London Studio Flat - BTL Advice

balsingh

I am looking to get a place in London (Tube Zone 1/2) as a potential BTL. My price range only allows me to get a studio flat or at a major push, a small 1 bed flat.

My first query regards the rent ... is there much difference in the rent that can be acheived between a studio and a 1-bed?

The 2nd question is even more important? Do studio flats make popular rentals based on location? Is the avergae single professional happy having a bed in the lounge (provided they are close to a staion or work) or do people prefer a proper bedroom (even if it means being further away form a station or work)?

I know the market factor affect everything, but right now, all I want is personal opionions ... ideally from people who have rented in London zones 1/2.

I have another scenario which I will make in another fresh post.

Tommy_C_2

I think a 1 bed is more likely to be rented by a couple, and a studio flat to a single person.

My brother and his Mrs have a 1 bed ground floor flat in Greenwich next to Maize Hill station that they will put up for sale soon.

Doozergirl

The competition amongst people wanting to rent is most fierce near to train stations. These are the properties that go first.

With regards to price, have you tried looking at the property websites for rental flats and prices? The number one rule of BTL is to check rent against house price

xycom1

I live in a one bedroom flat - I wouldn't even consider a studio. Nor would I consider any of these horrible modern apartments with the kitchen in the lounge - but then I'm a snob.

I'd definitely agree with Doozergirl that the properties close to train/tube stations are most popular and there is a clear price premium on them!

Paul_the_Painter

Take xycoms advice seriously, and do your maths carefully.

For example if the property is £300,000 and you have a £100,000 deposit, you need to finance £200,000, so monthly interest only mortgage (at 5%) is £833. but to that you have to add what your £100,000 would be earning in a bank i.e. £417, add the two together to get the rent you have to charge - £1250.00. Then bank on 1 Month Void per year, so £1363 per month, if you are going to have the property managed another 10% goes on top so £1500 per month.

The trap a lot of people fall into is thinking Mortgage payment £833 therefore charge £1000 per month and I make a profit.

There are associted tax issues that may mean that the rent figure needed to make a profit will go down - deductions for wear and tear, interest costs etc.

You are doing well in the BTL market if you get 6-7% return on invested capital, you can get 5% in a bank (- tax) or you can effectively get 7% by paying down your mortgage.

Think Hard, do the maths.

Doozergirl

I'd go for a one bed over a studio too. If I had to compromise on zone, size of property or proximity to train/tube then I'd compromise with a one bed, near a train station in Zone 3. Nothing's that far in london - you're talking a matter of 5 minutes on the tube...

lynzpower

Hello again! So you decided to go for it then did you?

balsingh, check the loot/ letting boards etc before you do anything. I suspect that the mortgage these days on a studio in most parts of london is more than you will achieve in rental income.

I agree with Doozer, better to be near a station than bother with the zones, but thats jkust me, I know a lot of people wont consider living outside of zone 2, i personally think they are mad but there you are..!!

I would never buy a studio to live in or let out as they are quite frankly bloody tiny (talking from the majority ive been in) . And not enough to swing a cat in. I wouldnt dream of being all in one room, for a start Ive got way too much stuff. You cant have guests over to stay, if you are already kipping on the sofa.

Personally speaking I would NEVER spend more than 600 a month on a studio flat, as you can get better sized rooms, bathrooms facilities in house sharing. Id have to be desperate before Id consider one.

I think you need to be clear about what sort of income you need to cover what on a morgage and think, will there be someone who is willing to pay it. Ive seen studio flats sitting in our local estate agents for 1k a month, and I think, someones taking the pi55, poor value for money

balsingh

I have decided that its defintly gonna have to be a 1-bed place. I would never consider a studio to live in, so why buy one as a BTL? I woudl rather have a 1-bed place further out a bit (zone 2) than have a studio in Zone 1.

One concern I do have is the amount of unrented flats in London (zone 1/2 areas). Looks like I will have to pay the premium and get something near a station.

lynzpower

Balsign. Im sure someone will be along to contradict me, but personally, I wouldnt even dream of buying a flat to let out in london at the moment. The voids are tremendous. Im hearing of people all over the place negiotiating thier rents down and a mate of mine who lets 2 flats in london is making a loss on both of them month in month out in the hope that there will be capital gains.

I dont want to sound patronising or treat you like a muppet, but do be very careful, you sound like this is going to financially stretch you? HAve you factored voids into your projections?

Tommy_C_2

balsingh wrote:

I have decided that its defintly gonna have to be a 1-bed place. I would never consider a studio to live in, so why buy one as a BTL? I woudl rather have a 1-bed place further out a bit (zone 2) than have a studio in Zone 1.

One concern I do have is the amount of unrented flats in London (zone 1/2 areas). Looks like I will have to pay the premium and get something near a station.

My brother will be looking to get about 180K for his 1 bed ground floor flat with private parking (and right next door to Maize Hill station) in Greenwich. I would buy it myself to rent out if I had the money.

It is also a good location to rent to tourists on a weeky basis. You can get as much in a week from a tourist as you can in a month from a longer contract. It could also earn a lot from when the olympics are on.

lynzpower

Sorry TommyC but I always have to smile when people talk about what money will be made when the olympics are on- thats Over 6 years away!!!!