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Are Investment Properties Worth It in 2025?

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    Is Investing in Property Still Worth It?

    It’s no secret that buy-to-let property investment has been a popular choice for many years.

    Offering regular rental income and sizeable capital growth, buy-to-let investments have delivered some of the best returns to investors over the last decade.

    Is property still a good investment in 2025? That’s what we’re here to find out.

    In this blog post, you’ll learn three reasons why property investment is worth it in 2024, with a few reasons why it might not be the best choice for you.

    Other topics include:

    • Why do people buy investment properties?
    • Are owning rental properties worth it?
    • Is now a good time to invest in property in 2025?
    • What makes investment properties worth it?

    Let’s get into it.

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      Why Do People Buy Investment Properties?

      Before we look at answering the question “are investment properties worth the investment?”, it’s essential to look at why people buy them in the first place.

      Simply put, real estate investing is a fantastic way of generating passive income. Allowing investors to earn a cash flow of rental income every month while also enjoying a huge cash pay-out further down the line, few assets can deliver such high returns.

      For instance, in Manchester, in the last 20 years, the city has seen an average property price growth of over 315%!

      It’s also safe. Despite the COVID-19 pandemic and the UK economy suffering, UK property prices have been increasing at the fastest rate since 2004. Meanwhile, the stock market experienced its worst crash in 2020 since 1987.

      Many real estate investors choose to shore up their investment portfolios through diversification, whereby they own multiple properties, often in different locations to make the most of differences in regional property markets.

      While this all sounds good, the reality is real estate investing isn’t for everyone. Due to how long it takes to earn rental income and develop capital appreciation, property is a long-term investment.

      If you’re a short-term investor and don’t want to wait for the long-term growth of property investment, buying rental property will likely not be the investment strategy for you.

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      Are Investment Properties Worth the Investment in 2025?

      Now that we’ve established why people buy rental properties in the UK, it’s time to look at why investment properties are worth the investment in 2025 and why they may not be for you.

      Yes, Real Estate Investing is Worth It

      Massive Property Price Growth for Rental Property

      One of the main reasons behind the appeal of real estate investment is the long-term capital growth potential.

      The average UK property price is now valued at £292,059, according to the latest available Land Registry data in October 2024.

      Factoring in additional growth predictions from Savills, which anticipate up to a 23.40% price growth in the UK by 2029, it’s clear that long-term investors could be set for a fantastic cash payout in the coming years. In fact, areas like the North West are projected to see growth as high as 29.4% in the next five years.

      Rental Income Is Higher Than It Has Ever Been

      Alongside the massive property value growth, rental income for buy-to-let property investing has also shot up.

      According to HomeLet, the average monthly rental income in the UK reached £1,284 in December 2024, 2.2% higher than in November 2023.

      Huge Tenant Demand With Housing In Short Supply

      Research has suggested that tenants will outnumber homeowners by 2039, highlighting the future dominance of landlords in the UK property market.

      This is likely in part due to a massive supply and demand imbalance, with a growing population resulting in more lucrative property investment opportunities in the UK.

      With these reasons in mind, if you’re asking, “Is buy-to-let worth it in 2025?” then the answer will likely be yes, depending on your investment goals.

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      No, Real Estate Investing Is Not Worth It

      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.

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        Piggy bank next to a row of coins representing saving and investment growth

        Conclusion: Are Investment Properties Worth It in 2025?

        Overall, the key takeaways from this are that while the money earned and income generated from buy-to-let can be as lucrative as ever, the increase in other costs and tax changes to mortgage tax relief have impacted overall income.

        This doesn’t mean that property is no longer ideal. Instead, it means you’ll need to do more research to find the right property in the right location to generate the best returns – something we’ll address in the next section.

        Despite the issues, it is still a widely held belief that real estate is a good investment, you just need to look outside the obvious areas like London to get the most profit.

        Therefore, if you’re looking at buying your first property or want more properties and would like to know if it is good to have an investment property, it really depends on your goals.

        If you’re thinking long-term or are planning for retirement, buying an investment property to rent is still a good investment in 2025. And it can get even better if you shop around carefully for properties at a good value with strong rent returns.

        Buy-to-Let Investment Guide

        Want to become a successful buy-to-let investor? Get our free investment guide today for all the latest tips!

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        2025 Property Market Predictions

        Interested in investing in the UK property market in 2025? Get an idea of how the market may perform with our handy 2025 predictions guide.

        Download Guide 2025 Property Market Predictions Guide Mockup
        Property investor holding wooden house and doing calculations while researching the real estate market on laptop

        Investing in Rental Property for Beginners

        How to Buy a Rental Property to Maximise Your Returns

        To save as much money as possible and lower the cost of property investment, a smart idea is to invest in either residential property or student accommodation off-plan with a property investment company.

        This is for a few reasons.

        1. Residential property offers the highest capital growth returns. At the same time, student accommodation is far cheaper and can deliver a good rental yield in the long run.
        2. By buying new build buy to let off-plan real estate (buying property that hasn’t yet been completed), you can save a tonne of money on your purchase.
        3. Using a property investment company can help you keep the cost down with payment plans, assured rent returns, and exclusive opportunities you won’t find anywhere else.

        When looking at properties, you should also focus on capital growth and rental yield to ensure the most successful investment possible. You can learn about what is a good rate of return on rental property in our guide on how to invest in rental property as a beginner.

        You’ll also need to find property in the right location, with the best property hotspots currently Liverpool, Manchester, Birmingham, and Luton.

        You can get further information about investing in all these locations by checking our guide on the best places to invest in property.

        Alternatively, to learn more about buying an off-plan property, be sure to check out our detailed guide. You can learn more about student property investment by also clicking the link.

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          Choose RWinvest For Your Perfect Investment Property

          We hope you’ve enjoyed this post answering, “is property a good investment in the UK in 2024?”

          Despite impacts on mortgage payments and property taxes, new and experienced investors can still make incredible investments in 2025 if they do their homework.

          To ensure that investment properties are worth it, invest with the best UK property investment has to offer with RWinvest.

          We are an award-winning property investment company with over 20 years of experience in student and residential buy-to-let.

          With offices across the UK, we are well-placed to find the perfect investment opportunity for you.

          Whether you’re thinking of investing in rental property for beginners or are experienced, we will have the perfect property for you.

          Chat with one of our property consultants today and find your dream new property now.

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          Author

          Dale Barham

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          Dale is a property news and onsite content writer at RWinvest.

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