Date Published 29 February 2016
One of the key questions any investor will ask is: what type of property is the most investable? - Whether it is a Terraced House, a Mews House, a Penthouse, an apartment or 1, 2 and 3 bedroom flats. Yesterday this question was no different, when a potential investor rung up the office and enquired whether it was more profitable and worth his time to invest for Buy-to-Let in a Marylebone flat, rather than a house at this present moment in time. I explained to him that in Marylebone every street is very different in regards to its rental potential, profitability and the market values of its properties. He understood this and proceeded to request if I could put together some specific financial analysis in order to aid him in his investment endeavours. Thus in order to support my client in answering this overriding and forever-asked question, I decided to zoom into a range of different areas within Marylebone, research the market values of these properties and compare this against the potential yields that can be generated as a consequence of investment. In this article I will reveal to you the findings I delivered, when I compared 2 and 3 bedroom flats with houses of the same number of bedrooms (2 and 3), along 6 different streets:
Financial analysis of Flats in:
Enford Street (W1H):
2 Bedroom Flats: Average Property Value: £1,175,571 – Average Rental Value: £3,758 (pcm) - Predicted Rental Yield: 3.83%
3 Bedroom Flats: Average Property Value: £2,259,000 – Average Rental Value: £7,250 (pcm) - Predicted Rental Yield: 3.85%
Dorset Street (W1U):
2 Bedroom Flats: Average Property Value: £1,646,888 - Average Rental Value: £4,850 (pcm) - Predicted Rental Yield: 3.53%
3 Bedroom Flats: Average Property Value: £2,145,875 - Average Rental Value: £6,142 (pcm) - Predicted Rental Yield: 3.43%
Great Cumberland Place (W1H):
2 Bedroom Flats: Average Property Value: £1,146,538 - Average Rental Value: 3,863 (pcm) - Predicted Rental Yield: 4.04%
3 Bedroom Flats: Average Property Value: £1,643,428 - Average Rental Value: 5,650 (pcm) - Predicted Rental Yield: 4.12%
Financial Analysis of Houses in:
Oldbury Place (W1U):
2 Bedroom Houses: Average Property Value: £2,912,000 - Average Rental Value: £11,400 (pcm) - Predicted Rental Yield: 4.69%
3 Bedroom Houses: Average Property Value: £3,374,333 - Average Rental Value: £13,183 (pcm) - Predicted Rental Yield: 4.68%
Sherlock Mews (W1U):
2 Bedroom Houses: Average Property Value: £1,981,000 - Average Rental Value: £7,750 (pcm) - Predicted Rental Yield: 4.69%
3 Bedroom Houses: Average Property Value: £2,208,000 - Average Rental Value: £8,650 (pcm) - Predicted Rental Yield: 4.70%
Brendon Street (W1H):
3 Bedroom Houses: Average Property Value: £2,055,142 – Average Rental Value: £5,791 (pcm) - Predicted Rental Yield: 3.38%
From our results we can see that the highest rental yields can be found with 2 as well as 3 bedroom houses on Oldbury Place (W1U) and Sherlock Mews (W1U) with yields circling between 4.68 - 4.70%. The current highest rental yields in regards to 2 and 3 bedroom flats (out of our 3 streets) can be found on Great Cumberland Place (W1H) with returns ranging between 4.04 - 4.12%. In overall, using our chosen streets, 2 and 3 bedroom houses on average generate a yield of 4.42%. As for 2 and 3 bedroom flats, using our 3 representative streets, we can expect an average rental yield of around 3.80%. Although both flats and houses perform very well and portray great investment potential, we see that houses edge flats in terms of their rental potential – with regards to the streets that we have evaluated. However, we can also see that houses are much more expensive than flats, with 2 and 3 bedroom houses on average commanding £2,506,095 per property. In contrast, we are shown that in these streets flats offer a much more inexpensive solution, with 2 and 3 bedroom flats worth an average £1,669,550. It is also important to understand that in Marylebone, the majority of properties are flats, whether they consist of 1, 2, 3 or even 4 bedrooms, flats are the most available properties and usually the most financially affordable, changing hands most commonly. As for houses, there is also a much higher availability of 3 bedroom houses opposed to 2 bedroom houses, which can be seen by our findings with Brendon Street with most of the houses here being 3 bedrooms, making a fair calculation not worthwhile for the low supply of 2 bedroom houses on this street; a greater concentration towards the predominant 3 bedroom houses is much more valuable. In overall, whether you decide to invest in a house or flat in Marylebone you can rest assured that either type of property will certainly reap you great financial rewards. Whether you are looking to buy a cheaper property which will produce high rental yields or a more expensive property, which could potentially generate even more added income; it is entirely down to the individual investor's circumstances.
Should you need any more information regarding flats or houses in the Marylebone area, please don't hesitate to contact me at your own convenience. I will gladly assist you and give my opinion towards the best investment areas for whatever type of property you wish to invest in.
