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Why should you invest?
Social Housing investments are suited to investors who are looking for long term, passive income that provides secure and steady returns. Social Housing investments typically offer rental returns from 7%-10% yield for a period of 5-10 years, per lease.
Long Term
Social housing typically offers a longer lease than private housing – for instance, a social housing operator will usually sign a tenancy for a minimum of 3-5 years. This makes social housing investment a low-risk option which can provide steady rental income over several years, whilst the property grows in value as a result of capital appreciation.
Minimal Maintenance
With social housing, the housing operator (generally the housing association or local council) usually handles property management, including everything from sourcing the tenant to collecting rent and dealing with ongoing maintenance issues. This means investors can rest easy knowing their property is well maintained, without having to pay extra management costs to third party agencies.
Secure Returns
A social housing investment is also likely to yield consistent and secure returns. The housing shortage in the UK ensures that demand is sustained, often with long waiting lists of people on the register for properties.
FRI Leases
With longer tenancies, social housing landlords often opt for full repairing and insuring (FRI) leases. This type of lease minimises the cost to the landlord, as the tenant is financially responsible for the majority, if not all of the repairs and maintenance, as well as restoring the property to its original condition at the end of the lease.
Positive Social Impact
Social housing is an ethical investment that makes a genuine contribution to society. Data from the Home Builders Federation shows that homes in England are “less affordable and in worse conditions than most other European countries”. By investing in social housing, you’re helping to create affordable housing and secure, long-term tenancies for those in need.
Diversifying Your Portfolio
Thanks to the housing operator and options like FRI leases, social housing can be a completely hands-free investment to add to your portfolio. As it’s such a low-risk investment, you can reduce overall risk exposure in your portfolio, and balance out any more traditional high-risk investments you’re putting money into.
