They do this because the capital gains are not taxed and they could offset the losses on the rental side against their normal income. This recently has been stopped I think. This has caused house prices to go up far more than they would have if we had a capital gains tax

But if house prices fall the model falls apart. I think Labour stopped the offsetting scam. The point is real estate is not a risk-free investment. If your ppty investment heads south you can always pull your $$ and invest in stocks & bonds.