Is property still a good investment?

Jun 8, 2023 | Business, Tax

As we slowly climb our way out of a cost of living crisis, is it the right time to invest in property?

House prices are still quite low at the moment, so if you have got the cash, now could be a good time to start a property investment portfolio. Once you are up and running, you could turn a healthy profit in the rental market.

But there are some things you need to consider before you get started — so do not rush into a decision. In today’s blog, we will help you work out whether property is the right investment for you.


Why invest in property?

Investing in property has always been a solid way to make passive income — once you have bought and ensured the property is livable, the rental market in the UK means you are never short of suitable tenants.

In recent years, the average cost of a house has actually gone down since last year — £260,736 as of May 2023, according to Nationwide’s house price index data — but is now slowly rising again, as confidence is regained.

If you already manage a property portfolio, holding onto investments where you can is advised at present, as we await the market to return to its previous levels.

But if you are ready to buy now, then the market is still low enough for it to be considered a good investment.

Investing in property will also allow you to have a diverse portfolio from which to pool. If it is well structured alongside other investments, you will have numerous avenues for financial returns.

And property is an easy thing to comprehend as everyone needs somewhere to live, so there is always going to be demand.


I want to invest; what do I need now?

There are some fairly basic requirements to getting started buying a property portfolio; these include:

  • a larger deposit, about 20% to 25% of the purchase price. Some lenders will accept 15%.
  • an extra 3% stamp duty to pay on top of the standard rates.
  • a safety net of cash to cover maintenance costs and mortgage payments when your property is empty — six months’ worth of rent is recommended.

Basically, make sure you have got enough money to invest comfortably — if you do not, it is not worth risking your financial security.


Property risks

Buying property has cons as well as pros, so it is worth understanding these before you invest.

First, property is very illiquid. This means it is hard to get your money back if you need it immediately. You should see it as a long-term investment, rather than a quick cash fix.

Changes to tax have also made property more expensive — the stamp duty land tax holiday from the days of Covid-19 is over now, and landlords have fewer opportunities to claim expenses.

Furthermore, the property market still remains volatile, especially in the current climate. While confidence is returning, that does not mean it is back on the right path.

And if you are looking to renovate the properties yourself, many buyers do not realise the logistics of doing this. It requires a lot of hard work, time and understanding that you may not possess. The simple answer would be to outsource the work to a contractor, which will cost more.


Final thoughts

There are plenty of entrepreneurs who manage a successful property portfolio with no trouble. But there are others who quickly find they are not cut out for it — the problem being it is a hard investment to get out of.

If you are excited about investing in property but want to know more and have questions about how you could do it, get in touch with us.

We have helped many investors reap the benefits of a healthy property portfolio through smart and effective planning and tailored advice.


Get in touch today.

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