Property investors in the UK are increasingly focused on achieving strong yields, and investing in flats is becoming more popular for several reasons. Choosing the right property type depends on various factors, such as location, target tenants, and overall investment goals, including whether you plan to rent the property to generate rental income.
Why Invest in Apartments?
One of the most effective strategies for securing the best returns is choosing areas with high demand. These areas not only offer strong rental yields but also promise rapid capital appreciation. Recent research suggests that investing in flats is another excellent way to maximize returns. Flats and other small properties, particularly those with higher energy efficiency, have long been popular among tenants looking to reduce monthly living costs.
Is Smaller Better?
If you are targeting families in suburban areas, small or medium-sized houses might see higher tenant demand. Therefore, the advantage of smaller properties depends on the location. According to research from Inventory Base, investing in flats can yield the best returns, offering an average yield of 6.4% for landlords nationwide. The report also indicates that flats have experienced the most significant rental yield growth, with monthly rents increasing by 9.3% over the past year.
When compared to property values, apartments have seen a greater decline in average property price than other housing types, with a drop of -0.9%. This has resulted in the average rental yield for investment flats rising by 0.6% over the past 12 months, compared to 0.4% for terraced homes and 0.2% for semi-detached and detached properties.
Additional Reasons to Invest in apartments
While maximizing rental returns is a priority for many buy-to-let landlords and property investors, several other factors must be considered to achieve investment goals. Investing in apartments is generally more accessible, as they are often the most affordable property type in many areas. This affordability allows first-time investors or those with limited funds to invest in flats and reap the benefits.
For those looking to diversify their portfolios, the lower price point of apartments is a significant advantage. Investors can potentially buy multiple flats and rent them to different tenants, spreading the risk compared to investing in one large property.
Energy efficiency is another key consideration for buyers and tenants, and flats tend to be cheaper to run than houses. This makes them appealing to tenants looking for lower monthly costs and a more comfortable living environment.
A Smoother Investment Process
Sián Hemming-Metcalfe at Inventory Base said, “Flats provide buy-to-let investors with a more affordable entry point and benefit from a rental market with high tenant demand and strong rental price growth. While capital appreciation may not match other property types, flats offer several advantages, including lower running costs and easier management.
“Efficiency is crucial for managing the bottom line, and detailed property reports are indispensable. These reports help document and maintain all aspects of the property, reducing the risk of disputes and costly repairs.
“In the end, it’s the combination of strong returns, convenience, and time saved—supported by precise property reports—that makes flats such an appealing investment.”
