Ethical investments – guaranteed rental for 20 years
If you are looking for ethical investments in property which ticks all the boxes when it comes to socially responsible investments, then we will soon be able to fully release something that we have been working on for the past year: Housing for adults with learning disabilities. We have been providing regular updates on this alternative investment for a while now, but we should hopefully make this innovative and niche investment available to our interested clients by the new year.
The social housing sector is fundamentally undervalued and continues to have significant capital requirements. However, with a number of factors contributing to an ever dwindling lack of funding, housing associations and their associated partners are now having to look elsewhere to meet their financial requirements. Whilst the government provides implicit support to housing associations, the funding channels provided directly by the government have been dramatically cut in the last few years and this policy will remain in the immediate to medium term future. In effect, the government is anticipating private funding will plug the gap and provide the necessary investment. For this reason, we believe the social housing sector to be undervalued from an investors perspective. We are already seeing welcome investment from clients who are happy with their social housing investments and we anticipate that this secure investment will also be attractive to clients that want to put their money into ethical investments and socially responsible investments.
Guaranteed for 14 years and 20 years – both ethical investments projects
We anticipate releasing 2 projects – one that is off-plan and one that is currently income producing. One site will offer 16 units, with the other site offering in the region of 20 units. By units, we mean 1 and 2 bedroom apartments or houses. The off plan investment will offer a 20 year lease, whilst the current income producing investment will offer a 7 year + 7 year optional term from the housing association, meaning a 14 year period in total.
What are the downsides to these ethical investments?
This will probably be the most secure and safe long term investment product that we will offer, that will have a genuine backer in terms of a local housing trust (which has been given implicit responsibility for special tenants by the local government). Some of our clients have described this ethical investments as similar to a securitised bond but with the added benefit of the security belonging to the investor in the form of title. The only real downside we can say for now is that once an investor has bought into the property, they will not be able to exit the lease that has been given to the housing association (unless a specific term has been broken). In effect, the client will be tied into a 14 year or 20 year rental arrangement – which for most rental investors, isn’t really a downside!