You may recall that, just over a year ago, I released a series of blogs looking at HMO stats for Medway and the headline highlighted that Medway had seen a 49% rise in HMO applications over the previous 12 months, with ALL of them being approved. This was of huge interest and indicated a real hunger for investment in the local area.
So, what do the statistics look like today and what has changed since early 2019? As the leading HMO specialist in the Medway towns, my objective is to always keep you up to date with the latest trends and I recently submitted a Freedom of Information request to Medway council to assess a number of points. This request returned the following results for 2019:
- There was a total of 57 HMO License applications submitted to Medway Council
- 100% Of HMO applications were approved by Medway Council
- There were two prosecutions for HMOs that breached regulations, and these are ongoing matters
- No fines were issued for breaching HMO regulations as Medway Council have not yet introduced a financial penalty policy
So, there was a 100% application approval rate in 2019 and a total of 57 new licences were granted. This compares to 40 new licences granted in 2018 – a rise of 17 (43%) when compared to 2018! This signifies the strength of the local HMO market as well as its future potential.
It is worth noting that Medway Council has not introduced a financial penalty policy – however, with two ongoing prosecutions, there will undoubtedly be fines issued due to statutory legislation.
2020 Licensed HMO data summary
The first point to note is that Medway has a total of 173 licensed HMOs and this is a rise of 46 HMOs (36%) from a total of 127 since last year.
As a local property expert specialising in HMOs, I am confident in stating that I am absolutely positive that there is no way that this is all of the licensable HMOs! Whilst I am well aware of rogue landlords, I find it incredibly frustrating that there are still so many simply disregarding the rules with no recourse. And that even those that are licensed, are not policed.
There are 1,202 people living in a total of 1,068 (some rooms have more than one person from the same household) licensed HMO rooms in Medway. This represents a significant number of people and if we assume an average income of £550pm per room, this makes the size of the Medway licensed HMO market around £7m per annum. I expect however, that when you consider unlicensed HMOs, this figure is probably at least 25% higher.
Some of the increase in the rise of licensed HMOs may be down to mandatory licensing rules, but it also reflects how Medway is becoming an extremely popular place to invest. I’d be interested to hear what your reasons for investing in Medway were.
Medway HMO sizes
The most popular size of HMO in Medway is five rooms, with 79 (46%) of the total and then six rooms, with 54 (31%) of the total. You will see that there are two licenced HMOs with four rooms and that is because these two properties have five people living in them.
It is likely that there are a number of HMOs which have only four rooms, however they do not fall under the licensing requirements so would not be reflected in this data.
As a specialist in HMO investments in the South East, I regularly work with landlords to help them expand their portfolios and five or six rooms is the most popular size. This is what most Medway properties tend to be and they work well, getting investors the best returns, alongside the benefits of avoiding messy planning applications. It is, however, interesting to see that there are a fair number of HMOs with over 10 rooms (12 in total).
Medway HMO hotspots
I looked into the data in more detail to understand what the popular areas for HMOs in Medway are and I have constructed the graph below to outline the concentration of HMOs by ward.
There are nearly 50 HMOs in Gillingham South and it is worth noting that Medway Maritime Hospital is in this ward. Gillingham North and Chatham South are the next most popular areas and this is partly because of their proximity to local businesses as well as Gillingham and Chatham railway stations.
Over the coming weeks I will be releasing some detailed blogs about the property market throughout Medway starting off with Rochester, however there is an over-saturation of HMOs in Gillingham and this table probably demonstrates that to some extent. That is not to say that you should not invest in Gillingham, but that you will need to hit a high standard and aim to be in the top 10% of properties.
I hope that you found this post interesting! I have certainly found it insightful to compare to the data for 2018 as it is a real indicator of growth in the local market. What will be interesting will be the data for 2020 and seeing whether the level of growth will remain consistent along with the impact that COVID-19 will have had.
If you have any questions about HMOs or are thinking of either investing or converting a property into one, the best place to start is by booking a consultation to discuss your investment goals. You can book a free 15 minute initial consultation here. Alternatively, you are very welcome to contact me via LinkedIn.