Should my Southampton Buy 2 Let be a one or two bed unit?

I often get asked if the number of bedrooms in a property has any relationship to the return that can be earned from the flat. I did some research and here are the results...

Currently in Southampton, the average rent for a one bedroom apartment is around £563 per month with an average property value of £109,700. This means an approximate average return/yield of 6.15% per year. There are one bed apartments on the market for rent at a higher price than some two bed apartments. In fact, some one bed apartments in Southampton can attract rents in the mid- late £800's whilst some converted terraced houses with flats in them can be rented for as little as £395 per month. This means yields on one beds can range between 3% and 8%.

Two bed apartments in Southampton can be priced at £300,000+ in one of the modern upmarket developments around Ocean Village and as low as £60,000 in other areas. Again, rents vary greatly, ranging from over £2,000 per month for some bespoke unique penthouse apartments overlooking the Marina in Southampton to £575 per month in the older parts of Southampton. However, looking at the average rent for a two bed apartment in Southampton, I calculate it to be £748 per month with the average value being £159,600 which gives an average return/yield of 5.62% per year. 

Whilst there is a little difference in the yields between 1 and 2 bedroomed units, it is only one of many factors you should consider before buying a property. Whilst two bedrooms are more expensive to buy, they appeal to a larger tenant pool. Do they sell better? Well, 45.3% of the two bed apartments on the market in Southampton at this moment in time are sold stc compared to 37.7% of 1 bed apartments – so quite a bit of difference there. Obviously this does not take account of the split between owner/occupied and rental stock.

It really comes down to the property and type of tenant. Two-beds attract sharers, which brings both advantages and disadvantages to the landlord but one beds have better yields. It depends what you want from your investment. I know the lettings market in Southampton so I can advise you what you can expect to achieve in rent, the size of your tenant pool and how to minimise your voids.