One-bed properties are proving to be the best financial investment when it comes to buy-to-let (BTL) rental yields across the UK’s major cities, according to new research from Howsy.

Data from the lettings management platform had previously highlighted three-bed properties as the optimal number for rental yields – offering the highest return with a rental yield of 4.3%. Howsy said its latest research showed this has since increased to 5%, but revealed that three-beds are no longer the best investment option.

The research found that both two and one-bed properties have leapfrogged three-beds where rental yields are concerned, with the average two-bed providing a yield of 5.6%, while one-beds now average a return of 6.2%.

The data showed that Newcastle has the best rental yield for a one-bed BTL property across the UK’s major cities – with the average yield coming in at 7.9% – and this was followed by Glasgow (7.7%), Liverpool (7.1%) and Plymouth (7%), all home to yields of 7% or greater.

Howsy found that Newcastle and Glasgow also ranked along with Belfast (6.9%) as the best spots for a two-bed BTL investment, with Sheffield (6.7%) and Leeds (6.4%) also proving profitable.

Howsy founder and CEO, Calum Brannan, commented: “We’re seeing a lot of changes to traditional property trends across the sector and the latest seems to be the profitability of the three-bed BTL.

“While still a good investment, on the whole, tenants demand is growing for one and two-bed homes that provide them with a space of their own. This growing demand is leading to one and two-bed properties climbing the ranks of profitability due to their lower investment price point and higher demand pushing up rental prices.

“As the threat of coronavirus reduces, we will no doubt see this trend reverse as people begin to again feel comfortable about shared living and the better social lifestyle this brings.”

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