What to buy for buy-to-let investors

What to buy for buy-to-let investors

There's a common misconception at the moment that the rental market is easy to make money in for investors. Of course, it is the booming asset class in the UK, and it is much more straightforward to make good, solid long-term returns from putting money into property than other investments, but there are many things that need to be considered when buying for this purpose. 

One of the most important considerations is around property type. Of course, location, amenities and other factors will come into the determination of whether or not an investment in the private rented sector will pay off, but without knowing that you are buying the right type of property that people are looking for, your success will be limited. 

In a world where property search engines are more specific and targeted than ever before, it is simple for people to pinpoint exactly what they want. If you have the wrong property type for what people are looking for in your area, it's quite possible that the majority won't ever even see, never mind consider, your property. 

So what is the right type of rental home to buy? It comes in fits and spurts, with different home types dominating the markets at different times. However, according to one report, the current climate is primed for investment in one-bedroom flats.

The Landbay Rental Index looks at rental price increases across the UK and takes into account the size and type of each asset that is taken on by a tenant. This helps to show how demand is swelling for specific property types.

In September, it said that one-bedroom flats were the stars of the property game. For this month, rental prices were up by 3.9 per cent when compared to the year before. The month before had seen a rise of just 2.9 per cent. 

Landbay said that this sharp rise in the rate of rental price increase for these flats shows that demand has spiked in the last month, with competitive prospective tenants going head to head with each other, and many offering more money to make sure their application is accepted. 

Such a quick rise in demand as the index suggest could indicate that one-bedroom properties are the most likely to bring landlords a good return in the short-term thanks to the many tenants looking to secure such a place to live. 

But what is the reason for this swell in demand? According to the report's authors, it's all about the jobs market at present, with many young graduates who left university in the summer now looking to secure their first job, and most hoping to live near to where they will work. 

"The upward trend in UK rents can simply be explained with one word, jobs. The UK’s job market is going from strength to strength and the rental market is staying hot on its heels," said John Goodall, chief executive officer of Landbay. 

"The sharp seasonal jump in rental growth for one beds reflects a buoyant graduate job market as people move to their first job. Flexibility and freedom is the order of the day for first jobbers, and one bedroom flats offer the perfect springboard to take the plunge into full-time working life. One bed flats are also popular for couples and young professionals who don’t want to flat share."