Investing in Social Housing

THE IMPACT OF INVESTING IN SOCIAL HOUSING

Social Housing offers more than just a roof over one's head; it provides a foundation for a better life.

Investing in Social Housing profoundly impacts families' physical and mental health in a positive way. A stable, quality home provides a sense of security, reduces stress, and enhances overall well-being, enabling individuals to thrive and contribute positively to their communities. This, in turn, helps to foster regional growth and development.

What does Social Housing mean for tenants?

For a person seeking asylum, finding a safe, stable home is the first step toward rebuilding their lives.

Victims of domestic abuse often escape dangerous situations, and having a secure home allows them to recover and start anew.

For people facing financial difficulties, it can alleviate the stress of unaffordable rents, enabling them to focus on improving their financial situation and well-being.

WE BELIEVE IN RELIABLE INVESTMENTS WITH MEANINGFUL IMPACT.

Social Housing is provided by the local council or non-profit organisations, offering affordable rents to those in need. As an investor, you'll benefit from a stable income stream through government-backed rents, reduced maintenance costs since repairs are covered, and no void periods, as the contracts are made with housing providers rather than individual tenants. Investing in social housing not only ensures consistent returns but also plays a crucial role in building stronger, more stable communities. It's a win-win for your portfolio and the people you'll be supporting, creating a positive impact on both your financial future and the well-being of those in need.

1.290.000 Families in the UK are in need of a Home

The demand for social housing in the UK is immense.

As of March 2023, there were approximately 1.29 million households on local authority waiting lists, reflecting a 6% increase from the previous year and marking the highest number since 2014.

On 31 March 2022, there were 1.21 million households on local authority waiting lists, an increase of 2% from 1.19 million in 2020/21.

LATEST STATISTICS

16% of households in England live in social housing, out of 28.4 million households in the UK in 2023.

252,000 households received a new social let house in 2022/23, a decrease of 4% from the 267,000 lettings reported in 2021/22.

177,487 social houses have been lost in the past 10 years, either sold or demolished.

7% of the applications entered social housing because they were fleeing domestic abuse. This is the same percentage as the previous year, with 16,000 in 2021/22 and 15,000 in 2022/23.

12 years is the average time social renters have lived in their current home, compared to the average of 4 years for private renters.

There was a net loss of 12,462 houses that were either sold or demolished last year, with only 9,561 new social homes built.

1 to 5+ years is the typical waiting time. 58% of new households receive a home in their first year, 33% take between 1 to 5 years, and 9% wait for more than 5 years.

78% of new social housing tenancies in 2022/23 are lifetime tenancies. These are tenancies given for the lifetime of the tenant. Due to housing contracts, those households can be reallocated to new homes from time to time.

6% of the 4.2 million social properties were let during 2022/23. New social housing lettings comprise a small part of the whole social rental sector.

42% of new household lettings included at least one person who had a health condition or illness, specifically a condition that lasts or is expected to last for 12 months or more.

11-49 days is the average time a social let house stays vacant. We work with social housing providers who have tenants moving in between 2 to 7 days after refurbishment completion.

The North West had the most new social lettings of all English regions in 2022/23, followed by the South East, West Midlands, and Yorkshire and The Humber.

A third of lead tenants in new social housing lettings in 2022/23 were in employment (32%). 16% of lead tenants were unable to work due to sickness, and 13% were retired.

All regions in England saw a decrease in new social housing lettings. The percentage decrease was the largest in the West Midlands at 10.3%, with the smallest in Yorkshire and the Humber at 0.5%.

3,000 of new households include someone who served in the Armed Forces. This amounts to 1% of all new social lettings. Notably, 16% of these households included individuals injured or disabled as a direct result of their service.

One-third of all new lettings contained at least one child (31%). Of the single parents getting a new social letting, 92% were women, and 8% were men.

(UK 2023/24 statistics)

Image P10 Social Media Post(Square) (1).jpg

Investors' Achievements

Social Housing impact made by our investors since early 2023.

Last update: June 2024.

£5 million

have being invested into Social Housing

24 families

have been supported by our investors

7 new homes

to be delivered in the following months

110 lives

to be suported by the amount invested

Choosing the right strategy for your investment.

Social Housing and Buy-to-Let are investment strategies that cater to different needs. It's essential to consider the pros and cons of each option before making a decision. Evaluating these factors will help you achieve your goals, whether you prioritise cash flow, stability, or risk management.

PROS & CONS

Buy-to-Let

Social Housing

There is consistently high rental demand in Leeds, ensuring that properties are almost always occupied.

The average duration for UK private renters to stay in a property is 4 years.

Before you begin the purchase process, you will receive confirmation that the property can be used for social housing, ensuring it will be tenanted as soon as it is refurbished and ready to be handed over to the housing provider.

Understanding this, we prioritise delivering newly refurbished properties to attract quality tenants. By offering modern, well-maintained homes, we aim to create a comfortable and stable living environment that encourages tenants to stay longer.

The average duration for UK social renters to live in a property is 12 years

Significantly longer than in the private rental market. This stability provides a secure and consistent income stream for landlords while also offering tenants a stable and supportive living environment, contributing to the overall well-being of the community and ensuring a positive impact for both tenants and investors.

This approach not only enhances tenant well-being but also ensures a stable and reliable rental income, fostering a mutually beneficial relationship between tenants and landlords.

Buy-to-Let

Social Housing

The rates for social housing follow Local Housing Allowance (LHA) levels, which typically increase over time and can be reviewed annually. This provides a steady and predictable income stream that adjusts with the cost of living and market conditions. You can have your rates reviewed 18 months from the start of the contract, allowing for potential adjustments that reflect current economic conditions and rental market trends.

Typically, rental rates increase by approximately 5% per year, ensuring that your rental income grows steadily over time. This consistent growth helps safeguard your investment against inflation and economic fluctuations. By keeping the property in excellent condition and adding desirable features, you not only justify rent increases but also create a welcoming and comfortable environment for your tenants.

High-quality tenants are more likely to appreciate and care for a well-maintained property. This mutually beneficial relationship helps create a positive living experience for tenants and a rewarding investment for landlords.

Importantly, if market rent prices were to decrease, it would not affect your contract with the housing provider. This ensures that your income remains stable and secure, providing peace of mind and financial predictability.

Buy-to-Let

Social Housing

There are plenty of suitable candidates and properties for Buy-to-Let investments, making it relatively easy to find a property that meets your criteria. Unlike social housing, no prior approval from providers is needed before purchasing a Buy-to-Let property.

There are no voids during the contract period, as the agreements are made directly between you and the social housing provider. If a tenant needs to move out, it does not affect you as the owner. The provider will handle finding a new tenant, ensuring continuous occupancy and stable rental income.

However, it's important to consider that Buy-to-Let investments may experience periods of vacancy, known as void periods. During these times, you may receive less or no rental income, which can impact your overall profitability. Additionally, finding new tenants can incur extra costs, such as tenant-finding fees and advertising expenses.

Contracts can last either 3 or 5 years, based on your preference, and can always be renewed. For 2- and 3-bedroom properties, the contract includes a 3-month break clause for both parties, offering flexibility while preventing immediate exit.

For 4-bedroom properties and above, different rules apply, and there is no break clause, which is typically welcomed by investors seeking stable income.

By planning and budgeting for these eventualities, you can ensure that your investment remains resilient.

Buy-to-Let

Social Housing

In some cases, Buy-to-Let properties can generate higher rental income compared to social housing, offering the potential for greater financial returns.

However, they come with significant management fees, typically around 10% + VAT per month on rental income for our investors, though this is a reduction from the standard 12% + VAT.

Fixed NET monthly income is based on the number of bedrooms, providing a reliable and predictable revenue stream. Currently, the NET fees for Leeds Social Housing are:

£700 for a 2-bedroom
£800 for a 3-bedroom
£969 for a 4-bedroom

While these management fees represent an additional cost, they also provide valuable services that ensure your property is well-maintained and your tenants are satisfied.

Professional property management can handle everything from tenant selection and rent collection to maintenance and emergency repairs.

Fees for 5-bed and 6-bed properties can vary depending on our providers.

This stability in income allows you to plan and budget effectively, ensuring that you can meet your financial goals while contributing to the welfare of the community. The fixed income model reduces the uncertainties associated with fluctuating rental markets, offering peace of mind and financial security.

This level of service not only alleviates the stress and time commitment required from you as an investor but also enhances the living experience for your tenants, who are more likely to stay longer, reducing turnover rates and vacancy periods. This stability benefits both you and your tenants, ensuring a consistent income stream and a harmonious living environment.

Additionally, these rates are subject to review annually to ensure they remain fair and competitive. The next rate review is scheduled for August, offering the potential for adjustments that reflect current market conditions and cost of living changes. This regular review process helps maintain the viability and attractiveness of your investment.

Buy-to-Let

Buy-to-Let properties will require ongoing maintenance throughout their lifespan, which can be costly. Regular upkeep is essential to ensure that the property remains safe, comfortable, and appealing to tenants.

Social Housing

Maintenance and repairs are covered by the Housing Provider, significantly reducing your responsibilities and costs. Only major items, such as the boiler, roof, and structural issues, are excluded.

Even with a fully refurbished property, setting aside 5% of your monthly rental income for maintenance is recommended to cover unexpected repairs and emergencies.

Moreover, addressing maintenance issues promptly helps prevent minor problems from escalating into more significant, costly repairs, saving you money in the long run.

Tenants living in well-kept properties are more likely to feel secure and valued.

This is why we always refurb Social Housing properties before handing them over to providers, offering you and the new tenant peace of mind.

Buy-to-Let

Social Housing

Financing social housing can be more complex. However, specialised brokers and lenders familiar with the social housing sector can facilitate the process and provide tailored mortgage solutions that suit your needs.

Securing a mortgage for a Buy-to-Let property is generally simpler compared to other types of investments. Lenders are well-acquainted with the Buy-to-Let market, and numerous mortgage products are specifically tailored for these investments.

This ease of financing makes it accessible for many investors to enter the market.

We collaborate closely with a select group of brokers and lenders who specialise in social housing and trust our work with investors, which helps streamline the financing process.

Buy-to-Let

Social Housing

Due to the niche market, reselling a social housing property can differ from traditional property sales. However, steady income and long-term contracts are often appealing to investors seeking stable returns and ready-to-go investments.

Buy-to-Let properties are typically easier to resell. The strong demand for rental properties in areas like Leeds ensures a steady market for these properties.

Additionally, showing a rental income history can make the property more attractive to prospective buyers, providing confidence in the investment’s profitability.

Offering immediate rental income and reduced management responsibilities for the new owner.

Buy-to-Let

Social Housing

Tenant disputes are handled by the Housing Provider.

Landlord insurance premiums can be slightly higher due to the nature of the tenancy.

Set-up costs include furnishing the properties and ensuring compliance with fire safety regulations. While these initial expenses are higher than those for a buy-to-let, the overall yields are comparable due to significantly lower maintenance and repair costs.

The contract includes a 3-month break clause for both parties, which means you can't exit immediately, but it offers flexibility and prevents long-term lock-in. Please note that this clause applies only to 2- and 3-bedroom properties. A different provider is used for 4-bedroom properties and above, and there is no break clause, which is usually welcomed by investors looking for stable income.

Tenant disputes, in the worst-case scenario, can be both lengthy and costly. Resolving issues such as non-payment of rent, property damage, or breaches of the tenancy agreement may require legal intervention, which can lead to significant legal fees and court costs. Additionally, the time spent managing these disputes can be substantial, often resulting in prolonged periods of lost rental income and increased stress for the landlord. Addressing tenant disputes effectively and efficiently is crucial to maintaining the profitability and stability of your investment property.

Income Variability makes buy-to-let a riskier investment when compared to social housing.

Refurb costs for Buy-to-Let properties are slightly higher than those for social housing. Although the initial set-up costs are lower, Buy-to-Let properties require a higher standard of refurbishment to attract higher rents.

Investing in property can have a greater impact than you might imagine.

Get In Touch and Make a Difference

YOUR TRUSTED PROPERTY INVESTMENT PARTNER

THE IMPACT OF INVESTING IN SOCIAL HOUSING

Social Housing offers more than just a roof over one's head; it provides a foundation for a better life.

What does Social Housing mean for tenants?

WE BELIEVE IN RELIABLE INVESTMENTS WITH MEANINGFUL IMPACT.

Social Housing2022/23Social Housing2022/23

1.290.000

Families in the UK are in need of a Home

As of March 2023, there were approximately 1.29 million households on local authority waiting lists, reflecting a 6% increase from the previous year and marking the highest number since 2014.

Investors' Achievements

Social Housing impact made by our investors since early 2023.

Last update: June 2024.

£5 million

24 families

7 new homes

110 lives