Property Investment Pitfalls & How to Avoid Them [2024]

While 2023 was a subdued year for property investment, 2024 has started on a more confident footing.

Affordability is returning to the market, and house prices have increased month-on-month four consecutive times (according to the Halifax House Price Index), reaching 1.3% in January. This represents a 2.5% growth since January 2023 – the highest annual rise for 12 months.

But that does not mean investors can just rush back into the market and purchase a property anywhere, expecting to make a profit.

Certain areas in the UK have much higher property values than the national average, such as London. The capital has an average property price of £727,023, according to the latest figures HM Land Registry UK House Price Index. The national average property value currently stands at £284,950.

While rents may be higher in London than in the rest of the UK, the astronomical property prices mean rental yields remain low in the capital. Coupled with higher mortgage costs, increased energy bills and a desire among tenants to move away from the capital due to financial constraints, it is easy to see why many buy-to-let landlords choose to look further north once they’ve done their property market research.

It is one thing to know which area to invest in, but buy-to-let investors also need to ensure they know which type of properties are likely to attract the right tenants.

For instance, a recent Shawbrook Bank study showed that buy-to-let landlords have seen a rise in popularity among city centre apartments due to more people returning to office work after a prolonged period of remote work. In addition, the same study showed that investors expect the city centre apartment market to remain a lucrative investment opportunity.

Further Reading: Learn what to look for in a buy-to-let property and how to calculate rental income with our updated property insights!