While there are several key reasons why buying buy-to-let property is worth it, there are some downsides which make many landlords think that real estate investment property is no longer the best choice in 2025.
Property Prices Can Be Expensive
The average UK property value is £292,059. This is an incredibly high number that is likely to rise, and it can deter many landlords from buying real estate.
While there are various ways to combat high house prices in the property market, including borrowing money with a buy-to-let mortgage, there is no escaping the fact that you’ll need a considerable amount of cash before you can start real estate investing.
Of course, this property cost is for the entire UK average. You can find far cheaper properties closer to £100k depending on what property type you want and which city you are looking for.
For our money, you can maximise your investment potential by securing a buy-to-let apartment in a city centre location like Liverpool. These apartments will be available for far closer to £100k and offer strong returns upwards of 6% NET.
Real Estate Ongoing Costs Can Be Pricey
Alongside the higher prices for purchasing buy-to-let property, there are also many monthly expenses that aren’t present in alternative strategies like stock investing.
To afford the money involved with buying an investment property in the UK housing market, you’ll likely opt for a buy-to-let mortgage.
These work differently than traditional mortgages, as you’ll typically need to pay a 25% deposit. They’re also interest-only, which means you will only pay the interest each month without touching the overall debt.
Lenders will have a more thorough application process than traditional residential mortgages, and you will need to prove that the returns you will make from the property will be enough to pay the mortgage.
Stamp duty tax is another high entry cost, with buy to let investors pay a 5% surcharge on top of standard rates (check out our stamp duty guide to learn more).
All the costs you can expect to pay include:
- Stamp Duty tax
- Mortgage interest payments
- Tax bill including property taxes like income tax or capital gains tax
- Maintenance costs
- Legal fees
- Land Registry fees
- Homeowners Insurance
- Estate agent fees
- Ground rent
- Property management fees
You shouldn’t be put off by all these costs, as you can earn some serious returns. However, it’s important to note that you will need to save a fair amount to invest in real estate.