What Property Investments Work Well During a Tough Economy?
September 4, 2026
Foot Forward Property Investments has been developing fully managed property investments for over 34 years. In that time, we have worked through recessions, housing market corrections, interest rate shocks, periods of high inflation, lending restrictions and more than one period where property investors suddenly discovered that an investment model which looked fantastic in a rising market could fall apart very quickly once the economy turned.
The current period has been particularly difficult. Borrowing costs are higher, household finances are stretched, operating costs have risen and buyers are far more cautious about committing large sums of money to property.
Those conditions tend to expose one thing very quickly: some property investments are far more dependent on a booming economy than the marketing brochures would have you believe.
Professional HMO properties and regulated care properties work from a different starting point. One is based around providing affordable accommodation to working tenants. The other is based around long-term contracted rental income from specialist care and education property.
Tough Economies Expose Speculative Property Investment
There has been an enormous amount of property investment marketing built around swanky off-plan apartments, shiny new-build developments and supposedly effortless capital growth.
The brochure normally looks fantastic.
There is a rooftop terrace, a concierge desk, computer-generated images of a spotless apartment and some very optimistic projections about what the property might be worth in five years.
What matters considerably more is what happens when the development actually completes.
An investor might have reserved the apartment two years earlier in a strong market. By completion, mortgage rates could have increased, buyer confidence could have fallen and comparable properties may be selling for less than expected. If the investor purchased at a new-build premium in the first place, there may be very little room for error.
The apartment does not suddenly become worth more because somebody spent a lot of money producing the sales brochure.
This is one of the major problems with off-plan property investment. A substantial part of the investment case can depend on predicting what an unknown property market will look like several years into the future.
That is speculation.
New-Build Premiums Can Become Painful
New-build investment property has another problem which becomes much more obvious in a weaker economy.
Investors frequently pay a premium for being the first owner.
Developers can justify that premium when demand is high, mortgages are cheap and buyers are queuing to purchase. Once the property becomes second-hand, however, it is competing against both other resale properties and the next phase of brand-new apartments being marketed by the developer.
That can leave an investor in an awkward position.
Imagine paying £300,000 for a new-build apartment and then discovering two years later that another investor is trying to sell an identical apartment in the same block for £275,000. At the same time, the developer may still have unsold units available with incentives, furniture packages or mortgage contributions.
The investment now has to fight against its own development.
General house price growth can hide that problem during very strong markets. A tougher economy makes it considerably harder to ignore.
Single Buy-to-Let Margins Can Disappear
Traditional single buy-to-let properties have also become increasingly difficult to justify in many parts of the UK.
The numbers can look reasonable until every real expense is included.
Mortgage interest, management charges, maintenance, insurance, compliance, void periods, repairs and taxation all have to come out of a single rental payment.
If a boiler fails, one tenant’s rent is paying for it.
If the property is empty, the landlord receives nothing.
If mortgage costs rise significantly, there are only two realistic options. The landlord absorbs the reduction in profit or tries to increase the rent.
During a tough economy, tenants are dealing with exactly the same financial pressure as landlords. There is a limit to how much additional rent the market can absorb before people simply move somewhere cheaper.
That leaves many highly leveraged single-let investments with very little breathing room.
Property Flipping Becomes Far More Dangerous
Property flipping is another investment strategy that looks considerably easier when house prices are climbing.
The model is normally based around buying below market value, completing a refurbishment and selling the property quickly at a profit.
There are several moving parts which all need to behave.
The property needs to be bought cheaply enough. Refurbishment needs to remain within budget. Contractors need to finish on time. The market needs to remain stable. Mortgage affordability needs to remain strong enough for somebody to purchase the finished property.
A six-month refurbishment can begin in one market and finish in another.
If comparable sale prices fall by £20,000 while refurbishment costs rise by £15,000, a healthy-looking margin can disappear before the property even reaches Rightmove.
Then there are holding costs.
Council tax, utilities, finance costs, insurance and potentially bridging interest continue regardless of whether the property sells.
Flipping is ultimately dependent on somebody else buying the property at the price required to make the numbers work. When buyers become nervous, lending tightens and transaction volumes fall, that dependency becomes very uncomfortable.
Why Professional HMO Property Behaves Differently
A professional HMO is not dependent on selling the property six months later for more money.
Its primary purpose is income.
During difficult economic periods, affordability becomes increasingly important to tenants. Someone who might previously have rented a one-bedroom apartment may decide that paying for rent, council tax, electricity, gas, broadband and the rest of the household bills simply does not make financial sense anymore.
A properly developed professional HMO provides another option.
The tenant can have a modern bedroom, their own ensuite bathroom, good communal facilities and bills incorporated into the rent, without taking on the complete cost of running an apartment alone.
That can make professional HMO accommodation particularly attractive when household budgets are under pressure.
For landlords, several rental streams are being produced from one property rather than relying entirely on one tenant.
Not Every HMO Is a Good HMO
None of this means that buying any cheap six-bedroom property suddenly becomes a clever investment.
Quite the opposite.
We have been developing HMO properties for decades, and one of the biggest problems we currently see is investors being attracted to areas purely because houses look cheap.
Cheap houses can be cheap for a reason.
If an area has enormous HMO saturation, weak professional employment or dozens of landlords competing for the same tenants, a theoretical yield on a spreadsheet means very little.
The same applies to refurbishment.
Cutting corners on an HMO is one of the easiest ways of creating an expensive problem later.
Cheap kitchens fail. Poor bathrooms leak. Bad soundproofing creates complaints. Inadequate layouts make rooms harder to rent. Poor heating systems create maintenance issues. Cutting costs on compliance can become considerably more serious.
HMO investment needs to be approached as a long-term operating business rather than a cheap refurbishment exercise.
How We Develop Fully Managed HMOs
Foot Forward Property Investments develops professional HMO properties in areas where we believe the supply and demand position makes sense.
We specifically avoid building portfolios based purely on the cheapest property prices available.
Our involvement starts at acquisition. We handle planning where required, refurbishment, property design, compliance and HMO licensing. Once the development is completed, we continue managing the investment rather than disappearing after completion.
That includes tenant management, rent collection, maintenance, inspections, licensing requirements and the ongoing day-to-day operation of the property.
For many investors, that is exactly why they choose to work with us.
They are not looking to become an HMO landlord with another job attached to their existing career. They want a properly developed property which is then professionally operated.
Care Property Has Almost Nothing in Common With Off-Plan Investment
Regulated care property sits at the opposite end of the investment spectrum from a speculative apartment purchase.
Foot Forward Property Investments develops Children’s Care Homes, SEND Schools and Adult Residential Care Homes for private investors.
These investments typically provide between 10% NET and 12% NET rental yields, depending on the individual property and project, with rental terms structured over 20 years.
The investor owns the underlying freehold property.
The specialist care provider operates the regulated service from the building and pays the agreed rental income under the lease structure.
The investor is not relying on somebody purchasing the property next year for a higher price. They are not trying to predict whether apartment values will increase. They are not waiting for a young professional to decide whether £1,500 a month for a city-centre flat still represents good value.
The investment is built around long-term occupation by a specialist operator.
No Exposure to Individual Room Voids
One of the major differences between care property and conventional residential investment is how rental income is structured.
With a standard buy-to-let, losing the tenant means losing the rent.
With a care home, the property itself is leased to the care provider.
Our care property investors receive their contracted rent regardless of individual placement voids within the operating business. The care provider is responsible for running the service, maintaining the building and dealing with operational costs under the relevant lease structure.
The investor does not have to find residents, employ care staff or become involved in running a regulated care business.
We handle the property acquisition and development process, while the specialist provider handles the operational side.
CPI-Linked Rental Income
Inflation is another major consideration during difficult economic periods.
A 20-year fixed rent would gradually become worth less in real terms if prices continued increasing around it.
Our care property leases therefore include CPI-linked rental increases.
The contractual rental income can rise in line with the relevant CPI mechanism within the lease, giving investors an income structure which responds to inflation rather than remaining frozen for two decades.
Compare that with some traditional property strategies.
A landlord may see mortgage payments, insurance, contractor charges and maintenance costs increase but still be constrained by what tenants can realistically afford to pay.
Care property operates under a completely different contractual structure.
Demand for Care Does Not Depend on Consumer Confidence
Care property is also tied to a completely different source of demand.
Children requiring residential care still require accommodation when interest rates rise.
Young people requiring specialist SEND education still need appropriate educational settings when the housing market slows.
Adults requiring specialist residential care do not stop needing care because house prices have fallen.
The care providers operating these services receive funding through local authorities and other public-sector funding structures. Local authorities also operate under statutory duties relating to the care and accommodation of eligible children and young people.
That creates a very different underlying market from conventional property investment.
It does not mean care property is completely without risk. No legitimate investment is.
What it does mean is that the investment is not primarily dependent on consumer confidence, mortgage approvals, first-time buyers or whether somebody wants to purchase a luxury apartment next year.
The Difference Is What the Property Is Actually For
When economic conditions deteriorate, investors tend to discover very quickly whether they bought something because it solved a genuine need or because somebody produced an attractive investment brochure.
A £350,000 off-plan apartment needs somebody willing and able to pay enough rent to justify the purchase price, or another buyer willing to pay more for it later.
A property flip needs a buyer.
A single buy-to-let needs one tenant to carry the income.
A professional HMO provides lower-cost accommodation to several tenants who are actively looking for more affordable ways to live.
A Children’s Care Home, SEND School or Adult Residential Care Home provides specialist property for a regulated service operating under a long-term lease.
Those are materially different investment models.
34 Years Has Changed How We Look at Property Investment
After more than 34 years developing property investments, we are considerably less interested in what looks exciting on a brochure than we are in whether the investment still makes sense when economic conditions become unpleasant.
We have seen property fashions come and go.
There is always another luxury apartment development being launched. There is always somebody explaining why a particular new-build scheme is going to experience enormous capital growth. There is always another property flipping course showing a refurbishment bought at exactly the right price and sold at exactly the right time.
Real property investment is rarely that tidy.
Buildings require maintenance. Markets change. Mortgage rates move. Buyers disappear. Refurbishments cost more than expected and rental markets become saturated.
Our approach is deliberately based around property types where demand has a practical reason to exist.
Professional HMOs provide affordable housing for working tenants.
Our regulated care and education properties provide buildings required for Children’s Care, SEND education and Adult Residential Care, while offering investors long-term contracted income through the operating provider.
Investors looking for fully managed professional HMO properties can view our current developments at:
www.footforwardproperties.co.uk/hmo-for-sale
Investors interested in Children’s Care Homes, SEND School properties and Adult Residential Care Home investments can view our current opportunities at:
www.footforwardproperties.co.uk/care-homes-for-sale
A difficult economy does not automatically make property a bad investment. It simply becomes much less forgiving of property that was overpriced, overleveraged or dependent on optimistic assumptions in the first place.