Is Social Housing a Good Investment?

As the demand in the UK for social housing continues to grow the government and house associations are working on trying to find quicker solutions to tackle the crisis. If you’ve looked into this, you may have seen that we now offer social housing investments as a unique opportunity to invest in Government-backed properties with long-term leases in place.

But the question remains, is this actually a good investment for you?

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WHY INVEST IN SOCIAL HOUSING?

Firstly, before we touch on whether it’s the right type of investment for you, why would you invest in social housing to start with?

It may not be something that you’ve come across all that often in your property investment journey as it’s not as common as your Buy To Let, HMO or flip style strategies, but it is becoming far more prevalent as the housing crisis continues to compound.

If you invest in social housing you will be helping place vulnerable tenants in property assisting the Government in easing the housing crisis, and in return you will be provided with a consistent source of monthly income for a significant duration as specified in the lease contracts.

These investments offer not only a benefit to society but a consistent return on your money without having to deal with all the issues that come along with a standard Buy To Let property as you will not be required to maintain the property nor pay any of the bills as this is all managed by the associated housing company.

HOW DO YOU INVEST IN SOCIAL HOUSING?

That sounds fantastic right, but how do you actually purchase one of these properties and start your social housing investment journey? These deals are pretty complex and require jumping through a lot of red tape in order to ensure that they are suitable to meet the specific requirements and criteria that the housing associations need which often requires a fair amount of development work.

Finding the deals can be tricky, but also nurturing the relationship with the housing associations can also be another significant hurdle, but that’s something we can help with as the properties we are selling have already been acquired, renovated and have the lease fully in place.

THE BENEFITS OF INVESTING IN SOCIAL HOUSING

There are several benefits to investing in social housing, it’s a safe investment that can be particularly appealing for some select investors. Let’s take a look at some of the major pros of social housing investments:

No Maintenance Costs

The cost of maintenance on a traditional investment property can’t be underplayed, it can eat significantly into your profits if issues arise within the house. On these leases you don’t have that challenge, the local council or housing association take care of everything for you, managing your tenants requirements.

Secure Returns

Coupled with your high yield is the high level of security that comes with these specific types of deals, they are signed contractually for a duration typically of 7 years or above with a guaranteed monthly rent.

Completely Hands Off Investments

When we say these investments are hands-off, they are! It’s a completely armchair purchase, you buy the property and don’t have to deal with anything for the duration of the lease, they handle all the tenants, you won’t have to worry about any late payments or void periods, and everything is taken care of for you.

Long Term Investment Security

As we mentioned in the secure returns section, these leases are typically 7 years or over, making them extremely low risk and presenting appealing long-term returns. That is also just the original lease that is in place, there is every chance with the growing housing crisis that this could be extended, but of course, we can’t guarantee that as it depends on the situation at the time.

Positive Social Impact

By investing in social housing you are contributing and helping ease a significant government challenge by housing people who are vulnerable. Not only will this be a great investment in terms of returns, it’s also a morally good one.

THE RISKS OF INVESTING IN SOCIAL HOUSING

Despite this investment being overwhelmingly positive in general, there are of course a few negatives or risks that come with investing in social housing.

Locations Are Restricted

One of the largest restrictions is as an investor the choice of location. Typically speaking there is only demand for these properties in certain areas, and depending on the particular housing situation not everywhere is covered, so if you have a distinct preference in terms of location then this may prove a barrier.

These investments are more suited to investors who are more relaxed on their requirements and open to invest across the UK – it will give us a much higher chance of being able to acquire you one of these investments.

Property Type Is Restricted

As well as the location, you may also be restricted when it comes to the type of the property. Being more open on whether you’re happy to buy a terraced house or semi-detached for instance will improve your chances of being able to acquire one of these properties. The houses need to meet multiple criteria in order to be placed with these leases, meaning several don’t qualify and having a specific requirement narrows this down a lot further.

Terms Vary

You need to be aware when you get involved in investing in social housing that every providers terms will vary, even slightly. They all have their own sets of terms & conditions which you need to read thoroughly as they can vary on duration, rental amounts, what’s covered in their maintenance of the property & so much more.

Financing

Financing can be a tricky subject when it comes to social housing investments, it’s not always cut and dry. It’s hard to go fully in to depth on these, but it all depends on how the property is valued and various intricacies – but if you choose to invest with us, we’ll go fully into detail what your options are with the particular property before you purchase it.

IS SOCIAL HOUSING A GOOD INVESTMENT FOR ME?

Investing in social housing doesn’t work for every investor, and we’ll be the first to tell you that. It is really dependent on what you want to personally achieve, and the funds that you have available.

If you’re new to investing you may have specific requirements that you want to meet, such as location, type of property & strategy, and if that’s you, then this deal probably doesn’t quite work out in that situation. You have no control over tenant selection or property management, so if you prefer being hands on then this also probably doesn’t quite work for you.

With all of that being said, if you want a hands-off investment that is guaranteed, you’re socially aware and seeking a long-term investment to essentially park a good return on your money – then this is a deal that is perfect for you.

WHY CHOOSE THE PROPERTY SOURCING COMPANY

If you’ve decided that a social housing investment is for you, then why should you choose us to provide that property? We’ll find you the best deal, at the highest yields, tailored to your requirements.

The main reason to choose us we feel is the complexity of these deals, agreeing conditions with the housing associations and local council can take a long, long time. Then you have to find the properties that meet the strict and specific criteria, undertake the works required in order to meet the required standards & then get the lease in place, it’s very time consuming and there is a degree of risk in getting the property to that point. We do all of this for you, and we’ve also managed to agree elevated rates due to the volume we are able to provide.

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