Hello readers,
What a year we’ve had! From multiple threats of a recession, to soaring interest rates and soaring rents there’s a lot to reflect on. Keep your eyes out for my 2024 projections blog and today I wanted to have a look at where we are with room rates.
Some headlines which have been catching my eye over the past week are about how rental rates are starting to show signs of cooling. After a record year, that doesn’t surprise me that these predications are starting to show; after all, rents are technically capped by earnings.
But what of room rates I hear you ask? Well, SpareRoom have recently released some data on the trend since 2020 and you will see how average room rates have been steadily increasing since mid 2021.
SpareRoom comment that average room rates are an average of £800 per room outside London and £1,000 per room within London. These figures seem quite high to me, so without sight of the data I’m not able to validate it, however from a quick skim of the rooms available at the moment within Medway, you will see how the listings tell a different story:
- 149 Double rooms ranging from £600 – £750
- 25 Single rooms ranging from around £500 – £600
Whilst I’m not entirely sure how SpareRoom have reached an average of £800, the graph does show a general upward trend which is largely reflective of increased mortgage and general operating costs.
Something else that drives rents is demand and the data from SpareRoom has highlighted a steep drop over the past few months, with an overall drop for the year.
You will see how, at the peak in September 2022, the UK average was 8.1 renters to each room and now we have an average of 4.3 renters to each room.
What this means for Medway’s HMO landlords is that although there’s not the massive demand/supply imbalance that significantly drove up rents, four renters to each available room is still good odds!
What I do find interesting is how Medway’s available HMO rooms are largely in Rochester and Chatham. You will see from the map below that there is very little demand in Gillingham!
This might simply be that Gillingham is more popular, so rooms tend to go quicker or something seasonal; however I’m not entirely sure why this might be as our experience is that Gillingham can sometimes prove to be over-saturated.
So, what does 2024 bring for HMO landlords?
I certainly think it’s looking to be a brighter year as with the Bank of England holding rates steady, it’s likely we’re in for a drop in the not-too-distant future and with property prices continuing to fall it means that there should be some good deals out there.
Whilst there has been a drop in demand verses supply, the imbalance means that rooms should still let relatively quickly – it’s just important to ensure they are of a high standard so they stand out from the competition.
Hasan
