I was chatting with a first-time landlord recently who was keen to buy a flat in Chichester to rent out. He asked me whether a one or two bedroom flat would be a better investment.
Whilst the answer would partly depend on his budget and what he primarily wanted to achieve from his investment, I took a look at some statistics that I thought I’d share with you.
One-bedroom flats currently on the market in Chichester range in price from £125,000 – £275,000. Meanwhile, the cheapest two-bedroom flat in Chichester is £165,000, with the most expensive having an asking price of £595,000.
The average asking price for a one-bedroom flat in Chichester at the moment is £210,000, compared to £279,950 for a two-bedroom flat. One-bedroom flats are currently achieving an average rent of £750 per month compared to £925 per month for the two-bedroom apartments.
That gives an average yield of 4.3 per cent for a one-bedroom flat, compared to a 4.0 per cent yield for a flat with two bedrooms. Surely a one-bedroom flat is therefore the better purchase?
Whilst one-bedroom flats appear to offer a better rate of return, a two-bedroom flat should be slightly easier to manage, with fewer void periods and longer-term tenants. One-bedroom flats tend to be the first step on the ladder and one that often doesn’t last long for most tenants.
On the other hand, offering two bedrooms opens yourself up to more tenant types; giving space for sharers, children or a spare room/office. Two-bedroom properties can often suit tenants for many years, giving them some space to grow into.
A two-bedroom flat should also be easier to sell in the future as it appeals to a wider variety of buyers. This train of thought is backed up by the statistics, as the average time to sell a one-bedroom property in Chichester is currently 80 days, compared to just 50 days for two-bedroom homes.
One important aspect to consider, regardless of whether the flat has one or two bedrooms, is location. The two best areas I’ve found for flats in Chichester are those close to the city centre or near to St Richards Hospital.
Flats are less frequently requested in the more family-orientated areas of Chichester, such as Parklands, where larger family houses tend to be preferred.
As you can see, there are many different considerations to bear in mind when thinking of investing in buy-to-let. If you’d like to discuss the options available to you, or you’re looking for someone to help let and manage your rental property, please get in touch.