So, last week I went to meet a landlord who had been reading my blog and newsletters and was interested in pin-pointing his next buy to let investment. He lives in Twickenham and has a budget of £400k to spend and was asking me whether it was better to buy a house or a flat. So, that led me to take a look at what's out there and how the figures stack up.
There's a development about half a mile away from the train station which is extremely popular with renters with one road in particular, Varsity Drive, that has both two bed flats and houses therefore making a comparison simple.
I picked out these two as examples to show my landlord...
Two bed house
This is a modern house with private south facing garden and off-street parking. All good so far. On at £399,950 and will rent every day of the week at £1,350pcm making a yield of 4.1%
http://www.rightmove.co.uk/property-for-sale/property-47115530.html
Two bed Flat
So, this is the two bed flat. Great size, nice looking development with parking. Also has a long lease so no issues there. Always do check that as if a flat is cheaper than it should be then that's usually why.
So this one is on at considerably less that the house as £285k. With a rental figure of £1,150 that gives you a yield of 4.8%.
http://www.rightmove.co.uk/property-for-sale/property-46827272.html
So you'd think from that that you would automatically go for the flat yes? Well, there's a couple of other things to take into account first which may change your mind. The flat will have a ground rent to pay which immediately eats into your profits and the house is more desirable than the flat and so will rent quicker. The flat could therefore have longer void periods which, again, eats into your profits.
The choice, as they say, is yours!
Rebecca Smith.
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