With house prices falling and interest rates on new mortgage deals at their lowest level in 23 years, you may be tempted to jump on the property ladder. As the market continues to weaken and prices fall, studio flats become more a more viable option to a wider audience. But is purchasing a studio flat a wise investment?
Cheaper than One Beds
While cheaper than one-beds, compromising on space may not represent great value. Most estate agents now value properties on their price per square footage, which can make studios not so appealing. Location is vital when looking to invest in a studio flat, estate agents have reported some studio flats being on the market for years due to their postcode, while more desirable locations are snapped up straight away.
Limited Space and Limited Finance
As well as the lack of space there are some other drawbacks to consider. Properties with additional bedrooms provide you with the option to rent out rooms if you find yourself struggling to keep up with mortgage repayments. If you plan to let your studio then you should be aware that most tenants rarely stay for long periods and there may be times when it is left unoccupied. Remember that the property market will eventually pick up, meaning could become less desirable to future buyers.
Finance for a studio flat can also prove difficult. Lenders are not always keen to lend on studios. Getting finance often relies on the properties size, ideally your studio will need to be 380sqft before they will consider you for a mortgage. Part of this is the lenders concerns with your properties potential resale.
Location, Location, Location
Despite all of this, studios can still make a good buy-to-let investment if you have chosen the right location. Look for prime city sports with good access to transport links and restaurants. A recent survey showed that properties situated near Pizza Express and Star Bucks are worth more. There is as always still a strong demand for studio flats from tenants looking for easier commutes in to work or better locations to live.
Studios tend to perform best for short-term lets. Location is key, look for up and coming areas that are attracting professionals who have more disposable income. With all investments there is always risks, with the right research a studi flat could be the best buy for you.