5 hidden dangers of investing in property

After working hard to build your wealth, you could be searching for new ways to continue growing it so you can achieve your long-term goals.

Two of the options that might first come to mind are investing in the stock market or purchasing a property and becoming a landlord.

Read more: Property v stocks: Which is the better investment for you?

If you have considered the latter, then you’re not alone. Research reported by Landlord Today reveals that a third of UK adults aspire to become buy-to-let (BTL) landlords in the future.

You might think that purchasing tangible bricks and mortar offers a “safe” way to invest your wealth.

Yet, it seems as though the rental landscape is changing. Investments in BTL properties have fallen to the lowest levels since before the 2008 financial crisis, LandlordZone reveals.

This decline in popularity could be due to the significant risks surrounding property investing. With that in mind, continue reading to discover five key risks that our financial planners in Bristol suggest you keep in mind.

1. There is the potential for significant loss

Diversification is vital when you invest your wealth. This involves spreading risk across various assets so that if one area of your holdings declines in value, the others may provide balance.

However, when you invest in a single property, or even a small portfolio, your risk becomes highly concentrated.

If you depend on the income of a single property and your tenant stops paying rent, your cash flow stops too. Meanwhile, you’re still paying for costs associated with your property, such as a mortgage or any maintenance.

More importantly, if you ever need to sell a property, perhaps due to personal circumstances or external events, you could end up realising a loss if the market is down when you choose to do so.

Remember that buying property is a significant expense and selling during a downturn could leave you in a challenging position.

2. They tend to be illiquid

When an asset is “illiquid”, this typically means you can’t sell it quickly to access the cash value within.

For instance, when you invest in company shares, you can usually sell these within a couple of days, depending on the state of the market.

However, accessing the value tied up in property can be complicated, as it typically involves employing an estate agent to sell it and a solicitor to carry out the conveyancing process.

That assumes you can find a buyer – which may be difficult to do at short notice.

Of course, there are certain benefits to an asset being illiquid. It might encourage you to leave it to grow over time rather than being tempted to sell if you need the cash, for example.

Still, it’s crucial to ensure you’ll be able to afford having your wealth tied up in a property for a potentially long period.

3. You may find it challenging to deal with the management of the property and tenants

When you become a landlord, you will often face new responsibilities aside from just collecting rent each month.

Indeed, you could face tenants who fall behind on their payments, leave unexpectedly, or even cause damage to the property that requires costly repairs.

There may also be times when the property sits empty altogether, meaning you’ll need to cover mortgage payments and maintenance costs without the benefit of a rental income.

As you can imagine, these situations can be both time-consuming and stressful.

Granted, you can use a management company to care for your tenants, but this can significantly reduce your overall profits.

As such, it’s vital to factor in these costs and commitments before you decide whether a BTL investment is right for you.

4. Financing and maintenance costs can be high

Owning a BTL property tends to involve several ongoing financial commitments.

For instance, BTL mortgages sometimes have higher interest rates than their residential counterparts due to the higher risks involved. This can make borrowing more expensive overall.

If interest rates rise, your repayments could also increase, affecting your profits.

What’s more, maintaining a rental property can become expensive. You may need to pay for regular upkeep and repairs to keep the property compliant with rental standards.

You may also face larger, unexpected expenses, such as replacing a boiler or refurbishing between tenants.

With careful planning, you can manage these costs, and the property can still provide a steady income over time.

Still, it’s essential to ensure you have saved sufficiently to cover any of these costs so your investment continues to support your long-term financial goals.

5. You usually have to stay abreast of complicated regulations and tax changes

Regulations and tax rules surrounding property investments tend to change often, and staying up to date can be challenging.

For example, the BTL Stamp Duty Land Tax (SDLT) surcharge increased from 3% to 5% on properties over £40,000 from 31 October 2025, meaning you could now pay considerably more tax on purchase.

The government also reduced the SDLT nil-rate threshold for residential properties in England and Wales from £250,000 to £125,000 on 1 April 2025. This could mean that more of the value of your property would be subject to SDLT than before.

Read more: Is buy-to-let still worth it in 2025? Key considerations if you’re thinking of investing

Energy efficiency rules have also become stricter in recent years.

From 2028, rental properties will be required to achieve at least a “C” rating on their Energy Performance Certificates (EPCs). If they don’t, it could potentially result in fines of up to £30,000.

Upgrading your property to meet these new standards could quickly get costly, especially if you need to install a new boiler or insulation.

As such, it’s vital to ensure you fully understand the implications of any new rules before you invest in a property.

Get in touch

Our financial planners in Bristol can help you decide whether a BTL investment is right for you. To find out more, please get in touch.

Email helpme@aspirellp.co.uk or call 0117 9303510.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

The Financial Conduct Authority does not regulate buy-to-let (pure), commercial mortgages, or tax planning.

Think carefully before securing other debts against your home.