The latest market analysis by Inventory Base, the UK’s market leading Property Inventory Specialists, has revealed that cooling property values and market leading rental growth mean that flats currently make the best buy-to-let investment for landlords, having also seen the strongest annual increase in the average yield versus other property types.
Inventory Base analysed current market data on both rental values and house prices across each property type to find the average yield offered by each, before looking at how this level of return has changed on an annual basis.*
The research shows that flats currently top the table when it comes to the best returns on offer to buy-to-let investors, with the average yield for a flat sitting at 6.4% across Britain.
Terrace homes rank with a close second at 6.3%, whilst semi-detached homes (5.3%) also offer a respectable return on investment. In contrast, the average yield on offer from a detached property investment currently stands at just 3.9%.
But it’s not just current yields where flats are putting in the strongest performance. Over the last year, flats are the only property type to have seen a decline in the average property value, falling by -0.9%. At the same time, flats have seen by far the strongest level of growth with respect to the average monthly rental value, up by 9.3% versus last year.
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%).
Sián Hemming-Metcalfe at Inventory Base, comments: “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.
“Efficiency is crucial for managing the bottom line, and this is where detailed and accurate property reports become indispensable. These reports document and maintain all aspects of the property, significantly reducing the risk of disputes and costly repairs.
“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.”