One Bedroomed Flat or Studio Flat?

Hi David

What are the numbers?

I suggest you have a play with our Landlords Calculator, that should help you to decide – see >>> https://www.property118.com/calculating-rental-yields-and-returns/

Another deciding factor could be the ability to finance the property as lenders often don’t lend on smaller properties. Even if you don’t need a mortgage you should bear this factor in mind because mortgage availability will affect your resale market when the time comes for you to sell.
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Mark is quite correct.

Lenders criteria will state whether they lend on studio flats or not and then the minimum floor area they will accept. This is typically a minimum of 25 or 30 square metres, but it can be a different figure.

Thank you for letting me know your thoughts on this, i think by the sound of it I should walk away from the studio flat and look for a one bedroomed flat.

Reply to the comment left by “David ” at “27/08/2014 – 08:15“:

Not necessarily, how did you arrive at that decision?
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Reply to the comment left by “Mark Alexander” at “27/08/2014 – 09:44“:

I think I should be able to get a mortgage on the property as I was looking at a studio flat before purchasing the one bedroomed flat and was told by my broker I should not have a problem with obtaining a mortgage but I would not want to purchase a property that may be difficult to sell on due to the fact that potential purchasers cannot get funding.

Reply to the comment left by “David ” at “27/08/2014 – 19:24“:

Size of studio flat is a major factor for mortgage lenders so if its big enough there shouldn’t be too much of a problem in that regard.

The important figure to consider is your return on cash invested and break even interest rate. Why not run a few different scenarios with the Landlords Calculator to see what works best for you?
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In my opinion, a studio flat is less likely to have a long term tenant than a one or two bedroom property. This is perhaps based on warped logic but I imagine studios have a high tenancy turnover. Therefore this may be a key consideration to think about especially if you are self-managing the property.

That being said, in my only studio flat, the tenant has been in the property for 18 months now and long may it continue!

I would also say the annual costs (service charge & ground rent) can be proportionally higher for small flats than larger flats in the same block of flats. Net yield is however usually higher for a studio flat compared to a one bed. Both of these judgements are based on my limited experience and I’m sure could be counter-argued.

We also have a studio flat in our small portfolio and had similar reservations as to the attractiveness for rental. The key is to ensure a decent size > 30 m2 (typical minimum for many mortgage loans), a good size lounge / bedroom and well fitted out. You can also fit out with some very attractive fold-up beds which is great for showing off the space on viewings. Rental income and yield not significanly different to one-bed flats and we had multiple offers within a few days of advertising.

Thanks Jireh, that’s just along the lines that I was thinking, the studio flat I’m looking at on Sunday is within a very nice block, roughly 30 square metres and in a reasonable part of town. we were thinking of fitting it out with top of the range furniture and asking around the same price as a one bed flat. You’ve put my mind at ease knowing that the plan at least has a reasonable chance of working.

Hi Jireh. Could you let me know where you purchased the drop down bed for your Studio flat as I will be needing to purchase one soon and can’t find what I’m looking for at the moment.

Look forward to hearing from you.
Thanks