With this in mind I was interested to see the news that the Royal Institute of Chartered Surveyors (RICS) has issued a report detailing a lack of rental properties on the market; the number of homes available is just not keeping up with demand. The RICS says that 1.8 million homes are needed by 2025.
This drop is partly down to the 3% hike in stamp duty, but it is also down to the decrease in supply of homes. Despite the tax hike, in my mind it clearly shows that there is a massive market to invest in by providing more properties to rent, whether HMOs or single lets.
This property investment could come in a number of ways. For example, why not build new properties for rent rather than sale? With the price of houses going up, renting is often the only option for many. Twenty thousand people are looking for a property in Medway; the waiting list is huge. It is therefore almost guaranteed that you will find someone to live in a property if you provide the right accommodation in a suitable location. Clearly this means you need to find the correct plot on which to develop, and the money to build.
As an alternative, though, you could consider buying one of the empty homes that can be found in Medway. According to the most recent stats, tax records show there are a total of 2,910 vacant dwellings in the Medway area, including 897 long-term vacant dwellings (that is to say, homes which have been unoccupied and substantially unfurnished for over six months).
If you find one, you can report it to the council and perform a Land Registry search to see who owns the property and subsequently offer to buy it from the owner. Quite often these homes are unsightly and the council like them to be brought back into use. While it will make a small impact on overall demand (unless turned into a quality HMO, therefore providing accommodation to more people) it will improve a local neighbourhood.
Otherwise, converting one of the many three-bedroom terraced homes in Medway into an HMO is a great place to start (see blog house vs flats http://www.medwaypropertynews.com/2016/09/hmos-vs-flats-which-gets-best-yield-in.html). They provide a home for a number of people without having the large amount of investment needed to start building from scratch. Of course, you still need to spend money on the tax, deposit, improvements, installing fire doors to meet legislation – and so on – but HMOs offer a good long-term yield on investment, even if you have the odd void period from a vacant room.
To add to the RICS news, the government announced plans at the Conservative Party Conference to use £5 billion of public funds to boost house building. Of that sum, £2 billion will be set aside to fund an Accelerated Construction Scheme, to make public land with planning permission available to builders. The remaining £3 billion will be used for a homebuilding fund to provide loans to stimulate new building projects where finances are tight.
A number of other policies were announced: looser restrictions around building on brownfield, a new scheme to convert unused offices into homes, and more power to councils to grant “permission in principle” on sites suitable for housing development. Let us see how quickly they can make this happen and if it makes an impact! Trends suggest demand will always outstrip supply, and private landlords have a massive part to play in helping with the housing crisis.
In the meantime, if you need help or advice on letting or sourcing an investment, I am happy to help. Please feel free to contact me via firstname.lastname@example.org, or give me a ring on 07944 726 676.
And don’t forget to book your place on the Property Vault Medway networking event, which is being held on October 25th. We have a great speaker, Martin Skinner, who has a wealth of experience in property and an incredibly inspiring story. All ticket sales go to support local charities or causes. Book HERE.