One-bed properties are now providing the best financial investment when it comes to buy-to-let rental yields, according to lettings management platform Howsy.
Looking at figures for major cities across the UK, it found that one-beds now average a rental yield of 6.2%.
Previously, three-beds held the top spot, with a rental yield of 4.3%. Despite this increasing to 5% in this latest research, one-beds have rocketed ahead.
The highest performing areas for one-bed rental yields included in this analysis are:
- Newcastle (7.9%)
- Glasgow (7.7%)
- Liverpool (7.1%)
- Plymouth (7%)
The research also looked at two-bed buy-to-let investments, revealing that Newcastle, Glasgow and Belfast all have the highest average rental yields of 6.9%. This is followed by Sheffield (6.7%) and Leeds (6.4%).
The top of the table for three-bed rental yields is Glasgow again, at 6.9%.
Founder and CEO of Howsy, Calum Brannan, commented: “We’re seeing a lot of changes to traditional property trends across the sector and the latest seems to be the profitability of the three-bed buy-to-let.
While still a good investment, on the whole, tenants demand is growing for one and two-bed homes that provide them with a space of their own.
This growing demand is leading to one and two-bed properties climbing the ranks of profitability due to their lower investment price point and higher demand pushing up rental prices.
As the threat of the Coronavirus reduces, we will no doubt see this trend reverse as people begin to again feel comfortable about shared living and the better social lifestyle this brings.”
This latest research from Howsy is based on the average house price and rent for each location, as provided by Home.co.uk.
| Rental yields – 1-bed | |
| Location | 1 Bedroom |
| Newcastle | 7.9% |
| Glasgow | 7.7% |
| Liverpool | 7.1% |
| Plymouth | 7.0% |
| Sheffield | 6.7% |
| Leeds | 6.6% |
| Leicester | 6.6% |
| Nottingham | 6.6% |
| Swansea | 6.6% |
| Portsmouth | 6.4% |
| Aberdeen | 6.3% |
| Newport | 6.2% |
| Manchester | 6.0% |
| Cardiff | 6.0% |
| Oxford | 5.8% |
| Belfast | 5.6% |
| Bournemouth | 5.5% |
| Southampton | 5.4% |
| Cambridge | 5.4% |
| Birmingham | 5.4% |
| Bristol | 5.3% |
| Edinburgh | 5.2% |
| London | 4.7% |
| Average | 6.2% |
| ______________________ |
| Rental yields – 2-bed | |
| Location | 2 Bedroom |
| Belfast | 6.9% |
| Glasgow | 6.9% |
| Newcastle | 6.9% |
| Sheffield | 6.7% |
| Leeds | 6.4% |
| Liverpool | 6.3% |
| Nottingham | 6.0% |
| Swansea | 5.9% |
| Portsmouth | 5.8% |
| Aberdeen | 5.5% |
| Manchester | 5.5% |
| Birmingham | 5.4% |
| Newport | 5.4% |
| Leicester | 5.3% |
| Cambridge | 5.1% |
| Cardiff | 5.1% |
| Plymouth | 5.1% |
| Edinburgh | 5.1% |
| Oxford | 5.0% |
| Southampton | 4.9% |
| Bristol | 4.8% |
| London | 4.2% |
| Bournemouth | 4.0% |
| Average | 5.6% |
| ______________________ |
| Rental yields – 3-bed | |
| Location | 3 Bedroom |
| Glasgow | 6.9% |
| Newcastle | 6.4% |
| Belfast | 6.0% |
| Leeds | 5.9% |
| Liverpool | 5.7% |
| Aberdeen | 5.6% |
| Manchester | 5.5% |
| Swansea | 5.3% |
| Edinburgh | 5.0% |
| Nottingham | 5.0% |
| Birmingham | 5.0% |
| Sheffield | 5.0% |
| Portsmouth | 4.9% |
| Bristol | 4.6% |
| Oxford | 4.5% |
| Southampton | 4.5% |
| Cardiff | 4.5% |
| Newport | 4.4% |
| Plymouth | 4.3% |
| Leicester | 4.1% |
| Cambridge | 3.9% |
| London | 3.9% |
| Bournemouth | 3.0% |
| Average | 5.0% |
| ______________________ |
| Rental yields – 4-bed | |
| Location | 4 Bedroom |
| Glasgow | 6.9% |
| Edinburgh | 6.4% |
| Leeds | 4.8% |
| Newcastle | 4.7% |
| Bristol | 4.7% |
| Belfast | 4.4% |
| Aberdeen | 4.4% |
| Liverpool | 4.4% |
| Birmingham | 4.3% |
| Manchester | 4.3% |
| Nottingham | 4.0% |
| Southampton | 3.9% |
| Portsmouth | 3.9% |
| London | 3.8% |
| Leicester | 3.7% |
| Cardiff | 3.7% |
| Sheffield | 3.6% |
| Newport | 3.6% |
| Oxford | 3.5% |
| Cambridge | 3.5% |
| Plymouth | 3.4% |
| Swansea | 2.9% |
| Bournemouth | 1.8% |
| Average | 4.1% |
| ______________________ |
| Rental yields – 5-bed+ | |
| Location | 5 Bedroom |
| Glasgow | 5.5% |
| Edinburgh | 5.1% |
| Southampton | 4.3% |
| Birmingham | 4.2% |
| Nottingham | 3.9% |
| Aberdeen | 3.9% |
| Liverpool | 3.8% |
| Manchester | 3.5% |
| Bristol | 3.4% |
| Newcastle | 3.2% |
| Portsmouth | 3.2% |
| Leeds | 3.2% |
| Leicester | 3.1% |
| Cambridge | 3.1% |
| Sheffield | 3.0% |
| Swansea | 3.0% |
| Belfast | 3.0% |
| Cardiff | 3.0% |
| London | 3.0% |
| Plymouth | 2.6% |
| Newport | 2.5% |
| Oxford | 2.1% |
| Bournemouth | 1.6% |
| Average | 3.4% |