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Is Property a Good Investment?

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For a good reason, the property has long been considered a solid investment choice. It offers cash flow and capital growth potential, making it a popular choice among investors. But is property a good investment? This post will explore the pros and cons of investing in property and whether it is still a viable option in today’s economic climate.

is property a good investment?

Buying for Investment as a Landlord

One of the most popular ways to invest in property is through buy-to-let. Buy-to-let involves purchasing a property to rent out to tenants and can generate a regular stream of income through rental payments.


In addition, long-term property prices tend to increase, meaning that the asset may also appreciate over time.

Investors can also consider investing in student HMOs (houses in multiple occupations), which can provide a high yield due to the number of rooms rented out to students. This type of investment requires more management but can offer a greater return on investment.


Property investment has helped some of the wealthiest people in the UK generate a lot of wealth, such as Lord Alan Sugar. His wealth is mainly derived from property in London, proving that property investment can be a lucrative choice.

Cashflow and Capital Growth

Property investment can offer both cash flow and capital growth potential. Investors benefit from rental income, which can provide a regular cash flow stream. In addition, the property’s value may increase over time, providing capital growth.


One of the benefits of property investment is that it is different from a traditional business, as there is no need to manage the property daily actively. This can make it an attractive investment choice for those who want to generate a passive income.

High Rental Prices and Tenant Demand

Rental prices have never been so high, which means that investors can generate more monthly income. According to HomeLet, the average UK monthly rental income reached a record high of £1,143 in August 2022, which equates to an average annual rental income of £13,716.


There is also a massive demand for rental properties, with housing in short supply. Lockdowns caused by COVID-19 have led to an unprecedented change in the UK real estate market, making it one of the best times to invest. More people than ever are looking to rent, and reports show landlords are securing tenants in record time.

is property a good investment?

Is Property Investment Worth It Anymore?

Despite the many benefits of property investment, there are also challenges ahead. Rising interest rates stretch mortgages, meaning lenders must apply hefty product fees. Stress tests are also getting more challenging, which makes it difficult for investors to secure a mortgage.


This means that mortgage payments may wipe out any profit made in rental income while inflation is still high and the bank rate is high. This can make it hard for investors to profit in the short term, meaning that property investment is a long-term game.



In recent years, there has been a significant shift in the property investment market from owning property in your name to being in a limited company. This is because, in a limited company in the UK, you can claim mortgage payments as a deductible expense, which is no longer allowed in your name.


Claiming mortgage payments as a deductible expense can significantly reduce the tax liability for property investors who own properties in a limited company. This is because, under the current tax system, mortgage interest can no longer be offset against rental income when properties are owned in an individual’s name. The government has introduced a phased reduction in the tax relief that individuals can claim on mortgage interest. By 2020, tax relief on mortgage interest will be limited to the basic income tax rate (currently 20%). This means that higher-rate taxpayers will be worse off.


However, in a limited company structure, mortgage interest payments can still be offset against rental income in full, which makes it an attractive option for property investors. The tax liability on rental income can be significantly reduced, which means that more of the rental income can be reinvested in the business or taken as profits.


Another advantage of owning properties in a limited company is that the company structure provides little liability protection for the shareholders. This means that the shareholders are not personally liable for any debts incurred by the company. This can provide peace of mind for property investors worried about the potential risks of property investment.


The government has also introduced several reforms to the property investment industry, which aim to weed out any amateurs and ensure that those who own properties and rent them out are operating professionally. These include introducing minimum energy efficiency standards for rental properties, which require landlords to improve the energy efficiency of their properties to a minimum standard before they can be rented out. 


The government has also introduced measures to regulate the buy-to-let market, which require landlords to be licensed and meet specific minimum standards.

These reforms aim to improve the rental sector’s quality and ensure that tenants live in safe and well-maintained properties. However, they have also made it more difficult for amateur landlords to operate in the market, leading to an increase in the number of properties owned by limited companies.


In summary, the shift from owning property in your name to being in a limited company has become increasingly popular due to the ability to claim mortgage payments as a deductible expense. This can significantly reduce the tax liability for property investors and provide limited liability protection for shareholders. The government’s reforms to the property investment industry have also increased the number of properties owned by limited companies. 


The reforms have made it more difficult for amateur landlords to operate in the market. Property investors must research and seek professional advice before deciding whether to own properties in their name or a limited company.

property capital growth

Conclusion: Is It Worth It?

Overall, property investment is still a good choice for investors looking to generate a regular income stream and benefit from capital growth potential. However, it is essential to be aware of the challenges ahead, such as rising interest rates and product fees, which can make it challenging to secure a mortgage.


Investors should also know the need for a long-term investment strategy, as property investment is not a get-rich-quick scheme. It requires patience and a willingness to invest for the long haul.


In summary, property investment is a viable choice, but it is essential to research and understand the market before committing to any investment. With careful planning and a long-term investment strategy, property investment can be a lucrative choice for those who are willing to put in the effort, time and risk to make it successful

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