Why it’s a great time to invest in a Medway HMO

Hello everybody. You may have seen my recent blog post where I mentioned an RICS report detailing a nationwide lack of rental properties, which is causing demand to outstrip supply.

Well, a new week brings a new report about our country’s property market. This time national estate agents Countrywide has said that rising prices are resulting in more lets than sales on the market, for the first time since the 1930s. Countrywide suggests that uncertainty surrounding Brexit is a contributing factor in the matter.

On top of that, with house prices in Kent now 13 times higher than the average wage, borrowers have to find bigger deposits than ever before; this has led to home ownership levels falling to a 30-year low. Putting all of that into consideration, it is pretty clear that now is a great time to be a property investor in the Medway HMO market. Houses in the area are still relatively affordable, and they can give you great returns.

Using some handy data from home.co.uk, you can see that in Chatham in the last 14 days, 83 properties were advertised for rent, with the average time on the market coming in at 88 days.

Chatham Market Rent Summary

Total properties for rent in Chatham: 325
Properties for rent in Chatham listed in the last
14 days:
83
Average property rents in Chatham: £883 pcm
Median rent: £823 pcm
Average time on market (ToM) in Chatham: 88 days

It also shows that the most popular rentals are ones in the £500 to £1,000 bracket, which come off the market quite quickly. Rentals in the £250 to £500 price bracket are the third quickest to be snapped up. This is good news for the HMO market, as it demonstrates a demand for HMO-priced rooms that average around the middle of both price brackets.

Properties for Rent in Chatham by Price

No. of properties Average ToM
Rent under £250 pcm 0 n/a
£250 to £500 pcm rent 63 115 days
£500 to £1,000 pcm rent 179 64 days
£1,000 to £2,000 pcm rent 76 113 days
£2,000 to £5,000 pcm rent 6 155 days
Rent over £5,000 pcm 1 322 days

In the next chart you can see that three-beds are the most popular followed by two- and one-bedroom lets.

Property Rents in Chatham by Number of Bedrooms

No. of properties Average rent Median rent Average ToM
One bedroom 92 £591 pcm £624 pcm 75 days
Two bedrooms 66 £928 pcm £875 pcm 70 days
Three bedrooms 86 £1,008 pcm £900 pcm 68 days
Four bedrooms 35 £1,592 pcm £1,500 pcm 196 days
Five bedrooms 2 £1,829 pcm £1,829 pcm 224 days

In the same timescale there are a total of 499 properties for sale in Chatham, and they are taking 84 days on average to sell.

No. of properties Average price Median price Average ToM
One bedroom 52 £151,571 £152,500 132 days
Two bedrooms 124 £187,451 £180,000 85 days
Three bedrooms 214 £244,719 £230,000 69 days
Four bedrooms 80 £369,737 £377,500 83 days
Five bedrooms 17 £444,647 £450,000 46 days

However, three-bedroom houses are moving quickly too.

Looking at this data, you could summarise that Chatham is bucking the trend with fewer houses for rent than for sale (as mentioned in the RICS report). But, when you look at the respective times spent on the market, you see that one- and two-bed rented houses are moving more quickly and three-beds, which are practically neck and neck with houses for sale; this would suggest that the new Countrywide data is indeed accurate. Meanwhile, renting four- and five-bed properties is in less demand and supply is lower.

Other data just published from Rightmove paints a similar picture in Gillingham, which is one of the top five highest growth areas for rental increases outside London. Of course, we must bear in mind that this is for single lets and not HMOs. It is nonetheless a good indication that HMO rents will also continue to grow, leading to an increase in yields. This once again shows how the rental market is growing in Medway.
Ultimately, these stats suggest that it is a great time to invest in HMOs, where it is possible to find great returns and yields from an ever-growing rental market.

I am always happy to hear from you, so if you need advice on another area or want to source a property as an investment, then please don’t hesitate to contact me. Email me via hasan@bullfinchproperties.co.uk or give me a ring on 07944 726 676.

Top image: © Copyright Malc McDonald and licensed for reuse under this Creative Commons Licence

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