5 Potential Pitfalls of Property Investment

There is a growing trend towards DIY these days and it is not limited to projects around the home. The internet makes it possible to become a self-taught expert in all kinds of subjects. Increasingly, people look to manage their own finances with advice garnered online where previously they have sought out professional help face-to-face. However, when it comes to property investment, you need to ensure that you’ve considered all the options and that you’re well-equipped to address them. Here are five important areas where you may need to seek professional advice if you choose to buy-to-let.

Tax implications

The rent generated by your second property will be treated as income by the taxman; and must be declared on an annual self-assessment form. You’ll be taxed according to the income band you fall into. Some costs can be offset by mortgage interest payments, letting agency costs and maintenance expenses can all help bring down your tax bill, for example. However, you may also face Capital Gains Tax liabilities if you ultimately sell the property for a profit. If you are not fully clear on the tax implications of owning an investment property, it could pay to seek sound financial advice from a savvy accountant.

Legal responsibilities of being a landlord

There are whole swathes of regulation here designed to protect landlords and tenants alike. To avoid falling foul of your legal responsibilities, you need, for example, to have a compliant tenancy agreement in place. The tenant’s deposit must be protected through a UK-government approved deposit protection scheme. The property must have an up-to-date Energy Performance Certificate; and you are also responsible for the safety of gas and electricity supplies on-site. Landlords are under increasing pressure to treat tenants fairly Professional help is often advised to ensure you stay on the right side of the law here.

Ongoing property maintenance

Another area you will be legally responsible for as a landlord is much of the maintenance of the property. Bricks and mortar may look like a solid investment, but inevitably require care and attention from time to time. Apart from that, you stand a better chance of leasing to a better class of tenant if the property is well-maintained. Additionally, you will have to pay out for routine costs such as gas and electricity safety checks, decorating between tenants and so on. Fail to add this to your budget and you may well find that your investment costs more than it generates in profit for you. If you’re no expert at DIY, you’ll need someone who is to ensure repairs and so on are carried out safely.

Void periods

Your property won’t earn money if you have no tenants. In fact, an unexpected or protracted void period may wipe out your profit for the entire year. It’s widely accepted that you should factor in at least 20 days a year when there’s no rent coming in. Because let’s face it, if you’ve taken out a mortgage on the property, the bank still expects their payments, no matter what your status. A good agency can help fill the void quickly and efficiently when tenants move on.


Investing in property is a big commitment. You won’t be able to extract your capital quickly if financial disaster strikes your personal finances. Houses take time to sell, unlike shares and bonds which can be disposed of relatively quickly. It’s far better to have a diverse portfolio of investments, rather than to sink your life savings into a single buy-to-let. Take professional advice from an investment broker so you have a sound exit strategy if necessary.

There is a great deal to be aware of and even more to do. That’s why these days, many still turn to professional and independent property investment brokerage services. These provide a dedicated and integrated service to help you invest in property while avoiding many of the common pitfalls – and much of the hassle ñ that being a hands-on landlord can bring.