When investing in buy to lets, does choosing flats or houses impact your portfolio? Below, we look at the best investment type for you.
Flats vs. houses – does it make a difference for your portfolio?
Both offer their own benefits and potential drawbacks depending on your current portfolio and long-term property investment plans. But which is the right choice for you?
Why Some Landlords Prefer Houses
Investing in houses offers you more flexibility and fewer things to worry about, as they tend not to have additional complications such as ground rents, service charges, and lease extensions, which often come with investing in flats. As you hold the freehold, you are fully in control of the property and responsible for any necessary maintenance.
Consequently, if you plan to add value to the property with bridging finance to fund extensions, loft conversions, or even splitting the property into multiple units, you can expect a significant boost in your rental income and the property’s value.
Demand for houses is also higher amongst tenants, with families, professionals, and sharers prioritising these types of rentals. This makes it easier to attract long-term tenants in all different locations.
Why Flats Still Hold Strong Appeal
Despite the benefits of purchasing houses, many landlords prefer the more hands-off approach that comes with investing in flats. Flats have fewer structural elements to maintain, and management companies often handle communal areas, making these properties much easier to manage.
Flats tend to generate higher rental yields in city centres and commuter towns and appeal to a growing demographic of single renters and young professionals. This trend is only expected to grow, giving you long-term demand.
However, as mentioned above, there are a number of costs and considerations that come with flats. Service charges and ground rents in sought-after areas can be particularly expensive and eat into your profits. Moreover, if the lease is short, you could face a large bill to renew it.
So, Which Is Better?
Like most options in the property market, there’s no one-size-fits-all approach.
Houses can offer you long-term capital growth and the opportunity to develop and expand your property portfolio with more control. On the flip side, flats generate stronger yields with lower maintenance, so this could be a smarter move for you.
What’s more, when it comes to getting a mortgage, there’s no difference in price. Lenders view vanilla flats and houses as very-low risk, so either way, our expert team can help you access a competitive rate.
The best choice for you will depend on your property investment goals and plans. Working with an expert broker is the first step, as we can complete a property portfolio review and find ways to reduce your mortgage costs to ensure your properties are as efficient as possible. We can also advise you on the best next steps for your unique circumstances.
What next?
Request a portfolio review here.
Alternatively, if you’ve found your next property investment, let us find you the best finance option on the market. Call us on 0345 345 6788 or submit an enquiry here.
