New research by lettings management platform, Howsy, has looked at which property makes the best investment for buy-to-let landlords when it comes to current rental yields and the result is clear, two-bed properties offer the best rate of return.
Howsy looked at current rental yields across one bed, two bed, three bed and four bed+ properties based on the average cost of buying each property type and the average rent they command.
The research showed that across England, two-bed properties make by far the best investment option with the average yield at 4.8% compared to 4.1% for one bed, 4.5% for a three-bed and 3.6% for properties with four or more bedrooms.
It also seems that investing in a two-bed up north is a better bet to maximise those rental yields with the North East seeing the highest average yields for a two-bed property at 5.5%.
The North West is the next best option with the average rental yield for a two-bed at 5.3%, followed by Yorkshire and the Humber (5.2%) and the East and West Midlands at 5.1% and 5% respectively.
The average rental yield for a two bed in the capital currently sits at 4.5%, but interestingly, London is the only region where a two bed doesn’t offer the best yields across all room sizes.
This title is reserved for the lowly one bed where rental yields on this property size hit 4.6%.
If you’re in the market for a three-bed, then the North West is the most lucrative region with yields at 4.9%, while Yorkshire and the Humber is your best bet for a four-bed or above with an average rental yield of 4.3%.
Founder and CEO of Howsy, Calum Brannan, commented: “As a landlord, maximising the profitability of your buy-to-let investment is as vital now as its ever been and property size and type are as important as location when it comes to doing so.
While the two-bed property is traditionally the most popular amongst tenants and landlords due to the additional size without going overboard on costs, there is a slight regional variation in the capital.
This is of course, due to the high rents you can secure in London even on a one bed and the overwhelming demand for properties that have seen even the smallest ‘studio flats’ rent for above-average prices.”
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