BTL: 1 bed flat - advice needed

niceguyed

Just to add, I'd do what you are doing now and develop your S&S portfolio. Just don't go all in with equities. I've started taking that more seriously the last couple of years and like you achieved a reasonable return. With the usual caveats I'd do that over a mortgaged BTL any day. I think even if I had the cash to buy outright I wouldn't do it but if I had to, I certainly wouldn't buy a flat!

maxsteam

A few other factors to consider when budgeting are that your costs, plus council tax, will continue when the flat is empty. You have mentioned "council tenants" which could mean anything from working people to ex-offenders. Bad neighbours will make it difficult for you to do anything other than choose between leaving the property empty and a bad tenant. Is there an effective management company for the communal areas and how much does this cost? Are you a DIYer or will you call in the workmen when something goes wrong? How will you respond when a workman stares at a perfectly good ceiling, rubs his chin and declares "have you seen that?", "it could all come falling down at any time", "we can fix it but it's going to be a big job", etc.. What will you do if the rent isn't paid?
The type of area, quality of the building and whether you pay too much will have more relevance to whether you'll get your money back when you sell than the number of bedrooms.
There's nothing wrong with putting a small amount of your assets into a property to see how it works for you but don't expect £200 per month profit. You will know in time if it's the right decision or not.
As regards the value of the property, you should look up the "sold" prices for similar properties in the area. The asking price means nothing. The price you pay is relevant to you. The lender will decide the "value" that they will base their calculations on and you should not be surprised if it's a couple of thousand less that the price you pay.
The limited company idea may be a non-starter. You would need to have both the property and the (commercial) mortgage in the company. Commercial mortgages are a different market to BTL mortgages. The main personal risk that would be avoided with a limited company is bankruptcy and, if this was a possibility, you would not get the mortgage.
I know a few people who have preferred short-term lets to long-term tenancies. I'm not speculating as to whether this would be better or worse for you and this flat but it's another option to explore if your familiar with the likes of AirBnB.