Something I get asked a lot is where in Medway is the best place for buy-to-let investment. Well there are several areas that have a strong rental market and can offer some good returns. But if I’m honest, the number one hot spot has to be Gillingham.
So why is that? Well the number one reason would have to be a growing population. In 2016 Medway as a whole had a population of 278,542, with Gillingham accounting for 37% of that. Gillingham is home to more than 100,000 people. And that number is still growing.
Numbers about population growth change from source to source, the latest being that by 2018 Medway figures are predicted to be around 286,680. Which equates to a 2.84% growth in less than two years. In a recent post about the Medway Housing shortage, I mentioned that the council’s Local Plan predicted a rise of more than 17% by 2035, to 330,200. The combination of this growth and a lack of affordable housing, can only mean opportunities for astute property investors.
The big property developers are way ahead of the game and there plenty of new housing developments underway around Medway. Thinking cleverly, these big developments not only present long-term investment opportunities. They could also be a source of short term lets. How? Well during construction there are bound to be site engineers, ground workers and any other number of manual labourers looking for temporary accommodation in the area. And those are just one target market for home shares.
Of course, it stands to reason that the biggest tenant market in Gillingham is students. With an abundance of large university campuses, colleges and other higher education providers, lower Gillingham is a great area for student lets. With the right property, a house of multiple occupancy (HMO) in this area could net around a 10% yield.
But it’s not just students that make Gillingham a great spot for investing. We know that the town is also a great base for commuters. With London accessible by road and rail in under an hour, Gillingham has a strong pull for those looking to settle outside the capital. As I mentioned a few weeks ago, it was recently named by Rightmove as having one of the highest rental growths outside of London.
In my opinion there is somewhat of a divide in the Gillingham rental market. Often referred to as lower and upper Gillingham, I think it’s fair to say that currently, the tenant markets of each area are a little different. Lower Gillingham is where the university campuses can be found and therefore the student rental market in that area is very strong. Upper Gillingham tends to cater more to commuters and families. Although this is not exclusive of course, and inevitably the two will spread and cross thanks to the continued regeneration of Medway. Critically, I don’t see much divide in terms of rental prices. On average a 2-bed terraced house would rent somewhere between £750 – £850 pcm, while HMO rooms could fetch as much as £450 pcm. I would say that you could expect around a 5% rental yield on a single let in Gillingham (depending on the property). While HMO landlords can potentially double that return with yields upwards of 10%.
Please let me be clear, there are other fantastic investment opportunities in Strood, Rochester, Chatham, and Rainham. But Gillingham has a fast growing population, a ready-made tenant market and plenty of properties waiting to be snapped up (this morning there were 297 up for sale). For investors, that equates to higher demand, potentially rising rents and less void periods. What’s not to like?
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