Are the Returns Worth Risks Involved in Owning a London Rental Property?


Investing for the financial security of your future is a leading consideration for any person. In past years, the traditional approach was to invest in a thriving stock market through savings and pension funds, alongside dabbling in selling and buying shares. However, with trends changing, more people now turn to property investment through the help of estate agents in Peckham to replace or supplement their family savings plan. The most notable advantage of this is that property is visible, solid and it is possible to control and manage it personally with bonds and stocks.

Once you settle on the financial goals you have, you will find yourself going through different property investment options in lieu of the present property market. Buying a rental property as an investment can surely be lucrative; however, it also carries some efforts and risks that are cash-intensive.

Here are some considerations you need to focus on before investing in a rental property.

You Need to Know the Risks

Becoming a property investor or owner is a task full of risks as rental properties could remain empty or you will a tenant that stresses you out”, according to estate agents at Fish Need Water. In either case, these factors will leave you in a vulnerable position as you continue to make repayments without having a proper income. There are also many risks regarding the economy, which is something beyond your control and has the power to wipe away thousands from the value of your London property.

If you do not secure the property against the main home you own, the risks will then be limited to the cash amount you put into your property in the very first place. Note that all these factors have to properly balance against the standard cost of property maintenance and ownership. However, if this income is greater in the figure, the risks involved will be worthwhile.

Keep a Check on the Rate of Return

Know that the higher the rate of the return on your property for rent, it means the better your investment and you will be able to absorb bad tenants or unexpected expenses. Before you purchase any rental property, you should also evaluate the potential income and costs. The return on your cash investment has to be slightly higher than 10%, and if this is not the case, then you should not consider purchasing the property a worthwhile investment as you may get similar returns if you consider the stock market.

The Capital

Approximately, investing a property with the help of a conventional mortgage is one that required down payment (about 30%). However, it will also include costs involved in modernizing the property or renovating it. This makes it easier to secure your capital, as you will have a longer time to pay it all back. When considering a rental property investment, you should be aware there are also other alternatives to the conventional mortgage, including:

  • Owner occupier
  • Private Lending
  • Third party backer

Different Taxes

When you choose a rental property as your investment, there are varieties of taxes that will be due, including capital gains tax, quarterly property tax and more if you decide to sell the property. Note that if the property shows a loss on your paper, this can be offset against the income tax. At such times, it is highly essential that you first get advice from your professional tax advisor in order to ensure the risks and costs of the rental property are all worthwhile under ownership.

The Time It Takes

As a rental property owner in London, you will have to handle and work on different maintenance issues and a variety of other duties such as finding tenants and emergency repairs. This is something that could take a drain on the time you have at hand. It is vital that you first take your time and evaluate the amount of time this process will take and the possible effects it will have on your earning potential to be sure that the rental property investment is worthwhile.


Every year, it is a fact that the value of thing everywhere rises in line with factors like inflation. As inflation occurs, the value of your property will also increase while the finance repayment and interest payment will probably have to change. This means you are in property terms, paying less for the property each year.

In London, owning a rental property is definitely something that comes with great returns. Regardless of which neighbourhood or area you plan to invest in, it is best that you ask for some help from estate agents in your area. However, before you dive into this business, you need to know there are many risks that are also involved in it. Before you make any final decisions, you should talk to an experienced realtor. A property expert could guide you through the process and help you make the best decisions when it comes to spending cash.

Related posts:


Please enter your comment!
Please enter your name here