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Managing my investments
Managing my investments

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2.4.4 What are the risks?

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Figure _unit2.4.4 Figure 13 Although the long-term trend for UK house prices is upward, the last 35 years have seen periods where prices fell
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This graph shows the trend of house prices in the UK, alongside the 'real house price'. The trend moves upwards, although there are peaks and troughs.

Figure 13 Although the long-term trend for UK house prices is upward, the last 35 years have seen periods where prices fell

Suppose you own a property as an investment.

Activity _unit2.4.1 Activity 2.5 Property risks

What are the risks of using that property as an investment rather than as a home? What are the risks of letting out the property?

Note your thoughts below.

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Discussion

The risks of letting out an investment property include:

  • property prices falling – something that can and does happen when economic activity is weak
  • the landlord being unable to find tenants for the rental property for a period of time
  • higher than anticipated costs on the property (for instance, on maintenance or renovation).

These risks reinforce the need for careful calculations and expert advice.