Buy-to-let landlords hoping to achieve the highest capital gains on their investment over the next 12 months should buy a one-bedroom flat, according to new research.
In a survey of professional landlords by Amicus Property Finance – a specialist short-term property lender – one-bedroom flats were named the most likely to produce strong capital gains, while two-bedroom flats will generate the highest yields.
A quarter of landlords in the UK believe that one-bed flats will offer the most attractive capital gains over the next year, closely followed by student accommodation in university towns and cities, at 24%. One in five landlords (22%) say that two-bed flats will provide the best opportunities for capital gains, while 21% think three-bed flats are best.
Terraced houses were the fifth most popular option, at 19%. Maisonettes were the least popular choice for those seeking capital gains, with just 3% of landlords predicting strong growth.
For the best rental yields, 28% of respondents claim that two-bed flats are the most attractive, while 25% believe investing in student accommodation will deliver the highest rental returns. A fifth (21%) named three-bed flats, while one-bed flats (20%) and new build properties (14%) were the fourth and fifth most popular options.
In last place for high rental yields were houses on established estates, at just 5%.
The CEO of Amicus, John Jenkins, says: “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.”
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