This property type posts the strongest annual increase in average yield
Flats currently offer the best buy-to-let investment for landlords, according to the latest market analysis by property inventory specialist Inventory Base.
This is due to cooling property values and strong rental growth, with flats seeing the strongest annual increase in average yield compared to other property types.
Inventory Base analysed current market data on rental values and house prices across various property types to determine the average yield for each, then assessed how these returns have changed over the past year.
The research shows that flats currently provide the highest returns for buy-to-let investors, with an average yield of 6.4% across Britain. Terraced homes come in a close second at 6.3%, while semi-detached homes offer a yield of 5.3%. In contrast, the average yield for detached property investments stands at just 3.9%.
Flats not only lead in current yields but also show the strongest performance in other metrics. Over the last year, flats are the only property type to experience a decline in average property value, falling by 0.9%. Simultaneously, flats have seen the highest growth in average monthly rental value, up by 9.3% compared to last year.
As a result, the average yield for flat buy-to-let investments has increased by 0.6% in the past year, outpacing the growth seen in terraced homes (0.4%), semi-detached homes (0.2%), and detached homes (0.2%).
“Flats not only offer buy-to-let investors a generally more affordable entry point for their initial investment, but they also benefit from a rental market that sees higher tenant demand and, consequently, stronger rental price growth,” said Sián Hemming-Metcalfe, operations director at Inventory Base.
“While the capital appreciation may not match that of other property types, flats come with a host of advantages for investors, including lower running costs and a smoother process when it comes to renting and managing the property.
“Efficiency is crucial for managing the bottom line, and this is where detailed and accurate property reports become indispensable. These reports document and maintain all aspects of the property, significantly reducing the risk of disputes and costly repairs. In the end, it’s the combination of strong returns, convenience, and time saved — underpinned by the precision of thorough property reports — that makes flats such an appealing investment.”
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