What is social housing, and who is it for?
Most social housing is made up of rental properties, which provide an affordable and secure housing option for low-income families and individuals across the country.
There are several different types of social housing – including standard houses and flats for long-term tenants, temporary accommodation for vulnerable people, and assisted living, which is most often used by the elderly.
Individual councils may have different rules about who can join the social housing register, but according to Shelter, the following people are always allowed to apply:
Other prospective social housing tenants might include people in a refuge due to domestic abuse, anyone who has left the armed forces in the last five years, or those who have lived and worked in a certain area long-term, but can’t afford private housing.
The Benefits of Investing in...
If you’re looking to bolster your property portfolio, social housing is an ethical investment opportunity that offers a stable ROI. Let’s take a look at some of the benefits in more detail:
Social housing generally offers tenants a longer lease than private housing – for instance, a flexible tenant in a council house will usually sign a tenancy for at least 5 years. This requires a long-term commitment from investors, but makes social housing investment a low-risk option which can provide steady rental income over several years, while the property grows in value.
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. Not to mention, there are no service charges or property management fees to cut into financial returns.
Sustainability is a growing priority for social housing projects in the UK – and even housing that isn’t sustainably built in the first place may undergo eco-retrofit works to reduce the carbon footprint of the property. Socially responsible investors might look to purchase environmentally friendly social housing with solar panels, proper insulation and other similar green measures in place.
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.
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 properly cared for, without the involvement of a letting agent.
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 any repairs and maintenance, as well as restoring the property to its original condition at the end of the lease
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.
Different Types of Social Housing in the UK
When you hear “social housing” – council housing is usually the first (and only) type of property that springs to mind. In actual fact, there are many categories of social housing in the UK, which represent robust investment opportunities
Council housing (or local authority housing) is specifically owned and managed by the government. These properties are usually rented out to families and individuals, and rent is determined using a national formula that takes into account factors like property value, size, location and income levels to improve affordability.
This type of social housing is owned by housing associations, which are comprised of registered social landlords. Housing associations are non-profit organisations that invest all the income they generate into providing quality social housing at an affordable rent, with long-term tenancies for people who need it most.
Assisted living, also known as supported housing, provides safe accommodation and services for vulnerable people. This often includes people with physical or intellectual disabilities, specific health concerns, or the elderly. Assisted living often has additional healthcare facilities on site, as well as trained carers and staff on hand to help.
Unlike the long-term tenancies offered by council and housing association properties, temporary social housing is usually an emergency measure. It’s generally used by anyone in urgent need of housing – like families or individuals who would otherwise be homeless – and is provided as a short-term solution until more permanent housing can be found.
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