Historically, buying property has been seen as one of the best ways to invest your money.
Steadily rising property prices and rental income, coupled with rock-bottom interest rates, have typically brought great returns for investors who’ve managed to get their foot on the property ladder.
But with changes in buy-to-let rules and higher interest rates, is that still the case?
“Property has long been seen as the gold standard of investing,” says Vix Leyton, a consumer finance expert at the finance app thinkmoney.
“But just because it’s traditional doesn’t mean it’s always the best choice for everyone. Property can still be a strong investment, but it’s not a shortcut to easy money – there are ongoing costs, responsibilities, and the occasional surprise bill.
“Increasingly, the challenge for landlords isn’t just the mortgage, it’s the growing list of rules and standards you have to meet.”
We asked Leyton and other financial experts whether property is really the best investment for your money these days. Here’s what they said…
Be aware of the costs
In recent years it’s become more difficult for landlords to generate a profit from buy-to-let investments, says James McCaffrey, a spokesperson for credit broker TotallyMoney.
“If you’re considering property as an investment, then doing research is essential, and that includes looking at the costs involved,” he advises.
“You can no longer deduct mortgage interest as an expense, while stamp duty on second homes has been hiked, and property income taxes will increase from April 2027 – all of which can add thousands to your costs.
“The days of super-cheap mortgages are behind us, with higher interest rates driving up the cost to borrow, and they could keep rising this year, so shop around and use an independent broker to help you find the best offer.”
Factor in letting agent costs
While some people choose to manage rental properties themselves to save money, many pay a letting agent to handle tenant checks, maintenance, and paperwork.
McCaffrey says: “Letting agents can help you with the day-to-day management of your property, finding tenants, taking care of repairs and collecting rent – but it comes at a cost, and you might find yourself paying them 15% of the income generated.”
And Leyton adds: “While letting agents are great for peace of mind, it’s especially worth considering if you don’t live nearby, or want to avoid late-night calls about broken boilers.”
You will probably need a buy-to-let mortgage
If you plan to rent the property out, you’ll typically need a buy-to-let mortgage rather than a standard residential one, and the rules are stricter, says Leyton.
She explains that most buy-to-let lenders will want at least a 25% deposit, which is significantly higher than the deposits needed when buying your own home, plus enough savings to cover stamp duty, legal fees, and a financial buffer for repairs or missed rent.
“That can easily mean tens of thousands of pounds before you even get the keys,” she warns.
“It’s not just about getting on the ladder, it’s about being able to stay there comfortably if something goes wrong.”
It can be hard work
Buying property to rent out can mean a lot of work – both paperwork and legwork if you opt to deal with repairs/tenant issues yourself.
Chartered financial planner Claire Walsh, managing director of Midsummer Wealth, says: “Property has long appealed to UK investors, driven by strong historical price growth. But in today’s environment, it’s harder to view it as a straightforward or universally attractive investment.”
As well as property price rises not being guaranteed, and there being potential interest rate increases, plus possible periods of no rental income when tenants move out, she points out: “Buy-to-let is far from passive.
“Landlords must deal with maintenance, regulation and tenant issues, or pay managing agents, which can significantly reduce returns.
“Many landlords are now reassessing their position, with some exiting the market altogether amid rising costs and increased regulation.”
What about short-term lets?
Some investors are drawn to buying property for short-term lets through platforms like Airbnb, particularly in tourist hotspots, says Leyton.
“Nightly rates can look more attractive than traditional rent,” she says, “but this approach needs a lot more hands-on care and is less predictable, with income rising and falling depending on demand, seasonality, and local rules.”
She explains that in many areas, councils now require registration or planning approval for short-term lets, and recent tax changes mean the financial advantages aren’t always as generous as they once were.
“It’s important to check the small print before assuming it will be a simple way to boost returns,” she warns.
Your money is tied up
Lee DeRedder, a financial planner at financial adviser Shackleton Advisers, says although there’s potential for lucrative growth in property investment, it means you can’t access your money easily as selling property can take months.
“While direct property investments can potentially generate attractive yields and the potential for price appreciation,” he says, “property can be an illiquid asset, making it difficult to sell in a short period of time, which can cause issues if you need cash in a hurry.”
Think about investing in property on the stock market
It’s possible to invest in property without actually buying the bricks and mortar yourself, by putting your money in investment funds known as Real Estate Investment Trusts (REITs).
DeRedder explains: “One of the fundamental rules of investing is diversification – in other words, not putting all your eggs in one basket – to reduce different risks.
“REITs offer a different way of gaining exposure to property by allowing an investor to invest in property via the stock market. However, this is a specialist area, and I’d always recommend speaking with a professional adviser if this is something you are considering.”
Spread your investment risks further
Walsh points out that investing in property ties a large amount of capital in a single asset, unlike diversified investment portfolios which spread risk across assets such as equities and bonds, and sometimes commodities or commercial property.
“These investments are much more liquid, allowing access to funds within days rather than months, and can be held in tax-efficient wrappers such as ISAs and pensions, depending on individual circumstances,” she explains.
“While property is often seen as ‘safe’ and investments as ‘risky’, risk exists in all asset classes. There’s no one-size-fits-all, but financial advice can help individuals identify the most appropriate approach for their circumstances.”
And Leyton adds: “For many people, investing regularly into a pension or a stocks and shares ISA can be a more flexible and lower-cost starting point.
“Those options let your money grow over time without the hassle of managing tenants or dealing with repairs, and you can start with much smaller amounts. You also spread your risk rather than putting everything into one property in one location.”