What type of properties are suitable for asylum seeker investments and refugee property investments?


Asylum seeker rental properties in Lancashire

That is the question we’ve been getting asked in the last three weeks. The uptake and interest on refugee and asylum seeker property investment has been excellent, but there have been a couple of similar concerns, which we will outline here as a future reference.

It should be noted that the rent, whilst government backed, will not come directly from the council into your bank account. It is first channeled through one of the three agents in the North West who have full expertise in working with refugee and asylum seeker tenants and then the rent will be cleared to you, based on the net figures as highlighted on a previous article on Refugee rental properties.

Coming back to this particular write up, the biggest concerns seem to be:

Are we offering HMO’s with asylum seeker or refugee tenants?

The simple answer is no, but this is not set in stone. Apart from 3 of the 17 houses that we have recently offered across the Greater Manchester and Merseyside area, the rest were single let properties to families or groups on the same tenancy. We do not let each room out individually and the 15 other properties did not have their own wash facilities or WC’s in each individual bedspace. In short, they did not require a HMO license of any kind as they were not HMO’s.

Won’t the Asylum Seeker tenant or refugee tenant drive down the value of the property?

This is a valid question and we understand the concern. The bottom line is that the properties that have been acquired, refurbished and let out to these government backed tenants are in areas that are in the lower to mid-end of town properties. If you are the type of landlord that believes letting out properties to working professionals is the only way, then we ask you to not enquire or take this further. We have many landlords that understand letting out to well managed DSS, LHA and social housing tenants are, in many cases, better than letting to professional working tenants, so we would be happy to offer these properties to them. As for appreciation, Unless something unforeseen occurs in the next 10 to 15 years, you will never be able to claim that you own a property in the nicest part of town. This is not to say that the prices won’t appreciate, but do not expect to see central-London type of growth(!) Additionally, The government has a clear mandate on what types of areas it will pay these rents, so the properties on this scheme must be located in pleasant and established communities. Again, to reiterate the point, these types of investments are for professional landlords and investors who are focused on an excellent cash-flow model and can see the benefit behind a 5 or 7 year lease that is government backed. Anything else is a bonus!

Can I sell the property on at any time? What happens to the 3, 5 or 7 year lease?

It would be your property with full-title, registered at the Landregistry, so yes, feel free to keep hold of it or sell it on. The question is still valid however – since the lease is for a predetermined amount of time, the next buyer of the property would be encumbered with the remaining years on the lease, so it is obvious that should you wish to sell on during this time, the only buyer that you could sell it to would be an investor. Please note, that the rents would be index linked and you would see an increase in rent over the lease period in line with inflation, so you could technically sell it on for the same yield that you bought it at (but at a higher price), but again, this is speculation. Once the 3, 5 0r 7 years are up, then yes, your options to sell it on would be opened up to both homeowners and investors.

These were the 3 main questions that we’ve been asked about refugee rental investments and asylum seeker investments. If you have any questions about this type of property investment, please get in touch.

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