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2.4.4 What are the risks?

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 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.

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