BUY-TO-LET landlords looking to buy a property will see a return on their investment within three years according to a new study.
Bonusetu.com analysed current market data from Zoopla, Rightmove, and Propertypal to reveal the best place to buy a one-bedroom property.
This was done by comparing the average price of a one-bedroom property in all 76 UK cities (as listed on the gov.uk website) and the Isle of Man to the average monthly rental income.
If you bought a property in Reading, the average return on investment (ROI) period is 1.43 years – the fourth best in the country, while in Wokingham, it would be closer to 2.65 years.
And bought places would see a rental yield higher than the Bank of England’s interest rate of 4%.
In Reading, the average rental for a one-bed flat is £1,845, and average property price is £211,875. A 15% deposit would be £31,781.25. The rental yield is 10.45%, and it would take just over 17 months to earn back the deposit.
Wokingham’s average one-bed rental is £1,300, and the average price is higher at £275,000. A 15% deposit is £41,325, and the rental yield is 5.66%, so it would take nearly 32 months to earn the deposit back.
The study showed that Coventry is the best city to invest in property because it will return your deposit faster than any other UK city. It would take you as little as 14.8 months to earn back the average deposit of £19.875 with its rental yield of 12.2%.
The second-best place is Birmingham. It takes approximately 15.6 months for the 12.5% rent yield to return your initial deposit.
Reading came in fourth.
The study also found that London and Chester took the longest to see a 15% return, with London having a return period of 201.2 months and Chester having a return period of 88.6 months.
Bonusetu.com also compared these figures to those of a three-bedroom property and discovered that a one-bed property will return a deposit 32.7% faster than a three-bedroom property.
The average three-bedroom property in the UK has a rent of £1,648, takes 55 months to earn back a 15% deposit, and a rent yield of 3.86%.
The average one-bedroom property has a rent of £957.13, takes 37.6 months to earn back a 15% deposit, and a rent yield of 5.75%.
Speaking on the findings, a spokesperson from Bonusetu.com said: “This research highlights the importance of evaluating current market conditions when considering investing in the housing market. By analysing the live market data, we can provide valuable insights for motivated property investors who are looking to maximize their return on investment in 2023.”
