REITs UK: Property Investing Without the Tenants
A REIT ETF inside an ISA: commercial property, no tenants, no broken boilers, no stamp duty surcharge. Most amateur buy-to-let landlords would be quietly better off in one.
REIT in an ISA vs leveraged buy-to-let
| Factor | Leveraged BTL | REIT in ISA | Winner |
|---|---|---|---|
| Stamp duty | £15,000 (6%) | £0 | REIT |
| Setup time | Weeks to months | Minutes | REIT |
| Diversification | 1 property | 50+ via 1 ETF | REIT |
| Liquidity | Months to sell | Same-day | REIT |
| Section 24 tax hit | Yes | No | REIT |
| Available leverage | 4x via mortgage | 0x | BTL |
Same £62,500 of capital, two routes to property exposure.
Key takeaways
A REIT is a listed company that owns income-producing property and is required to pay out 90% of rental profits as dividends
UK REITs in an ISA are tax-free; outside an ISA the dividend portion is taxed as property income, not standard dividend rates
A diversified REIT or REIT ETF gives you property exposure without tenants, mortgages, repairs, or stamp duty surcharges
Returns roughly track property prices over the long term, with much higher liquidity and lower transaction costs than buy-to-let