Where is £500k best invested in the current property market?

The latest research by the peer to peer lending platform, Sourced Capital, has taken a look at where’s best to invest in the current property landscape.

Sourced Capital looked at the average annual return available on a £500k investment across both the commercial and residential buy-to-let markets, to see which makes the most financial sense despite current market instability.

As a whole, residential buy-to-let offers a better investment option to commercial property with the average UK yield currently at 5%, returning £138k over five years based on annually compounded interest.

The average return across the commercial sector is currently 2.2%, meaning your £500k would return just under £60,000 over the course of five years. However, as with all property investment, this depends on where you invest it.

The best residential buy-to-let option is currently the North West, where yields climb as high as 5.5% on average, returning £153,480 over five years.

The North East and Yorkshire and the Humber are also some of the most profitable pockets for a residential buy-to-let, however, the East of England sits at the other end of the table. The region is home to an average yield of just 3.8%, returning £102,500 over five years. The high cost of buying in the South East and London means they’re also amongst the worst regions for a residential buy-to-let return.

When it comes to investing in a commercial property, the average yield might come in lower than that of the average residential buy-to-let, but depending on which sector you opt for, the returns can be far higher.

Investing in an industrial commercial property would see the average return of 2.2% per year increase to 7.6% or £221,160 over five years. Surprisingly office space as a whole is the next most profitable with a 6.9% annual return bringing a profit of £198,005 over five years. However, narrow your investment to central London and this return drops marginally to 5.8% per year.

The only bricks and mortar investment in the list that would lose you money is currently commercial retail space. Annually, this investment would lose you -6.2% a year, or £136,935 over five years.

Alternatively, investing via a peer to peer platform like Sourced Capital could see a return of 10% a year, climbing to as much as 12% depending on the project you invest in. Over five years, this hands-off approach could return a healthy £305,225, making it the most profitable as well as the least strenuous.

Of course, as with all investments, capital is at risk and the return you receive on any investment can differ both ways to the UK average.

Based on annually compounded interest
Investment type
Initial investment
Average annual return
Investment Return after 1 year
Balance after 1 year
Balance after 5 years
Investment Return after 5 years
Sourced P2P investment
£500,000
10.0%
£50,000
£550,000
£805,255
£305,255
Commercial – Industrial
£500,000
7.6%
£38,000
£538,000
£721,160
£221,160
Commercial – Office
£500,000
6.9%
£34,500
£534,500
£698,005
£198,005
Commercial – Central London Office
£500,000
5.8%
£29,000
£529,000
£662,824
£162,824
Commercial – Retail
£500,000
-6.2%
-£31,000
£469,000
£363,065
-£136,935
Commercial – Overall
£500,000
2.2%
£11,000
£511,000
£557,474
£57,474
Residential – B2L – North West
£500,000
5.5%
£27,445
£527,445
£653,480
£153,480
Residential – B2L – North East
£500,000
5.0%
£24,760
£524,760
£638,141
£138,141
Residential – B2L – Yorkshire and the Humber
£500,000
4.8%
£23,986
£523,986
£632,086
£132,086
Residential – B2L – West Midlands
£500,000
4.6%
£23,040
£523,040
£626,078
£126,078
Residential – B2L – East Midlands
£500,000
4.1%
£20,284
£520,284
£611,257
£111,257
Residential – B2L – South West
£500,000
4.0%
£20,085
£520,085
£608,326
£108,326
Residential – B2L – London
£500,000
4.0%
£19,907
£519,907
£608,326
£108,326
Residential – B2L – South East
£500,000
3.9%
£19,271
£519,271
£605,407
£105,407
Residential – B2L – East of England
£500,000
3.8%
£19,030
£519,030
£602,500
£102,500
Residential – B2L – UK
£500,000
5.0%
£24,759
£524,759
£638,141
£138,141

Properganda PR

National and local media coverage for property businesses. Journo quotes delivered in minutes.

You May Also Enjoy

Breaking News

Homeowners in England and Wales overvalue their properties by an average of 16%

Homeowners in England and Wales are overestimating the value of their property by an average of 16%, according to new figures. Data from Quick Move Now compares homeowner estimates with formal estate agent valuations and is broken down by both region and property type. Overall, homeowners overvalue in every single category.   Regional breakdown Region…
Read More
Visual blemishes on Roads due to service upgrades
Estate Agent Talk

Emergency Sidewalk Repairs: When to Act and Who to Call

Sidewalks are the unsung heroes of city infrastructure—quietly assisting tens of millions of footsteps every day. But when they crack, disintegrate, or shift all of sudden, they might quickly turn out to be volatile liabilities. In a town like New York, in which pedestrian site visitors are constant and belongings proprietors are legally chargeable for…
Read More
Breaking News

Reapit report reveals agents’ long-term market confidence amid legislative challenges

Despite the significant challenges posed by a shifting economic landscape and the largest wave of housing legislation in decades, estate and letting agents remain steadfast in their confidence about their long-term future in the industry. According to the first Reapit Property Outlook Report 2025, covering the full breadth of sales and lettings agency opinion countrywide,…
Read More
Breaking News

Owner-Occupiers Drive Resilient Commercial Property Market

Buying Becomes 37% Cheaper Than Renting The latest Commercial Property Demand Index from specialist property finance expert, Rangewell, reveals that while investor appetite across the sector held steady in Q2, strong levels of owner-occupied commercial mortgage activity are helping drive market performance, as business owners increasingly move from renting to buying their long-term premises for…
Read More
Breaking News

One year of Labour: Property market performance review

Investors left waiting for planning reform and incentives but majority plan to increase real estate allocation   Biggest failures: Lack of incentives for developers and investors, and ineffective planning reform Top priorities: Planning reform, tax incentives, and attracting international capital Where opportunities lie: Data centres, warehousing & logistics, and later-life housing Real estate debt is…
Read More
Estate Agent Talk

Plumbing Red Flags Every Homebuyer Should Watch Out For

Buying a home is one of the most significant investments a person can make. While factors like location, square footage, and curb appeal often steal the spotlight, what’s hidden behind the walls is just as important—especially the plumbing. Overlooking plumbing issues during the home-buying process can lead to costly surprises down the road. That’s why…
Read More