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    Why is Social Housing Investment Becoming More Popular?

    Before we go into more detail, let’s recap what social housing is. Social housing is a system of affordable rental housing provided by the UK government. Social housing supports vulnerable people, such as the elderly, those with disabilities or those on low or no income, who can’t afford to rent or buy a home privately.

    The housing market is ever-changing, and the shortage of affordable properties is creating an impossibly high demand for secure housing. Many local authorities are inundated with vulnerable people waiting for accommodation, with few suitable properties available to house them safely. In 2023, there were 63,605 affordable homes delivered in England. While 1.21 million households were on local authority waiting lists for affordable housing.

    With investment into social housing, local councils, housing associations, charities and social care operators can provide homes that fit the budgets and lifestyle needs of vulnerable people in our communities, and help to close the gap between the shortage of houses and household waiting lists.

    assisted living

    The Pros & Cons:
    Investing in Social Housing

    If you’re looking to expand your portfolio, social housing is a strong and reliable financial investment. It brings steady and secure income and helps to do good by addressing housing needs in communities nationwide.

    Benefits

    1. Steady and secure return on investment.

    Social housing is backed by the UK government, meaning your capital is more resilient to economic changes. An immediate need for social housing up and down the nation ensures a reliable stream of long-term leases and low tenant turnover – so your income is regular and predictable.

    2. Make a difference in the local community.

    Helping to provide affordable housing for vulnerable individuals and families will make a positive difference to local communities. Addressing the housing shortage and supporting the wellbeing of low-income people helps them become financially independent, keeps families together and strengthens ties to the community.

    steady increase and ROI

    3. Expanding your investment portfolio.

    Social housing investment is a great way to diversify your portfolio. Regular stocks and shares can be volatile, and private renting requires significant upkeep. Investing in social housing can reduce risk exposure in your portfolio and help you gain strong financial return.

    4. Sustainable and eco-friendly buildings.

    Many social housing properties are built with sustainability in mind. Socially responsible investors might want to invest in housing built using eco-friendly materials and designs, or properties that utilise energy-efficient facilities and sources. Investing in environmentally responsible property can help to build greener homes and better futures for local communities.

    sustainable housing

    Risks

    There are many benefits of investing in social housing – but naturally, there are a few things to take into consideration before making the investment decision.

    risks

    1. Changes to governmental policy. 

    Governmental policy surrounding the rental industry is reviewed and updated regularly. While social housing is backed by the government, it’s important to keep up to date with policy changes that could affect your investment. By understanding the state of the housing market, you can put steps in place to mitigate any risks to your finances.

    2. Rising legal costs and taxes.

    As with any property investment, some legal costs and taxes must be covered. Such expenses may include Insurance Premium Tax (IPT), Capital Gains Tax (CGT), as well as standard expenses like stamp duty, legal fees and transaction costs. You should take these costs into account when deciding if the investment is within your budget and suits your needs.

    3. Limited choice of locations.

    A significant challenge facing social housing is choosing areas that are attractive to the needs and preferences of both tenants and investors. You must evaluate the suitability of potential locations based on their proximity to schools, employment centres and other amenities to determine the success of the social housing investment.

    risks

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