Two-bedroom properties have been shown to make the best investments for buy-to-let (BTL) landlords in terms of rental yields.
Fresh research by Howsy analysed rental yields in properties ranging from one to four bedrooms and found that the sweet spot was two-bedroom properties with an average yield of 4.8%.
The letting management platform conducted their research by cross referencing the cost of buying each property type and the average rent commanded by them. The findings revealed that three-bedroom properties produce an average yield of 4.5%, with 4.1% and 3.6% for one and four-bedroom properties respectively.
In addition, they identified the North-East as the best region for investment in two-bedroom properties, with an average 5.5% yield.
This was closely followed by the North-West, where property investors could expect to see a 5.3% return, Yorkshire and the Humber with 5.2%, and the East and West Midlands at 5.1% and 5% respectively.
London dips slightly below the average, with a 4.5% rental yield for a two-bedroom property. The capital is also the only region where landlords would be better off investing in smaller property. Here, they can achieve a little more by investing in a one-bedroom property and gaining a rental yield of 4.6%.
Calum Brannan, founder and CEO of Howsy, said: “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.”