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Turned on to semi-detached: why newer 2-bedroom properties could be the hot choice for landlords

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Fri 25 Feb 2022

Turned on to semi-detached: why newer 2-bedroom properties could be the hot choice for landlords

Landlord Today reported this month that 2-bedroom semi-detached houses have become prime property for both home owners and private landlords. But what makes this type of property more appealing than the Victorian terraces that have more traditionally been the first choice when building a lettings portfolio? And should landlords follow the trend when looking for a rental property?

Buying a rental property has a different set of criteria compared with buying a property to live in yourself. As well as choosing a property that would appeal to a preferred demographic of tenant, it is also important to consider rental yield – calculating the rent vs the purchase price – and the amount of work and expense that might be needed to maintain the property and meet legislative requirements.

Market Appeal Since the pandemic, the “race for space” has been a key feature for a lot of tenants as well as home owners. Having a private garden or being located in an area with green space has become an increased priority for many renters, alongside having a parking space and having the flexibility to work from home combined with an easy commute or school run. These benefits tend to be offered by semi-detached properties on residential developments. Having a property that appeals to the market increases a landlord’s selection of prospective tenants and allows the property to rent at the maximum market rate.

Meeting Property Standards As the government demands more in terms of the standard of rental properties, landlords are wise to be mindful to potential legislative requirements. The recent Levelling Up white paper proposed ‘Decent Homes Standards’ for rental properties and combines with the proposal for rental homes to have a minimum C-rated EPC by 2028. Although Victorian terrace property tends to be cheaper in terms of purchase price, the requirement to then spend to meet specific standards can see this saving depleted, accompanied with the hassle of hiring contractors and organising work around tenants. Avoiding these issues from the outset can make it easier to anticipate profit from the let and also has appeal to tenants who can be confident that they won’t have a catalogue of maintenance issues to report over the course of their tenancy.

Higher Yields Generally, 2-bedroom properties tend to achieve average rental yield above other property types, calculated at 4.8% compared with one-bedroom apartments averaging 4.1% and larger properties coming in between 3.6% and 4.5%.  Although semi-detached properties can be more expensive to purchase compared with more traditional terrace houses, features such as parking and garden space can add a premium to rents to maximise the market value.  Added to the reduced expense of maintenance and improvement ongoing profits are more favourable for newer builds.

Taking these points into consideration, there are sound reasons behind this trend towards investing in newer semi-detached properties as a rental investment. However, with a strong demand for rental property from a broad range of prospective tenants there is potential in many types of property depending on your priorities as a landlord. For advice on lettings in King’s Lynn and West Norfolk call us on 01553 692828 and let Brittons let for you.