Buy-to-let investors looking to benefit from the greatest level of capital appreciation over the next 12 months should focus on buying a one bedroom flat, new research shows.
A survey of professional landlords by Amicus Property Finance, a specialist short-term property lender, found that one bedroom flats are most likely to produce the most attractive capital returns while two bedroom flats will generate the biggest yield.
A quarter of UK landlords said that one bedroom flats will offer the most attractive capital gains over the next year, closely followed by student accommodation in university towns and cities (24%). One in five (22%) landlords believe two bedroom flats will offer the best opportunities for capital gains while 21% suggested it would be three bedroom flats. Terraced houses were the fifth most popular option with 19%. Maisonettes were the least popular choice with just 3% landlords predicting capital gains.
For the best rental yields, 28% of landlords identified two bedroom flats while 25% predicted student accommodation in university towns and cities. A fifth (21%) selected three bedroom flats while one bedroom flats (20%) and new build properties (14%) were the fourth and fifth most popular options. In last place are houses on established estates with just 5%.
John Jenkins, CEO of Amicus, commented: “The findings show flats are the clear winners over houses and maisonettes for both capital growth and rental yields and this is reflected in our own experience in servicing professional landlords’ short term borrowing requirements.
“Despite some uncertainty in the consumer buy to let sector as a result of changes to stamp duty charges, we’re seeing a sustained and growing appetite for short-term property finance driven by the tightening of mainstream bank underwriting requirements and the inability of some lenders to act sufficiently quickly to respond to demand.”