Two beds make the best buy-to-let investment
The latest research by leading 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.
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 shows 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 a 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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Location / region
|
One bedroom – Rental Yield
|
Two bedroom – Rental Yield
|
Three bedroom – Rental Yield
|
Four + bedroom – Rental Yield
|
|
England
|
3.6%
|
4.1%
|
4.3%
|
3.6%
|
|
Yorkshire and the Humber
|
4.1%
|
5.2%
|
4.8%
|
4.3%
|
|
South West
|
4.1%
|
4.4%
|
4.3%
|
4.0%
|
|
North East
|
4.2%
|
5.5%
|
4.8%
|
3.7%
|
|
North West
|
4.3%
|
5.3%
|
4.9%
|
3.6%
|
|
London
|
4.6%
|
4.5%
|
4.5%
|
3.6%
|
|
East Midlands
|
3.7%
|
5.1%
|
4.6%
|
3.5%
|
|
South East
|
4.0%
|
4.2%
|
4.0%
|
3.4%
|
|
West Midlands
|
4.3%
|
5.0%
|
4.6%
|
3.4%
|
|
East
|
3.8%
|
4.1%
|
3.9%
|
3.1%
|
|
Sources
|
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|
Private rent statistics
|
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|
Average price by bedroom (based on mortgage transaction prices)
|
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