Two-bedroom properties make the best investment for buy-to-let landlords in England when it comes to existing rental yields, fresh research shows.
Howsy has analysed current rental yields across one-, two-, three-, and four-or-more bedroom properties and found that two-bedroom homes produce an average yield of 4.8%.
The study by the letting management platform, which assessed the average cost of buying each property type and the average rent they command, revealed that an average three-bedroom property has a yield of 4.5%, a one-bedroom property a return of 4.1%, and 3.6% for properties with four or more bedrooms.
Landlords wishing to achieve maximum rental yields should generally look to invest in the North East where investors can expect to achieve an average yield of 5.5% for a two-bedroom property, according to the research.
The North West is the next best option with the average rental yield for a two-bedroom at 5.3%, followed by Yorkshire and the Humber at 5.2% and the East and West Midlands at 5.1% and 5% respectively.
Those investing in London can expect to achieve an average rental yield of 4.5% for a two-bedroom property.
In fact, the capital is the only region where a two-bedroom property does not offer the best yields across all room sizes.
One-bedroom homes in London offer the best returns, with a rental yield on this property size reaching 4.6%.
Landlords looking to invest in three-bedroom properties will typically find that the North West is the most lucrative region with yields at 4.9%.
Yorkshire and the Humber is the best location for a four-bedroom-plus home with an average rental yield of 4.3%.
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.”
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