Residential Buy to Let
Residential buy to let is arguably the most common type of investment property. With many benefits behind it and a lot of opportunities to keep costs low, this type of rental property is a good option for a range of investors.
Residential buy to let is basically a property purchased by an investor and let out to tenants. It can come in the form of an apartment, house, or really any type of property that can be lived in long-term.
Pros of This Type of Investment Property
- There’s a lot of choice for investors, with many buy to let opportunities often available on the market.
- Tenant demand is high in the UK for residential rental homes, so investors can expect a steady stream of renters with few void periods.
- There are often low-priced opportunities for residential buy to let properties, depending on the area you buy in and the type/characteristics of the property itself.
- Residential properties are easy to sell, and capital growth returns are strong in the UK right now.
- Residential property investment offers one of the most low-risk strategies due to the strength and resilience of the residential market.
Cons of This Type of Investment Property
- If you invest in the wrong area, such as where rental demand is low and house prices are stagnant, returns could be limited.
- This is a long-term strategy, so investors who aren’t prepared to hold onto their property for a long time should avoid traditional buy to let options.
The returns offered by residential buy to let are:
- Rental income, which is paid by the tenant every month.
- Returns through capital appreciation. Only earned if the property has grown in value by the time it is sold.
The price of residential properties can vary depending on location and type (e.g. a studio flat is generally priced lower than a two-bedroom apartment).
As of November 2021, the average price of apartments in more affordable areas like Liverpool stands at £161,599, according to Zoopla.
According to the Land Registry House Price Index, the average property price in the UK in September stood at £269,945 (the latest data available).