Property vs Investing
Compare buying a property with a mortgage against putting the same cash into investments — and see how leverage and an ISA change the answer.
Chart shows property equity plus accumulated net rent, and the investment pot, before the exit taxes that are applied in the figures above.
For: leverage amplifies your gains; rental income; a tangible asset you can add value to. Against: leverage amplifies losses too; illiquid and slow to sell; heavy buying and selling costs; maintenance, voids and management; mortgage interest; income tax on rent and CGT on the gain; all your money in one asset.
For: diversified and easily sold; very low cost; an ISA makes all growth and income tax-free; simple to drip-feed. Against: no leverage (borrowing to invest is risky); short-term ups and downs; ISA capped at £20,000 a year; no income unless you sell units.