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Buy to let - flats vs houses

Hi,


We're looking to buy a rental property and it seems like flats are much better value for money.


I know leasehold isn't ideal, and apparently it can potentially be very costly to renew the lease once it drops below 70 years, but even with that factored in an apartment/flat seems like it should give a better return.


It also seems like it could be lower maintenance - the person in charge of the lease should organise any external works (at a premium I realise) and for example the house we're looking at has a painted exterior and a lovely garden - right now it looks great, but who knows what it'll look like in a few years.


Any thoughts please? :)

Comments

  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    Which is there most demand for in the area, rental flats or rental houses? Who is your target tenant? Which will generate the best returns, the flat or the house?
  • justme111
    justme111 Posts: 3,531 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    What if management company does not decorate the building ? You may not be able to do anything about it. If you have a house it is you who says how much you will spend on it this year , if it is a flat then you have no control over it.
    Have you checked price changes for houses versus flats in your area over the years ? I bet flats are fairly static while houses are probably 20-25% up in the last 10 years. So you will not have benefit of value increase of your investment.
    Do you realise you likely will have very different tenants if you go fir a flat compared to the house ? Do you realise how much more headache and expense it may result in?
    If you want to sell it either because you had enough of BTL or need to relocate or divorcing or whatever other reason a flat may be more difficult to sell because there is more limited market for it.
    The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
    Often people seem to use this word mistakenly where "quandary" would fit better.
  • teddysmum
    teddysmum Posts: 9,512 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    edited 23 June 2017 at 11:24AM
    If a tenant turns out to be antisocial within the home (eg a noise nuisance) there is chance of more complaints from neighbours in a block of flats, probably because more households are affected and more easily affected (noise via ceiling not experienced in a house).
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    Just don`t rely on large deposits for cash flow anymore......


    https://thenegotiator.co.uk/letting-fees-ban-queens-speech/
  • Cakeguts
    Cakeguts Posts: 7,627 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    For good tenants in an area where there is a demand for rental houses rather than flats. You can check by looking at the houses available to let on Rightmove. Try 3 bed houses in a popular area and see what comes up. Then put in 2 bed flats.

    Rental houses need off street parking for 2 cars on a driveway. Concreted over front gardens don't improve kerb appeal ( yes you need if for rental as well) If people can choose they would rather park outsid the house than on the road.

    In some areas there is a shortage of 3 bed houses and an over supply of anything with 2 beds. You have to check for your area. If you add to the over supply you may have more problem with voids.

    For a garden a small square of grass at the back with enough room for people to sit out is enough. If you buy a house with a large fancy garden you will need to pay for a gardener to keep in nice. Don't expect the tenant to do it they may not be interested in or good at gardening.

    Before you consider what to buy you have got to do market research. Some people think that any house or flat will let easily to good tenants. This is not the case you have to choose carefully.
  • dimbo61
    dimbo61 Posts: 13,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Owning a house is for me always better than a flat.
    You can extend a house if you have room and add value.
    Leasehold and management charges eat into any profit from renting.
    You need to find out what offers the best return
  • blizeH
    blizeH Posts: 1,398 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Thank you all so much for the responses! You raise a lot of good points which I didn't consider, and we've decided to go with a house/freehold rather than a flat :)
  • buglawton
    buglawton Posts: 9,242 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    All flats have leases with the land freeholder. The new trend is for the freehold to be sold to a specialist who extracts high fees for underletting (for every new tenant), sale or alterations. You'll have to scrutinise the lease with the help of a microscope and a solicitor to check this before purchase.
  • buglawton
    buglawton Posts: 9,242 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Just beware of another new trend - a large percentage of housebuilders are now selling under a lease and not freehold. And of course there have been cases of the lease being sold off to avaricious specialists - see my prev post.

    Overall, a second hand freehold house might be best.

    However, in order to get a BTL near Crossrail/near a university I've gone for a flat anyway as yield is still better than a house even after all costs.
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