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The Rise of Micro-Apartments in the Luxury Buy-to-Let Property Sector

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    Does Good Design Come in Small Spaces?

    Chronic lack of supply in the UK buy-to-let property market has led to a rise in ‘micro-homes’.

    Demand from renters has hit new highs recently, with Rightmove reporting a staggering 25 enquiries per property in August 2023. This has led to massive rental inflation, and with space now coming at a premium, it’s no surprise that smaller homes are becoming the norm.

    So, how have property owners adapted to this new normal? As mentioned, micro-homes and micro-apartments are one result, and some smart design choices are being made to make smaller apartments as appealing and comfortable as possible.

    While upsizing has been the general aim for most people in the property industry, many renters now consider ‘micro-living’ a lifestyle choice with plenty of its own benefits.

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      Why is Micro-Living on the Rise?

      UK rental demand has sky-rocketed in recent years due to the growing population and changing lifestyles.

      As more rental properties are required to meet the ever-increasing demand, the average living space per person has also decreased in tandem. According to GLA Housing and Land data, the average floor space per person for tenants in the English private rental sector fell from 34.1 square metres in 1996 to 28.6 square metres in 2018. In London, renters have even less space, down from 30.6 spare metres in 1996 to 24.6 per square metres in 2018.

      With these conditions in mind, investment property in London is particularly well primed for the micro-living trend – the rise of micro-apartments was reported last year in the capital, where space comes at an exorbitant price.

      Further Reading: Discover the best areas in London to invest in property and learn more about long-term property investment.

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      Compact Single-Living Apartment Trend Hits Major Cities

      Unfortunately, London is home to expensive, cramped flats as demand and rental costs are so high. This has given micro-apartments somewhat of a bad reputation.

      However, unlike the stifling micro-flats of London, the pivot towards compact single living has also hit the luxury property sector, resulting in some innovative designs and storage solutions. When it comes to the micro-living movement, it’s all about making the most of the available room rather than sacrificing personal space to save money.

      This lifestyle choice is becoming increasingly popular in major UK cities. According to research from Which?, many micro-properties have been built in urban areas like Leicester, Liverpool, Cambridge and Bristol in recent years.

      Small flats in urban areas will likely experience high demand from young professionals and students, who find more affordable and smaller living spaces convenient for their lifestyles.

      For example, Manhattan apartments are a riff on the classic studio, but by making the bedroom feel separated from the rest of the flat, they give the impression of distinct areas and added privacy. Manhattan apartments in Heaps Mill and Rice Works, two new-build properties in Liverpool, are 10-20% smaller than the average one-bedroom apartment, but with efficient use of space, they boast a luxurious and comfortable interior.

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        More Affordable for Both Tenants and Investors

        While many tenants are content to live alongside their friends, family, or partner and split the costs, others are more comfortable residing independently. With persistently soaring rents, it is becoming increasingly expensive to live alone.

        However, the size of an apartment is typically reflected in the rent, meaning savings can be made by opting for a pint-sized home, making solo living more viable.

        Property investors can also benefit from the cheaper price of investing in a smaller property. The rental income is often higher as a proportion of the property value, potentially leading to a more lucrative rental yield. The lower purchase price means that smaller apartments can make for an affordable entry into the property market, and the lower maintenance costs required can make it even more profitable.

        Read More: What is a good rental yield in 2024? Our expansive guides cover everything you need to know before investing in UK real estate.

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          Are Micro-Apartments Greener Investments?

          Energy efficiency and reducing our carbon footprints are big priorities in the property industry currently, and these considerations are bound to get more important as time goes on.

          As evident as it is to point out, less energy is required in a smaller property. Smaller apartments can be heated much easier, meaning lower energy bills and reduced energy use.

          Developers are also Incorporating energy-efficient and eco-friendly features into micro-apartments, further compounding their sustainability.

          Smaller apartments have many benefits for both tenants and landlords and can offer an affordable start to a property investment journey or an attractive asset for diversifying a property portfolio.

          To learn more about the UK property market, check out some of our recent buy-to-let guides:

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          Jessica Ferris

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          Jessica Ferris is a property writer at RWinvest, helping our readers stay ahead of property market trends with the latest news and statistics.