Smaller properties produce the best yields for buy-to-let investors with low budgets

For landlords looking to invest as a Buy-to-Let Landlord one and two bedroom properties continue to provide the highest rental yields, according to Daniel Bourke of Belvoir Lettings in Dunstable part of the 150+ Belvoir lettings network, the UK’s largest lettings only agent.

On average, one and two-bedroom properties have yields of 6.68 per cent and 5.51 per cent, respectively. This compared to average yields of 4.56 per cent and 4.37 per cent for three and four-bedroom yields as the following figures show:

The average rental value of a one-bedroom property in the Dunstable area was £529 and for two-bedroom properties £674, while rents for three-bedroom properties were £796 and four-bedroom properties £1,423.The average asking price in the Dunstable area for a one-bedroom property was £95,050, a two bedroom property £146,763, a three bedroom property £209,659 and a four bedroom property £390,664.Belvoir Dunstable director Daniel Bourke says: “With rents rising, arrears falling and some significantly improved buy to let mortgage products compared to those available in the last two years, the findings are very encouraging for investors who are looking to start or expand their property portfolio this year.”

He adds: “Despite larger properties achieving greater rents, it is the smaller properties that see the greater rental yield. We want to show landlords and investors in Dunstable, Houghton Regis and Leighton Buzzard what different sized properties are achieving in terms of rents and yields. As our data shows one and two bedroom properties are providing greater yields than larger properties for landlords, 6.68% average yields for one bedroom properties, means there are some really good opportunities for investors with relatively low budgets.”

“Even better returns are easily achievable, for example a two bedroom flat in the popular Kiln Way development sold for £115,000 in January 2013 and with a rental potential of at least £650pcm will provide a rental yield of 6.78%. With rents rising, arrears falling and some significantly improved buy to let mortgage products compared to those available in the last two years, the findings are very encouraging for investors who are looking to start or expand their property portfolio this year.”

But he points out it is a long-term trend, caused by a simple supply and demand situation.

“With many people working away from home, young professionals, need to rent smaller properties where the work is, and meanwhile first-time buyers can’t get a foot on the ladder.”

It just goes to show that if you buying a a property to let out, you need to know all the numbers involved before making that decision. We don’t sell houses at Belvoir and don’t charge for our opinion, so feel free to drop by our office on Church St in Dunstable.

More Buy-to-Let advice can be found here BTL Advice