With property prices appreciating, many people are turning to studio apartments as an affordable way of investing in the UK buy-to-let marketplace. We ask, are they a good investment?
In recent years the UK rental market has gathered a lot of pace. Properties of all types are in high demand, especially in prime city centre locations, which are experiencing high population growth coupled with a limited supply of new homes.
Private space
Another emerging trend has seen a rising demand for studio type apartments from young professionals who prefer to have their personal space. This trend has accelerated since the Covid-19 pandemic, which showed many people the benefits of having their own private space compared to sharing.
In Manchester, for example, where the population is growing, many young professionals and students from around the world are migrating to the city. They are looking for a home which is comfortable, affordable and situated in a central location.
Living alone is not seen as a negative thing by young people and students compared to previous generations. Instead, they are embracing the personal space and sense of convenience that comes with a studio apartment.
Affordability
In addition to wanting cheaper rent, younger renters are also becoming increasingly aware of escalating bills. A studio apartment is generally cheaper to run due to lower energy bills. This is seen as a big positive. With inflation at 9% and not coming down any time soon, studio apartments are seen as an effective way of keeping bills in check.
Today young professionals are far more environmentally aware. They are more concerned abut the impact they leave on the environment. A studio apartment has a lower overall carbon footprint and this sits well with their values.
In Manchester, it is predicted that a further 70,000 will move to the city before the decade is over. The population inflow will be young professionals, due to the job opportunities and lower cost of living that Manchester can offer. The UK government is also planning to double the number of overseas students at UK universities by 2030. This segment of the population also prefers to live in their own space. This means that the demand for studio type apartments will increase further still.
All the latest market data shows that the Manchester property market will continue to outperform most other parts of the UK. City centre locations offer the highest yields with good prospects for capital growth. With this in mind, Manchester represents an astute choice for property investment.
Investment return
A recent report states that the average monthly rent for studio property in Manchester has risen to £845. This price increase has significantly outpaced inflation over the last year. This is great for investors who are involved in this type of investment.
A studio apartment is usually available at a significantly lower price compared to a regular one-bedroom apartment. Despite this, they still command a good rent. As a result, the yield tends to be slightly higher for studio apartments. When you factor in a lower stamp duty charge, then the investment looks better still.
At M1 Estates we specialise in property investments which command a good rental yield. This is why we are very keen on studio apartments from an investment perspective. Manchester, in particular, offers some very exciting options. Contact us today to see how we can assist you on your property journey.