, it’s arguably never been easier to convert commercial properties[35].

Eco-Homes

An eco-home is one that’s designed or modified to have the lowest impact possible on the environment. They’re the greenest available property type on the UK market.

There is rising demand for greener homes, from buyers[36] and renters[37] alike. Moreover, many high street banks are offering incentives within their products to encourage borrowers into more eco-friendly homes[38].

With EPC deadlines[39] on the horizon along with other potential legislative changes, demand for eco-homes may only grow.

Houseboats

Houseboats offer a truly unique way of living. A houseboat is as it sounds: they are any boat or barge that has been modified or designed to function as a house[40]. While not for everyone, houseboats can offer positives for those who would find them attractive. For instance, houseboats are exempt from stamp duty and pay the lowest band of council tax for residential moorings[41].

However, there are licencing and mooring fees to take into account. Overall, though, houseboats may offer a relatively affordable option for young professionals, and/or artists.

Mobile Homes

Another niche property type, a mobile home, is a prefabricated structure, built in a factory on a permanently attached chassis before being transported to site[42].

While they may be unlikely to cross the mind of most homeowners or residential investors, they can accommodate a surprisingly large number of end-goals and strategies. Mobile homes can be used as a permanent home, for a holiday-let, for temporary accommodation, and even emergency housing.

Commercial Property Types

Of course, on top of the residential market, there are commercial property types available to investors. These can offer entirely new targets and strategies, which could compliment a wider portfolio. Thankfully, there may be just as much optionality in the commercial property world as there is in the residential market.

Those exploring their commercial property options will need to familiarise themselves with use classes. Commercial properties are categorised into use classes, which identify what industry the underlying property is in. So, for instance, hotels are C1, whereas general industrial properties are B2. Guidance on use classes can be sought from the Planning Portal[43], along with other institutions.

Retail Properties

Retail properties consist of shops, shopping centres, and anything else that may typically be thought of as a retail hub. Retail businesses struggled in recent years as a result of the pandemic.

As people were forced to stay at home, retailers struggled to survive, and many didn’t bounce back as the world opened up. An estimated 17,145 retail stores in the UK closed throughout 2022, according to Statista[44], rising from 11,459 in 2021.

Yet, we could see a reversal here. Confidence within the economy is rising and there is a retail supply shortage spread across major cities. Many consumers are yearning once again for in-person experiences, pushing demand for retailers[45].

Offices

Another type of property that struggled as a result of the pandemic: offices. These commercial properties are primarily used for business operations, and administrative work.

Demand for office space waned in certain sectors in recent years, as employers and workers alike embraced flexible working practices. But this trend is starting to go into reverse, with many companies pushing their staff to return to the office[46].

In fact, demand for office space in central London hit record highs[47]. Specifically, there was a particularly strong appetite for the highest quality grade A space, which accounted for 77% of leasing activity in mid-2024, according to Cushman & Wakefield.

Industrial Properties

Industrial property types cover a broad range of buildings and sectors. Wholesale warehouses, distribution centres, R&D hubs, and manufacturing factories can all be considered industrial.

The industrial property market is another which has seen a recovery in recent months. Cushman & Wakefield found that take-up of logistics and industrial properties in the UK by Q3 2024 was 18% higher than at the same point in 2023[48].

Moreover, total availability increased by 1m sq. ft during the quarter, reaching 64.2m sq. ft available over 429 properties, marking the first increase in supply since Q4 2023.

Hospitality Properties

Hospitality arguably offers the most diverse selection of property types for UK investors. Food and drink, accommodation, and tourism businesses can all fall under the hospitality umbrella. As such, there are many ways in which this market could be targeted.

And it seems consumers and businesses alike are keen to embrace some R&R at the moment. According to the Deloitte European Hotel Industry Survey 2024[49], London remains the most attractive European city for hotel investment.

What’s more, three-quarters of hospitality leaders say they are optimistic about the long-term future of the UK hotel market, and a surge in M&A is expected over the coming months.

Healthcare Properties

A relatively niche type for commercial property investors, healthcare properties can include GP surgeries, dentists, and hospitals.

While niche, there are clear routes to investment in this corner of the market. For instance, GP surgeries are often invested in via sale and leaseback[50]. Here, the freehold of the premises is sold to an investor, and a lease is granted back to the practice partners for them to continue occupying the building and provide medical services.

Also, the healthcare sector holds plenty of potential for the right investors. There are roughly over 8,000[51] GP medical centres in the UK, with a total value of around £12 billion. But there is still a clear need for more of these hubs across the UK, and much of our existing stock requires modernisation.

Leisure Properties

Similar to hospitality, the leisure sector is there for those who want to embrace relaxation and enjoyment. The two can often overlap, but restaurants, spas, and entertainment venues are all likely to fall into the leisure bracket, rather than hospitality.

This corner of the commercial property scene may contain fairly unique, untapped opportunities for property investors. Consumers are seeking out new forms of entertainment and fun. In recent years, we’ve seen the rise of VR bars, darts themed pubs, and indoor karting. As tastes evolve, property investors may be able to take advantage[52].

Special Purpose Properties

These may be among the hardest to define. Essentially, special purpose properties are those that can’t easily be categorised into the other obvious types of property. They are very specific to the underlying industry. An airport or religious building may be typical examples.

Property investors may be unlikely to come across special purpose properties, or even think about including them in their portfolios. But where they do, they’ll likely require bespoke finance to match their uniqueness.

Mixed-Use

The halfway house between residential and commercial properties, mixed-use buildings are those which have both residential and non-residential elements featured together. A common example is a pub that has a flat situated above it.

There are many reasons as to why a property investor may want to purchase this type of property. They can provide access to both the residential and commercial market’s perks in a singular location, and their high visibility locations (they can often be found in city centres) can make them desirable.

Ultimately, commercial property investments share similarities with residential purchases, but they are also very different in certain areas. Commercial investors – on top of basic supply and demand concerns – need to ready themselves for industry specific regulations, business cycles, commercial trends, and more.

Download your free guide to commercial property.

Types of Property by Investment Goals

It’s also possible to categorise different types of property by their investment credentials or suitability.

Buy-to-Let Properties

Buy-to-let (BTL) properties are those bought specifically to be rented out to tenants for income. A standard BTL may include a house or a flat, but many different types of investments can fall under the BTL umbrella. Holiday-lets, HMOs, and even commercial properties can be considered BTL assets.

The BTL market has faced challenges in recent years, but it can still offer opportunities for expanding property investors. There are many towns in which landlords are selling up[53], which may push prices down for new buyers.

Also, BTL yields can be surprisingly high where property investors get their targeting right. According to Hamptons[54], the average gross rental yield on a newly purchased BTL in England and Wales sat at 7.2% in October 2024.

HMOs (Houses in Multiple Occupation)

An HMO is a property that has at least three tenants living in it, forming more than one household, who share facilities such as a bathroom and kitchen[55]. A “large” HMO will have at least five tenants living in it, and owners will need a licence from the local council to operate it.

Yields with HMOs can be particularly high, which make them attractive to investors. Often, HMOs prove popular with students and young professionals, as sharing space can work out cheaper. But, for property investors, HMOs can also come with potential challenges. They are generally expensive to manage, and involve much legal due diligence.

Still, demand for HMOs will likely remain high for some time, as tenants compete for dwindling space.

Holiday Homes and Short-Term Rentals

Holiday-lets are properties utilised for short-term stays for those who are holidaying across England and Wales. This can include Airbnbs.

Holiday-let demand ramped up following the pandemic as international travel was limited. The staycation boom benefited those property investors who got ahead of the curve and even now, there is still a clear market for staycations[56].

As with other types of property, these also come with advantages and potential challenges. Holiday-let rents can be high, especially in sought after locations. This may lead to high yields for investors. They can also offer flexibility. During the periods in which the property is not rented out to holidaymakers, owners can utilise it for other means.

But, the seasonality of a holiday-let may also be an issue. Owners may only be able to generate income from a holiday-let for a few months of the year. They can also come with high operating costs, and regulatory challenges.

Student Accommodation

Student accommodation properties are those that are used exclusively by students during term time. There is purpose-built student accommodation (PBSA) available for this market, which is housing specifically built by developers for students. Typically, PBSAs come in one of two forms: self-contained flats, or halls of residence[57].

Although, HMOs are often used for student accommodation, as are many other residential property types. Similarly to holiday homes, student accommodation can offer high yields for property investors, but may only generate seasonal income during term time. They can also be expensive to manage, and are subject to strict regulations.

But this may be a relatively easy market to target. There are many university towns spread across England and Wales. London, Manchester, and Oxbridge see an influx of students every year.

Regional Variations

Speaking of specific towns, certain areas across the country can present different opportunities for property investors. There are also potential pitfalls to avoid. For instance, investing in Central London for its retirement housing may not produce the best results.

London and Major Cites

Major cities such as London are notoriously short on space, meaning they tend to be dominated by flats and terraced houses. The 2021 Census revealed that 55.9% of dwellings in the capital were flats, maisonettes, and apartments[58]. Given their economic pull though, major cities can be popular locations for young professionals and students.

They also can appeal to high net-worth buyers and renters, with London having some of the most prime real estate in the world. Demand is high in these locations however, meaning properties can get snapped up quickly. Fortunately, specialist finance can help here, with Market Financial Solutions being able to deliver funding in mere days where needed.

Rural Areas and Villages

Rural locations offer a slower pace of life and as such, may be more popular with retirees, those looking to start families, or people who simply want to be closer to nature. Here, people often seek out cottages, detached homes, and perhaps even agricultural properties such as farmhouses.

Rural areas may be primed for the holiday-let market, or retirement home scene. There may be limited options in these areas when compared to large cities, but there is plenty opportunity for the right property investors.

Rural areas saw the biggest rise in house prices between 2016 and 2021, according to analysis of the land registry data from Nationwide[59]. House prices in predominantly rural areas rose by 29%, compared to 18% in predominantly urban areas. Meanwhile, 13 of the top 20 local authorities for house price growth in 2021 were classed as rural.

North vs South

There are also great differences in the property markets of the North and South of England. Generally, values can be particularly high in the South of England, especially the South East, whereas prices are lower across the Midlands and the North.

Those targeting quick turnarounds with (hopefully) high returns could perhaps explore their options in the South, whereas those with more modest budgets may instead be better suited for the North.

It’s also worth paying attention to what consumers and tenants are doing here too. Recently, many people have been moving from the South to the North[60] for its cheaper prices, and reduced pressures.

The Coast and/or Seaside

The UK is home to over 7,700 miles of coastline[61], which features picturesque beaches, cliffs, and fishing villages. As such, these regions are popular with holidaymakers.

Property investors have caught onto this in recent years due to the rise of staycations. In fact, there may be around 257,000 short-term lets in England alone, according to the House of Commons Library[62].

Not all holiday hotspots will guarantee success evenly, however. Property investors will want to be strategic in where they invest. For instance, the average two-bedroom holiday-let in the Cotswolds would generate around £24,700 in income, according to Sykes Holiday Cottages[63] – whereas in the South Coast, it would be £20,100.

Key Considerations When Choosing a Property Type

No two property investment journeys will ever be the same. The success of any investment will depend on the investor’s underlying situation, end goal, and circumstance. But generally, before progressing with any deal, there are a few elements that should be focused on.

Budget and Financing Options

Property investors need to ensure they have their finances organised before progressing. They need to think about what they’ll be able to realistically achieve with their budget. If, say, an investor is planning to purchase a residential home worth around £250,000, they may want to explore their Northern options, as they may not be able to find many options in Central London.

Having the right financing behind them will be crucial here too. In the specialist finance market, there are different products designed for specific investments. If a property investor wants to secure a prime flat quickly, a residential bridging loan may be the best option for them.

Whereas if an investor was looking to refurbish an old office for new corporate tenants, a permitted and light development bridging loan may be more suitable.

Exit Strategies

Borrowers will need to think about what comes after the initial purchase or investment. At Market Financial Solutions, we will not issue funding without a clear, evidenced exit strategy in place. The exit strategy is the plan put in place to cover the original loan taken out.

Fortunately, borrowers have many options here, and these options may be swayed by the types of property being invested in. A common exit strategy utilised by our borrowers includes resale, or the selling of another asset. Here, a property is sold to cover the original loan. This may be easier with fairly liquid assets such as residential flats, over sprawling logistics hubs.

Property investors can also utilise refinancing for the exit strategy, moving onto long-term finance to cover a bespoke loan. It may be relatively straightforward to refinance on the high street with a BTL property, over say a run-down auction property with no secured tenants.

Legal Considerations

Different types of property come with different regulatory obligations. This includes tax implications, legal agreements, environmental rules, and more. Residential landlords, for example, need to adhere to around 170 individual rules and regulations[64].

The owner of a commercial asset[65] may be required to hit minimum EPC ratings sooner than residential owners do[66].

Those involved in the development of an HMO will need to ensure the bedroom sizes need to hit minimum size requirements[67].

The rules and regulations surrounding property investment can be substantial. As such, investors should seek out professional legal guidance if they’re unsure of where they stand.

Settled on the Types of Property You’ll Explore? These Are the Next Steps

Knowing is half the battle. Property investors can be on top of the types of property and everything else we’ve covered so far. But eventually, they’ll need to turn that knowledge into action.

Given just how many options and potential eventualities are out there, getting started can be a daunting task. Fortunately, we’re ready to support those who are keen, yet perhaps nervous, to get the ball rolling.

While we cannot offer advice on how our borrowers should invest, we can do much to help with the financial side of things. For every single one of our products, from a residential bridging loan through to a commercial BTL mortgage, there is a dedicated underwriter at the ready. All our deals are underwritten from day one of an enquiry.

And on this, every enquiry we receive is responded to within four hours. That goes for all phone calls, emails, or live chat messages we receive.

Our underwriters will ensure the brokers and borrowers we work with are matched to the best form of specialist finance for their property type. Or, if they need to hear a quick “no”, we will ensure everyone knows where they stand promptly.

There are very few types of property we won’t lend on, so long as they fall within our criteria. We’re ready to support everyone who reaches out to us.

FAQs

What is the best type of property for high rental yields?

There is no one right answer for this question. How much a property investor yields will depend on their circumstances, and external factors. One investor may be able to yield 10% from one unit within a block of flats, while a buyer of the identical unit next door may only get 5%.

Generally, in the residential market – student accommodation, HMOs, and government-backed properties can offer high yields[68]. In the commercial scene – prime offices, retail, and hospitality properties can produce high returns[69].

Are there different loan products for different property types?

Yes, on both the high street and specialist lending scene. Although, at Market Financial Solutions, many different types of property can be incorporated within a specific product. For instance, our commercial BTL mortgages can be used for offices, shops, restaurants, and more. Our residential bridging loan can be utilised, amongst others, for HMOs, student accommodations or residential flats.

Can a leasehold property be converted into freehold?

Yes, but this involves a legal process which will require the services of solicitors and/or conveyancers. To convert a leasehold property to freehold, the leaseholder will need to issue a notice to the freeholder detailing their intent to buy the freehold from them. The freeholder will need to agree to this for the conversion to go ahead, and they may negotiate the terms involved. Should everyone be in agreement, the leaseholder can then proceed with the purchase.

How do I finance an HMO or a student property?

There are multiple options available to property investors looking to finance HMOs and/or student properties. High street lenders may have HMO specific loans for these types of properties[70]. Standard mortgages may also be suitable for these investments, depending on the circumstance. At Market Financial Solutions, our range of products could be utilised here in different ways. A large bridging loan could be used to purchase a substantial HMO property. A permitted and light development loan is there to spruce up a student house before new tenants arrive. An auction loan can secure a potential HMO quickly if an opportunity is found off the radar etc.

Can I live in my investment property?

At Market Financial Solutions, our products are solely used for properties that will not be lived in by the borrower. They are used for investment properties that will be rented out to tenants, sold on for a return, or otherwise commercially utilised. Those who own an investment property outright without a mortgage or other form of finance in place may be able to live in the property if it’s not utilised[71]. However, this obviously deprives them of being able to generate a gain from their asset.

Can the government take control of a property in the UK?

While a complicated area, the answer is broadly yes. Property investors are unlikely to have to deal with this, but public bodies can force homeowners to sell up via Compulsory Purchase Orders (CPOs) should their assets obstruct a regeneration project, or it’s for the “greater public good[72]”. The current government plans to reform CPO rules to support their housebuilding efforts[73]. Although, it should be noted that these CPOs can be formally objected to and challenged[74].

What are the best locations to buy investment property?

Again, this depends on the property investor’s underlying goals, target market, and circumstance. The “best” location for a student let property may be Manchester, Liverpool, Cambridge, or any other university town. Whereas Devon, Cornwall, or the Lake District could all legitimately be called the best areas for holiday-lets. Generally, London is likely to always benefit from high demand, but other areas across the Midlands, North, and Wales could see more people flock to them as costs rise in the capital.

Where can I get more support if I want to buy an investment property?

At Market Financial Solutions, we can help with property finance. However, should property investors want further support on their plans, they can seek out professional guidance from qualified advisors. This can include wealth managers, consultants, lawyers, and accountants. Although, it needs to be remembered that these types of professionals will levy fees for their services.

Conclusion

Evidently, the many different types of property available in the UK can lead to many different outcomes. There are multiple opportunities for property investors who want to look beyond the standard residential flat. But there may be an equal number of complications.

As such, they’ll want to ensure they have the right form of finance behind them. At Market Financial Solutions, we have built our offering around this belief. Across our property finance range, we can deliver funding for practically every kind of property type in the UK. From the obvious, through to the truly niche.

What’s more, we can support a broad range of property investors – from first-time buyers, through to portfolio landlords. We’re ready to hear from brokers and borrowers spread across the UK.