Houses vs Flats for Buy-to-Let: Why I Bought the £150,000 Flat
September 11, 2026
If somebody asks me whether I prefer houses or flats for buy-to-let, my portfolio gives a fairly clear answer. I own fourteen houses and one flat. Everything else being roughly equal, I would normally choose the house.
But everything else is rarely equal in property investing. The one flat I own has been among the better investments I’ve made. In my video of 11 September 2026, I put it in the top third of my property purchases, against some fairly stiff competition.
The lesson is to have a preference without letting it blind you to a good deal. I want to know what I’m getting for my money, what a tenant will pay to live there and what I’ll keep after the costs. A label on the property brochure cannot answer those questions for me.
The £150,000 flat that changed the comparison
From memory, I bought the two-bedroom flat around 2021 for approximately £150,000. At the time, the cheapest comparable two-bedroom house I was looking at in the same town cost more than £220,000.
That meant a gap of over £70,000. The difference in rent was much smaller. I remember looking at roughly £1,000 a month for the flat and perhaps £1,100 for the house. These are the approximate figures I recalled in the video, rather than a claim about current rents across the country.
Put another way, the flat offered around 91% of the house’s rent for about 68% of its purchase price. That immediately made me interested. I naturally preferred houses, but I couldn’t ignore the amount of extra capital the house required for another £100 a month of rent.
I started thinking about what the tenant was actually getting. Both options provided two bedrooms, a living room, a kitchen, a bathroom and somewhere to park. A house might offer a garden or more space, which clearly has value. But in this particular comparison, the rental difference did not seem to justify the much larger purchase-price difference.
Compare the return before choosing the property type
Using those remembered figures, the flat’s £1,000 monthly rent gives £12,000 a year. Dividing that by £150,000 produces an 8% gross yield. The house’s £1,100 monthly rent gives £13,200 a year; using £220,000 as the comparison price produces a 6% gross yield.
That calculation is useful because it puts two differently priced properties on the same basis. It also shows why simply choosing the property with the highest monthly rent can lead you in the wrong direction. An extra £100 sounds attractive until you compare it with the additional purchase price.
However, gross yield is only a starting point. Those percentages exclude borrowing, service charges, maintenance, insurance, management, empty periods and tax. The more useful figure is the return after the actual expenses attached to each property.
I would also compare the quality of the rental evidence. An agent’s optimistic estimate is different from evidence of similar homes actually letting. The question is what this property is likely to achieve, in its condition and location, for the tenants who are looking there.
The deposit difference matters when building a portfolio
At an illustrative 75% loan-to-value, a £150,000 property needs a 25% deposit of £37,500. A £220,000 property needs £55,000. That leaves a £17,500 difference in the deposit alone.
For somebody building a portfolio, £17,500 is a meaningful amount of money. It could contribute towards another purchase or remain available as a reserve. Tying up less cash in one property can make a substantial difference to the pace and resilience of the wider plan.
Those deposit figures are not the total money required to buy. There will also be the applicable purchase tax, legal fees, mortgage costs and any initial work. I would keep a separate reserve rather than assume every available pound can go into completing the purchase.
The loan size also differs. At the same loan-to-value and interest rate, the more expensive property carries more borrowing and therefore more interest. That can make the gap in net cash flow quite different from the gap in headline rent. Work through both loans using real mortgage terms before deciding which deal is stronger.
A cheap flat can become expensive after service charges
The obvious extra cost to investigate with a flat is the service charge. I want to know the current amount, what it pays for, how it has changed and whether major works are expected. A low asking price does not compensate for costs you haven’t understood.
In the video, I use a £3,000 annual service charge as an example of something that could materially alter a deal. That was not a statement that my own flat has a £3,000 service charge. It is an illustration of why checking the ongoing expenses matters.
Against £12,000 annual rent, an illustrative £3,000 charge absorbs a quarter of the gross rental income before the mortgage and other expenses. A large works bill could add another demand on your cash. The property can look very different once those numbers are visible.
The government’s guidance on leasehold service charges explains that the lease sets out how charges are organised and what can be charged. It also covers reserve funds and rights to information and challenge. You should understand the actual lease and building documents, rather than assume every flat has the same arrangements.
Freehold houses need maintenance too. Choosing a house does not make the roof, windows or heating system somebody else’s problem. The comparison should include realistic costs on both sides, while recognising that a flat can leave you sharing decisions and bills with other parties.
Why control usually makes me favour houses
With a freehold house, I generally have more direct control over the building. If the roof needs attention, windows need replacing or I want to refurbish, I can decide how to approach that work, within the rules that apply.
With a flat, I have the lease, the freeholder and usually a managing agent to consider. Decisions about the wider building may be made collectively or by somebody else. A substantial bill can arrive at a time that doesn’t suit my own plans.
My managing arrangements have been perfectly fine. I don’t have a story about a managing agent ruining my investment, and I wouldn’t invent one just to make houses sound better. I simply recognise that I have given up some control over how the building is run.
That does not mean leaseholders have no rights. Charges can be subject to legal requirements and challenge, as the official guidance explains. But having rights and being able to choose the timing, scope and contractor yourself are different things. The level of control is part of what I’m buying.
Before buying a leasehold property, I’d have the solicitor check the remaining term, restrictions on letting or alterations, ground rent, service-charge arrangements and any known works. The government’s guide to buying or owning a leasehold home is a useful starting point alongside advice on the specific lease.
Houses can give me more ways to add value
Much of the way I’ve built my portfolio has involved buying well and then looking at what else I can do with the property. With houses, I often see more scope to improve a layout, move internal space around or create additional bedrooms where suitable.
I have five HMOs, and adapting the available space has helped me generate more rent from those properties. That is part of why houses fit my own approach. It is not a suggestion that every house can legally or practically become an HMO, or that adding rooms automatically adds profit.
Planning permission, building regulations, licensing, layout and tenant demand all need checking. The government’s HMO licence guidance explains the national licensing framework and the need to check with the relevant council about local requirements.
A flat may offer much less freedom to carry out the changes I have made in my houses. There may be opportunities to refurbish or improve it, but I need to understand the lease and the building before assuming I can alter anything. The potential to add value only counts if I can actually deliver it at a sensible cost.
Tenant demand and long stays belong in the numbers
A good two- or three-bedroom house can suit people through several stages of life. A couple may move in, have children or need room to work from home and still find that the property suits them years later.
Some tenants in my single lets have stayed for close to a decade, particularly at one of my London properties. I value that. Changing tenants creates work and can bring costs, while a good tenant who likes the property and wants to stay is a valuable part of the investment.
That does not mean flats only attract short stays or houses always attract long ones. The local market, the home itself and the people living there matter. I’m explaining one reason houses often appeal to me, rather than applying a fixed rule to every tenancy.
For either property type, I want a clear idea of who will rent it and why. A property that fits a real local need is a better starting point than one selected solely because it produces an attractive percentage in a spreadsheet.
Look for mispricing, but be honest about the result
Another example from my experience was buying two four-bedroom houses off plan in Didcot in 2016. They cost £775,000 combined: one at £400,000 and one at £375,000. I bought them over about nine months, and the developer was paying the stamp duty as part of the offer.
I thought the pricing looked wrong because those new homes were around 10% cheaper than comparable completed properties. By completion roughly two years later, I put their combined value at around £900,000. In the video, I estimate them at well over £1 million now.
That implies more than £225,000 of growth against the combined purchase prices. It is an estimated increase in asset value, not £225,000 of realised cash profit after every cost and tax. I haven’t seen that exact opportunity again, which is why I would not assume it can simply be repeated on demand.
With my flat, I also felt I had spotted a pricing disparity. Over the following years, rents increased and the gap in values between flats and houses in that town narrowed substantially in my observation. That outcome helped make the purchase a good one for me. It remains one personal example, rather than a forecast for every flat.
My answer: prefer houses, buy the deal
If the choices are genuinely similar, I usually favour the house for control, flexibility and the opportunities that fit my strategy. But when a flat offers almost the same rent for substantially less money, I’m happy to investigate it seriously. That is exactly what I did.
Look at the purchase price, realistic rent, financing, service charge, lease, maintenance and tenant demand together. Then decide whether the expected return justifies the cash, effort and risk. If you want to connect that decision with your longer-term goals, read my property retirement plan.
For help thinking through your next step, book a free strategy call, explore Starter Club, or look at Done For You and book a 20-minute suitability call.
Watch the original video
Watch Houses vs Flats: Which Makes MORE MONEY?, published on 11 September 2026, for the full comparison and my own examples.
This article shares my experience and general property education. Past results do not guarantee future returns; property values and income can fall.