Help the Social Housing Crisis, Profit with Purpose. The Rise in Popularity for Social Housing Investment.

Over 1.3 million households are on social housing waiting lists, with many in temporary accommodation. This is having a huge detrimental effect on public spending and the economy in general. The government is already planning welfare cuts and reforms that will effect many vulnerable tenants, so government funding cannot be relied upon to address this increasing requirement for more social housing. The solution, socially conscious investors and ethical private investment. Private investors like you, can help to increase the stock into the social housing sector, providing social impact, homes for the vulnerable, and supplying the huge demand, all the while generating consistent, long-term financial returns for their own portfolios. A win-win!

Over the past 10 - 15yrs social housing stock has decreased, in part due to the Right to Buy scheme and underinvestment. This has left local councils and housing associations in a position where demand has skyrocketed, but supply has massively dwindled, with increasing rents across the private rental sector, pricing out low-income households, forcing them to social housing or homelessness. Demand has become such an issue that a reported £2.2bn has been spent by local councils on temporary accommodation in a 12-month period. Recently in reports by the National Housing Federation, figures show that the number of families waiting for social housing since 2015, has increased by 37%, with 3 local authorities, out of 32, all in London, the waiting lists exceed 100 years. Many local authorities have put growing numbers of families into temporary accommodation, but Shelter claims that to meet the increasing demand for social housing, over 90,000 homes would need to be built every year, which is more than ten times the current rate of house building. Kate Henderson, chief executive of the National Housing Federation, said “The fact that families in so many parts of the country face waiting lists for an affordable home longer than their children’s entire childhood is a national scandal. Security, stability and the space to learn and play is vital for a child’s development, yet we are allowing hundreds of thousands of children to grow up in damaging temporary homes, in cramped and poor-quality conditions and with little privacy. This is no way for a child to grow up and these children deserve better. The social housing sector has faced years of withdrawal of vital funding. Thing a better future for our children and ending homelessness for good. This means delivering e upcoming Spending Review is the opportunity for the government to rebuild the capacity of the social housing sector and commit the investment and the change that is needed, creatcoordinated homelessness and long-term housing strategies which include a package of measures to support the social housing sector to recover and crucially a big boost in funding to build new social homes.”

Private investment in social housing is starting to help transform the sector with investors working with housing associations to provide the capital to boost new housing developments, which will benefit from government-backed leases. These leases are inflation-linked and provide secure, assured rental income.

As a private investor, you will find that investing in social housing can offer attractive yields, and certainly yields that are higher than traditional buy to lets, while providing homes for those in need, and instead of relying upon the private rental sector, you are aligned with government funding, in a sizeable demand driven sector, which is resilient and recession proof.

As an investor how can you get involved?

Source suitable properties that work for the local housing associations. Companies such as Landmarka, have long-standing relationships with these housing associations and understand their wants and needs, and can help you to source the right type of property. The housing associations then lease the properties under long-term commercial agreements. This means the housing association acts as the operational tenants. The association then works with the local council to place eligible vulnerable individuals and families into these homes. The housing association will then manage the tenant and ensure the property adheres to current regulations.

As the housing association has sourced and put their own individual/tenant into the property, it is the housing association that looks after the majority of repairs, maintenance and general day-to-day management, which means the landlord/investor has a much more hands-free experience compared to normal buy to let.

Investing in social housing has a direct positive impact on reducing homelessness and the housing associations' growing waiting lists.

What are the risks investing in social housing?

There are risks with any type of property investment however, the risks with investing in social housing are reduced from those found in buy to let, but include:

• The current government policies, reforms and changes can impact the social housing sector. This could come from the reduction in benefits, rent caps, grants or additional regulations that might mean landlords spending more to ensure their properties meet requirements. All these factors could have an impact on rents.

  
  

• The investor may have to spend slightly more on the property initially to meet the requirement of the local housing provider, for example, an en-suite to provide two bathrooms, mains interlinked smoke detectors and other similar additions.

  
  

• A poor-performing housing association may face financial instability, which would have a detrimental impact on its ability to fulfil the obligations of the lease​​.

  
  

Although the risks listed above are to be considered, ultimately an investment in social housing provides investors, who are both financially and socially conscious driven, with a unique opportunity to align personal morals with current real-life impact, as the demand for affordable housing is urgent and remains constant.

If you are investing in property for longevity, then social housing provides you with inflation-linked rental income and leases often running for 6 - 8 years. A property investment is protected against the ever-rising costs of inflation.

You tend to find that properties most suited to housing associations are also in areas that are competively priced, and in potential regeneration areas, giving great yields, and in turn will benefit from strong capital appreciation.

With hands-free management by housing associations, investors can enjoy a passive income, removing the headaches of tenant turnover, void periods, and repairs while helping the community in general. Landmarka is able to help connect global investors with the housing associations most in need, not only helping to provide stock but delivering strong returns to those investors.

Build a legacy, make a difference while building an investment portfolio!

If you are interested in learning more about social housing investments, contact Landmarka by visiting this link they will be able to help you further to find a property investment that fits your personal investment requirements.