Landlords Predict 1-bedroom Boom

Landlords Predict 1-bedroom Boom
25pc of landlords said one bedroom flats will offer the highest capital gains over the next year, according to a survey by Amicus Property Finance.

Another 25pc said student accommodation would provide the best rental yields.

22pc of landlords thought two-bed flats will give the best capital gains, and 28pc said they would offer the best rental yields.

John Jenkins, CEO of Amicus, said: "The findings show flats are the clear winners over houses and maisonettes for both capital growth and rental yields."

Just 3pc of landlords said maisonettes will offer the best capital gains.

The statistics, which do not include a sample size, throw up an interesting opinion - that the prospective first-time buyer demographic is having the biggest impact on landlord returns.

Firstly, prices are under significant upward pressure from those trying to buy. This prices more people out of the market, but favours those who already own desirable property in the sector.

Meanwhile, the higher demand pushes up rents, giving a two-fold returns to landlords who benefit from a supply shortage. The state of the property industry is driving more and more people towards renting, which could explain how some landlords are struggling to decide whether to stick or twist.

Many landlords have made a career from investing in smaller properties, and are counting on the first-time buyer market properties to increase in value as per the norm. At least, that's what these findings show. But it remains important to remember that the predictions made in the Amicus survey are only for the next year.

So, what will happen in 2018 and beyond?

Ian Wilson, CEO at Martin & Co, expects the buy-to-let market to mature, and the average rental property size to increase.

"We advise those people who are looking to invest in the next two to three years to start thinking in a more savvy way about the market. Until now, renting has been a mainstay for the younger generation, but the trend is quickly spreading toward mature professionals and even families.
"People are now getting married and raising children and live in private rented accommodation into their thirties and forties.
"This is where the sector is going to mature because people are going to put cash into essentially 'family housing' stock."

Martin & Co released a set of Market Intelligence reports to celebrate their 30 years in the private rented sector, including findings that 71pc of 16-24 year-olds now live in private rented accommodation, and there has been a 346pc increase in 35-44 year-olds living in private rented accommodation since 1986 - putting the predicted 'one-bedroom boom' into a more historical perspective.

Download a free copy of your market intelligence report by clicking here