Bigger yields gained by three or more bedrooms
Houses with three bedrooms or more result in higher net yields of up to 11 per cent for UK landlords, the latest figures from online buy-to-let agency yieldit suggests.
The firm says that properties which can house multiple tenants or larger families might make a start investment of choice, with returns boosted by houses often being freehold rather than leasehold, the absence of a service charge and self-managing.
When looking at property type in relation to yields, houses came out on top, with average net yields of 6.4 per cent, followed by studios at 5.3 per cent and apartments at 4.9 per cent.
The data from yieldit also exposed a notable difference in average yields between one bedroom and two bedroom apartments, with the average one bedroom apartment commanding a 1.4 per cent higher net yield than a two bedroom apartment, at 5.4 per cent and 4 per cent respectively.
This indicates a greater demand for one bedroom apartments, particularly in city centre markets where couples may struggle to afford the luxury of a spare bedroom.
Instead many are opting to rent one bedroom apartments, or alternatively renting in a larger group, in homes with more than two bedrooms.
Breaking down the numbers further revealed that one bedroom apartments with parking actually had a slightly lower net yield at 5.2 per cent on average, than one bedroom apartments without parking at 5.5 per cent.
Ryan Hughes, head of sales at yieldit, said: “Deciding on what type of property to invest in is one of the biggest choices a landlord has to make.
“Houses suitable for families remain a popular choice, and yields can be significantly higher when you remove costs like ground rent, service charge and self-manage, however, it’s important to note that this type of property might require more work and unexpected maintenance costs could affect annual returns.
“For those looking to invest in apartments, the data suggests that there is a growing demand for one bedroom apartments without parking.
“As environmental issues become more prevalent we can expect to see tenants opt for more environmentally friendly ways to travel and an unwanted parking space might push up the price for renters,” he added.