Medway’s HMO Market Shows No Signs Of Slowing Any Time Soon!

Hello Readers,

If you have been following for a while, you will know that each year I release an update on the Medway HMO market and it’s that time again.

Before we dive in however, I am excited to announce a big step forward for Home Share, which is the lettings company I founded in Medway.

I started Home Share in 2015 out of pure passion for the sector after growing up in property, looking after my parents’ two buy-to-lets and am extremely proud to have grown it from nothing to 112 properties under management.

The hard work has not just been down to me, but an incredible team of dedicated staff who have been with me on this journey and who I can’t thank enough for their dedication, hard work and loyalty to the company. ?

I’m excited to announce that I have just recently promoted one of the team. Crystal, who joined Home-Share in 2021 has stepped into the role of branch manager and I’m really excited about the next steps for the business as we continue to grow. Those of you who join at the monthly Property Success network events and haven’t yet met Crystal will do soon I’m sure!

What Could A Lack Of Compiled Information Reveal?

So, this takes us onto the latest HMO update for Medway and it’s an interesting one as the data is relatively limited this year.

Interestingly, for the first time I can remember, Medway council have not updated their HMO register and the last available version is from December 2021. This means we have no data on things like how many HMOs, where they are, the size of the market etc.

I put the question to Medway council as to when there will be an updated register and received the following response:

“The December 2021 is the latest version. We will be working on the updated version when we are able.”

This is an interesting one and could indicate a lack of resources within the housing department to monitor activities. This is particularly interesting given the recent headlines of how Local Authorities do not have the resource to enforce the proposed rental reform bill.

For example, local authority leaders have warned about concerns over their “ability to deliver the proposals… given they remain under enormous financial pressure” and as well as worries about money, councillors also said there was a “staffing crisis in most local authority housing teams, with many local authorities struggling to recruit experienced environmental health officers”.

It will be interesting to see how this potential situation unfolds as the bill is inevitably adopted over the coming 12-18 months!

Medway FOI Request Revealed

Amidst the backdrop of a lack of information however, I did manage to get a response to my FOI request on some questions covering January – December 2022 and the results are quite surprising.

1.????The number of unlicensed HMOs that have been licensed discovered by Medway Council: 25

2.????The number of fines, total values and reasons for such relating to beaches in HMO regulations: None

3.????How many new HMO licence application renewals and how many of these were accepted: 30 and all accepted

4.????The total number of HMOs within the Medway Council area: 252 on the public register (as of December 2021); 30 new applications; 35 renewals

I have never seen such a report as this and needed to pause for a sharp intake of breath with point one. 25 unlicensed HMOs discovered during 2022 – that’s unprecedented and a significant number, but one that shows either the level of rogue landlords that continue to operate or the number of landlords who simply don’t know the legislation. This is particularly strange as in my FOI request last year, the response to this was simply that ‘The Council does not hold this data.’

Zero fines was an interesting one as well. I would have thought that a landlord operating an unlicensed HMO would be risking a fine. Unless these are ongoing incidents, it could demonstrate a softer and more lenient approach.

With point three having 30 new applications and these added to the number of undiscovered HMOs, we could have a total of 55 properties added to the total of 252 from December 2021, showing a 307 (21%). Obviously, we don’t know how many of these new applications were because properties were previously not licensed and in the total for point one.

What do we think to this? Does it show a more proactive council and contradict my thoughts on staffing levels perhaps. I honestly don’t know, but one thing it does reveal is how popular the Medway towns are for HMOs.

I have illustrated the potential growth below if we assume 307 HMOs in December 2022, there has been 142% growth in licensed HMOs over the past four years!

The Medway HMO Market Wrap-up

What do I think this data reveals? There’s a very simple answer and that’s how the market continues to be an attractive option.

Investors need to note that with a market growing at this speed, there is risk of saturation making the right advice from a local specialist (such as ourselves) all the more important.

With the increasing cost of living, I don’t think the market will slow any time soon as all-inclusive bills with a low cost compared to a mortgage or renting a flat / house, HMOs do form part of the solution during challenging economic times. The challenge for investors is to continue operating a reliable cost model amidst a backdrop of high mortgage rates.

I’d be interested to hear your thoughts on this data and where you think the local market is headed. Have you changed your investment strategy or are you bedding in, sticking with what you know?

Hasan