Good things come in small packages – 1 bedroom buy-to-lets outperform larger properties
- One bedroom properties generate rental yields of 5.9% (LendInvest)
- Liverpool and Oxford among best UK buy-to-let investment areas (HSBC)
- Ten tenants chase every London rental vacancy (Wriglesworth Consultancy)
As experts in the UK buy-to-let property sector, Property Frontiers have for many years been offering the best property investment deals to their clients. Now, the newly released October LendInvest Buy-To-Let Index has confirmed the company’s approach and focus.
The LendInvest figures show that average rental yields for one bedroom buy-to-let properties in the UK far outstrip those for larger (three bedroom) properties. One bedroom properties earned investors average rental yields of 5.9% p.a., two bedroom properties brought in 5.2% and three bedroom properties dropped to 4.6%.
Bigger isn’t always better
Property Frontiers Chief Executive Ray Withers comments,
“We have for years endeavoured to present the best of the UK’s one bedroom buy-to-let investments to our clients, rather than more substantial three and four bedroom properties, as our experience and knowledge of the sector had shown us that those were the properties likely to generate the most impressive returns. It is gratifying to see that LendInvest’s research has shown this to be the case.
“We have also found that city centre studio apartments offer excellent returns and both these and one bedroom apartments have proven particularly popular with investors looking to diversify their portfolios with a range of high yielding properties in key UK cities.”
The other side of the coin
The LendInvest report shows that it is not just rental income that investors have gained. The average buy-to-let property has achieved capital gains of 2.5% p.a. over the last four years, according to the October data. It is this combination of capital growth and attractive yields that have caused so many investors to turn to buy-to-let as the way to make their money work harder for them.
Of course, as ever with property investment, location is king. HSBC’s figures earlier this year highlighted the UK’s top areas for buy-to-let investment. Liverpool and Oxford were among the top ten locations in the country for rental yields, generating gross rental yields of 6.5% and 7.02% respectively. Property Frontiers has one and two bedroom apartments ready for investment in both cities.
HSBC’s head of mortgages Peter Dockar, comments,
“House prices in the top-yielding locations – while still out of reach among many first time buyers – are relatively affordable for landlords investing in property and the demand from young professionals has pushed up rents and driven up the returns.
“London is often seen as the haven of property investment with many believing the streets are paved with gold. However, while the highest rents in the country are an attractive draw for landlords, high house prices in the capital squeeze yields and limit the returns available. As a result, returns can often be far more attractive in other areas so it certainly pays for landlords to do their research.”
Of course London is still an extremely attractive location for buy-to-let investors, with the LendInvest October figures highlighting several of the capital’s postcodes as generating the most impressive returns. A new report from Wriglesworth has emphasised the reason behind London’s exceptional returns, showing that an average of 10 tenants are chasing every rental vacancy.
Property Frontiers is, naturally, at the forefront of the buy-to-let housing market in London, as well as other major cities. The company’s superb Rise @ Deptford development is just 6 minutes from London Bridge and offers a limited number of two bedroom apartments to investors. With a dedicated concierge facility and communal roof terrace, the building is set to be one of the area’s most iconic sites.
For further details, contact Property Frontiers or call the team on +44 1865 202 700.