Falling property values and soaring rents make flats the most profitable option for landlords, according to new research.
The findings from Inventory Base show that flats currently offer the highest returns for BTL investors.
Despite a slight decrease in average flat prices, rental values for flats have surged by 9.3% annually, outpacing all other property types.
The property inventory specialist compared average yields across flats, terrace homes, semi-detached and detached properties.
‘Rental market that sees higher tenant demand’
The firm’s Sián Hemming-Metcalfe said: “Flats not only offer buy to let investors a generally more affordable entry point for their initial investment, but they also benefit from a rental market that sees higher tenant demand and, consequently, stronger rental price growth.
“While the capital appreciation may not match that of other property types, flats come with a host of advantages for investors, including lower running costs and a smoother process when it comes to renting and managing the property.”
Top spot best BTL investment
Flats clinched the top spot best BTL investment with a 6.4% average yield, followed by terrace homes at 6.3%.
In contrast, detached properties yielded only 3.9%.
The research shows that over the last year, flats are the only property type that’s seen a drop in average value, falling by -0.9%.
However, flats have seen by far the strongest level of growth in the average monthly rental value, up by 9.3% versus last year.
Yield offered by a flat buy to let investment
As a result, the average yield offered by a flat buy to let investment has increased by 0.6% in the last year alone, a stronger rate of increase than terraced (+0.4%), semi-detached (+0.2%) and detached homes (+0.2%).
Ms Hemming-Metcalfe also says that efficiency is crucial for profitability and detailed property reports are indispensable.
She adds: “In the end, it’s the combination of strong returns, convenience, and time saved—underpinned by the precision of thorough property reports—that makes flats such an appealing investment.”
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