- Operating in the North West and Midlands, our investors get a minimum 8% net yield
- The rent is guaranteed by our social housing partners for a minimum of 5 years
- Our investors own the rental property on a full freehold title
With over eight years experience in the social housing sector, we have a wide cross section of experience in:
- asylum seeker property investments;
- housing adults with learning difficulties;
- housing young offenders that have left prison;
- helping women that have escaped domestic abuse
We are experts in this niche market and have been offering social investments since 2012. It has proven to be very successful for our investor clients and we’ve also managed to help many individual residents to have better, independent and accomplished tenancies.
As a matter of update, all renewed lease has now been agreed to run for another long period, with the length dependent on the area. Typically, the new rental guarantee arrangements will be for a minimum of 5 years, to a maximum of 10 years.
What is the investment offer?
It is a guaranteed rent lease, with no void periods and all maintenance paid for (up to a certain fixed amount):
- Long Term Rent Guarantee
- Investments in the North West & The Midlands region
- No void periods from when the lease begins, right through the lease end
- All maintenance covered (upto £2,000 per annum for a regular repair, upto £5,000 for a boiler)
Generally, the standard of the property that we provide has to be a good level. We accept and encourage this as we also want to provide a good quality home to the social tenants.
The rental returns do vary, depending on what the property is being sold for and what rental amount is agreed, but it generally varies from 8% to 9% net yield for 5 to 10 years.
In Which Areas Do We Operate This Model?
We operate in two areas: The North West and the Midlands. Please note that this is a dynamic situation and changes quite often. Please get in touch for an up to date list of locations.
Why do we work with this social tenant type?
We have been investing in property for over a decade now, and we believe that the best tenants are the ones that truly value the roof over their heads.
For clarification, we do not offer investments where the tenancies are given to LHA (local housing allowance) tenants as there’s just too much headache involved with managing this type of tenant.
Working and professional tenants are also good, but they need a degree of hands on management.
However, in our experience, the social housing type has worked out well for us. We are experts with the tenancy type as we have a background from the charity sector; this is helpful when trying to understand the needs of the tenant.
What is our offer to investors and landlords?
In summary, we have three options for our investors:
Basic let only service
You already own a property. Rental income expected in month 3 to 4 from initial contact with us.
- We inspect a property you own.
- You pay for any required furnishings.
- We manage the lettings / meet client.
- Minimum involvement from client.
- 5 to 10 year rental guarantee.
Ready made investment
You buy a property from one of the ones we own. It’s income producing already.
- Income producing from day 1.
- Fully refurbished and furnished.
- 2 and 3 bedroom properties.
- Priced from £95,000 to £195,000
- Complete armchair investment.
- 5 to 10 year rental guarantee.
SOURCE + REFURB
We source and project manage
You pay us a fee and we source. Rental income expected in month 5 from initial contact with us.
- We research and find a property.
- We manage refurbishment.
- We furnish the property to standard.
- A fixed fee of £7,000 per property.
- More transparent; more hands on.
- 5 to 10 year rental guarantee
(a) Let Only
In this option, we first do all the necessary checks to see if the property location is suitable. If so, we then proceed to check the property itself is suitable.
From there we offer 3 further options: Standard, Furnish or Complete which vary from fixed £750 to £1350 +10% management depending on the service. To read more about this, please click how to let properties to social tenants.
(b) Turnkey Sale
With this service, we buy properties at below market value, undertake the necessary refurbishment and then once complete, we provide all the furnishings and sell on to our clients on a minimum 5 year lease.
This is a full armchair investment which requires very little input from the client. Our properties start from £95,000 up to approximately £195,000.
(c) Source Package +Refurb
This option is for clients that want to be involved from the very beginning. We work with the client in identifying the right property, the client buys the property under our guidance and then we move on to refurbishment and then furnish the property with view to a minimum 5 year rental guarantee. With this option, we charge a fixed fee of £7,000 for each property from start to finish. Please note, any acquisition, renovation and furnishing costs are borne by the client. Our role in this is to manage the entire procedure from start to finish on behalf of the client.
Renting out your house to Social Tenants
Since we have gained a wealth of experience in selling social housing investments to our UK and international clients, we’ve had a number of requests from clients who did not end up buying from us but asked for something else very similar.
These clients were happy to pay a fee and we’re now offering this service to all clients who fit the profile and want to rent their houses or flats.
In short, if you have a property that you’d like to let out in the Greater Manchester, Lancashire or Yorkshire area on a 5 (or 7) year guaranteed rental contract and as long as the property matches what we’re looking for, we can offer the following:
- STANDARD – Property assessment and consultancy only with view to acceptance for £750
- FURNISH – Property assessment, consultancy and a complete set of furnishings required for £1,350 inclusive
- COMPLETE – Property assessment, consultancy and a complete set of furnishings required for £1,350 inclusive + 10% ongoing management
In effect, the lowest cost solution is the STANDARD service which incorporates a property assessment and discussion with you to see if your property fits the profile for these long term rental investments. Once the property is accepted, we ask for a one time £750 fee.
In all cases, these properties need to be furnished with beds, wardrobes, chest of drawers, sofas and dining table with chairs as a minimum.
If you’d like us to provide the furnishings in addition to the basic service, then we can do it for £1,350 inclusive of delivery and construction/fitting as per the FURNISH service above.
As a final option and something which is completely and wholly hands free is the COMPLETE service above whereby we offer a 10% management fee for ongoing services.
What this means is that we will liase with the social housing provider and will only bother you when something needs paying for e.g. washer machine repairs, boiler repairs and so on.
Any tenant related damage or issue will not be your concern. This is dealt with as part of the lease.
We would recommend options STANDARD and FURNISH to everyone, but especially the COMPLETE option if you have a property in the North West or the Midlands but live too far away to attend any property concerns.
Traditional rental property in Lancashire
Please get in touch if any of these services interest you and we’ll be happy to discuss things with you at a preliminary stage. Once we’ve done the fact finding mission, we can give either a positive or negative response and then take it from there.
Coming back to this particular write up, the biggest concerns seem to be:
- Are we offering HMO’s with asylum seeker or refugee tenants?
- Won’t the social housing tenant drive down the value of the property?
- Can I sell the property on at any time? What happens to the 3, 5 or 7 year lease?
Let’s deal with each question below.
Are we offering asylum seeker housing investments 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 individuals that have suffered domestic abuse or young offenders that have recently left prison.
Won’t the social Housing 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 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.
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. Anything else is a bonus.
Can I sell the property on at any time? What happens to the 5 or 7 year lease?
It would be your property with full-title, registered at the Land Registry, 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 social housing investments. If you have any questions about this type of property investment, please get in touch.
Social investment requires a different mindset
The key thing to stress and what we have continued to stress in the last few years is that social housing tenants are not for everyone.
They definitely add to the diversification of an investment portfolio, but it requires a certain type of investor to truly benefit from the product.
First and foremost, it sits very well with investors that understand social tenants are vulnerable groups that need support and protection.
“If you want to target the high end of the market with en-suites in every room, then this type of investment isn’t for you.”
Yes, there have been stories in the last decade where scrupulous individuals have unethically made vast sums of money in this sector but we do not wish to engage with such types of investors, nor do we encourage it.
We’d like to think that by offering such a product, we can alleviate the burden for the local councils and at the same time, offer good quality and presentable homes to individuals that need basic provisions.
In return, we’re happy to secure good, long term rents secured on a long term contract.
It has to be said, the sourcing of these types of social investments requires a methodical understanding of all stakeholders needs and requirements. We must contend with the demands of our investor clients, the stipulations in place by the local councils and police and just as important, the long term needs of the prospective tenant.
This last point also has an overarching imprint on the longevity of the tenant and thus the ‘hands-off’ model for the investor client. For example, we need to be able to secure the property in an area in which the tenant will feel comfortable settling in and making it their home for the foreseeable future.
Whilst the contract is long term and up to 7 years inclusive, there is a break clause in place should the tenant be unable to settle due or for any other valid reason.
What this means in effect that we should be careful to ensure that the areas where the properties are to be secured are safe and open to individuals and families of different ethnic persuasions. The last thing we need is a disturbance or incident which requires police involvement.
Will an social housing investment require hands on management?
We get asked this question quite a lot and we offer our investors two options. Before we outline these options, it must be said that after 7 years of being involved in this sector, we would generally say that you would not require management.
We are certainly not helping ourselves here by potentially losing revenue, but in general terms and for what we’ve seen, there is not in general, a need to get this type of investment managed.
However, for every 4 properties where nothing ever goes wrong, there’s always 1 case where attention is required.
That is just the nature of the way things work and we usually see things requiring attention at the most inconvenient of times i.e. when it snows, during Christmas, during bank holidays and so on.
So, with these two considerations in mind, we offer two options.
- Managed – if you live outside of Greater Manchester and the North West of England in general, then yes, we would recommend that you get us to manage the property. The choice is wholly and completely yours, but if you are unable to get to the property or to manage local tradesmen, then you need something to take care of this when things go wrong.
- Unmanaged – we would say that if you live within 30 kilometers of Manchester and have experience in managing your own portfolio of properties, then there really isn’t a need to use us as your property managers.
You can read more about the managed options we offer by reading on how to manage social property described above.