Small is beautiful for BTL yields, says UK's biggest agent

Smaller properties provide a better return than larger ones, with one- and two-bedrooms providing average yields of 6.8% and 6.4% respectively.

Countrywide, the UK's largest national chain of agents, has produced national yield, rent and arrears data for the first time, based on the number of bedrooms.

It has taken its information from 50,000 rental properties on its books across Britain.  

It says three and four-plus bedroom properties are achieving an average yield of 6.2% and 5.6% respectively. The average rent for four-bed properties was £1,398pcm in the first quarter of 2013 while for one-bed properties it was £673pcm.

Although larger properties achieve greater rents, it is the smaller properties that have seen rents rise the most, with one- and two-bed properties seeing a 3.3% year-on-year increase in rents, three-bed properties a rise of 2.3% and four-plus bedroom homes a rise of just 0.3%.

All sizes of properties have seen a fall in rental arrears in the first quarter of 2013, with the greatest fall (of 1.5%) at three-bed properties and the smallest fall (0.4%) at one-bed properties.

Nick Dunning, commercial director at Countrywide, said: “We wanted to produce this data to show landlords and investors what sized properties are achieving in terms of rents and yields.

“As our data shows, one- and two-bed properties are providing greater yields than larger properties for landlords, and 6.8% average yields for one-bedroom properties means there are some really good opportunities for investors with relatively low budgets. For example, a one-bed flat in Nottingham recently sold for £51,000 and is providing a rental yield of 6.9%.
 
“With rents rising, arrears falling and some significantly improved buy-to-let mortgage products compared to those available in the last two years, the findings are very encouraging for investors who are looking to start or expand their property portfolio this year.”