One and two-bedroom properties provide the highest rental returns for investors with average yields of 6.8 per cent and 6.4 per cent respectively, according to data from Countrywide, the UK’s largest lettings agent.
Countrywide’s research is based on 50,000 properties across England, Scotland and Wales.
Three and four plus bedroom properties are achieving an average yield of 6.2 per cent and 5.6 per cent respectively. The average rent for four bedrooms properties was £1,398 per calendar month (pcm) in the first quarter of 2013 while for one bedroom properties it was £673pcm.
Despite larger properties achieving greater rents, it is the smaller properties that have seen rents rise the most, with one and two bedroom properties seeing a 3.3 per cent year-on year increase in rents, three bedroom properties a rise of 2.3 per cent and four plus bedroom homes a rise of just 0.3 per cent.
All sizes of properties have seen a fall in rental arrears in the first quarter of 2013, with three bedroom properties witnessing the greatest fall at 1.5 per cent and one-bedroom properties the smallest decrease at 0.4 per cent.
Movements in rents, yields and arrears data in England, Scotland and Wales
| Bedrooms | Q1 2013 average rent (£) | Q1 2012 average rent (£) | Rent year-on-year increase | Yield | Arrears 30 days ( per cent rent roll £) | Arrears improvement year-on-year ( per cent rent roll £) |
| 1 | £673 | £651 | 3.3 % | 6.8 % | 5.5 % | 0.4 % |
| 2 | £758 | £733 | 3.3 % | 6.4 % | 5.4 % | 1.2 % |
| 3 | £872 | £852 | 2.3 % | 6.2 % | 7.0 % | 1.5 % |
| 4+ | £1,398 | £1,394 | 0.3 % | 5.6 % | 6.7 % | 1.0 % |
| Total | £835 | £815 | 2.4 % | 6.2 % | 5.9 % | 1.1 % |
Commenting on the analysis 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 bedroom properties are providing greater yields than larger properties for landlords, 6.8 per cent average yields for one bedroom properties, means there are some really good opportunities for investors with relatively low budgets. For example, a one bedroom flat in Nottingham recently sold for £51,000 and is providing a rental yield of 6.9 per cent.
“ 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.”
