Investing in Supported Living: Everything You Need to Know

If you speak to landlords about why they chose to become a landlord, one of the answers you’ll often get is that they welcomed the opportunity to help provide a home for a family.

Most landlords take this obligation seriously, there are numerous tales of rents not being increased so that tenants aren’t forced to look elsewhere during times of hardship.

One area of the market where this is particularly true is in the field of supported living, although this is often not widely recognised as an opportunity by existing landlords or those looking to invest in the property market.

As buy-to-let professionals with years of experience, we’d like to introduce you to a market sector where your investment is not only profitable, but has real and lasting social impact.

What is supported living?

Supported living is a situation where an individual requires assistance to reach their full potential. It may be that they need regular visits from carers in their own home, or they might benefit from a community where suitable care is always on hand.

In the latter case, that community may be a single property comprising a number of individual dwellings, or it could take the form of a ‘village’, again with individual dwellings all centrally supported by a care provider.

Supported housing

Supported housing is a collaboration between property investors and housing/care providers to provide safe sustainable homes to some of the most vulnerable people in our society.

Supported housing can often have an incredibly positive impact on an individual’s quality of life by providing them with an independent home within a supported environment.

The specifics of the support provided and the nature of the dwellings will vary, sometimes within a single development, depending on the requirements of clients and the level of care they require.

Some properties provide 24-hour care others might only have care and administrative staff present during working hours. The specifics will depend on the site and the level of support offered.

Regardless, the aim remains the same, to allow residents to live an independent life, safe in the knowledge that the care they need is always available when they need it.

Supported housing and the property investor

How does the property investor feature in this? You may be surprised to learn that the answer is ‘quite highly’!

Many supported housing developments are created by the private sector and as such they are constantly seeking investors to support their work.

It’s not unusual for these organisations to operate as not-for-profit entities, although their customer-specific services are conducted on a commercial basis.

Consequently they are seeking investors to take on the financial responsibility for individual dwellings with the benefit to investors of healthy yields and the prospect of capital growth.

While obviously not identical to the buy-to-let market, the underlying principles are similar.

The landlord invests in the supported housing scheme, purchasing one or more individual units.

A lease agreement will normally be between them and the organisation running the supported living development.

The property itself increases in value over time and should, depending on other economic factors, deliver a substantial profit when the landlord comes to sell it.

Key differences between supported living and the open market.

There are some important differences between investing in supported housing and investing in property for letting on the open market.

• Yields tend to be consistently good, being in the region of 10% currently.

• You’ll have no management fees or requirements. You’ll only be responsible for ensuring that any structural repairs are dealt with and ensuring you stay ahead of any compliance issues.

• Rental voids are exceedingly rare; even so, the investor has a guaranteed income as a result of their lease agreement with the support provider.

• Likewise you won’t encounter rent arrears, nor will you have to dedicate time or resources to tenant management; this is the responsibility of the care provider. As a result, you won’t have to worry about private rented sector legislation.

Experienced investors will appreciate that as with all investments, each one is different and it is vital that you check the individual terms of your lease to ensure that you know what your obligations are.

Advice from the property pros

Investing in supported housing is a win for all concerned. Your investment ensures that provision is maintained, or increased. Care providers can offer their services to greater numbers of clients, improving the quality of their lives.

The public purse benefits since supported housing is more cost effective than institutionalised residential care and the individuals concerned get the opportunity to literally live their best lives, safely and securely.

The key difference for the investor or property owner when compared to a private sector let is that you’ll have a long term lease with a professional organisation. This means you’re not subject to the possible issues inherent to the PRS.

In summary…

Investing in the supported housing sector is still somewhat specialised, so if we’ve piqued your interest, please get in touch to discuss it further.

Should you need them, there are mortgage products available for those looking to invest in this area, and while we are not mortgage brokers or financial advisors, we can point you in the right direction.

What sets the supported living sector apart from the PRS is the risk-benefit equation. HMOs, for instance, can be very profitable, but they can also be risky. Supported housing offers similar benefits but with very low risks.

That’s not quite the same as stumbling across a unicorn in a forest glade, but it’s close! Investing in supported housing offers a low-risk, stable return, combined with a largely hands-off commitment.

And lastly, your investment will make a lasting and positive difference to the lives of some of the most vulnerable members of society today. That might yet be the best return you can hope for.Please get in touch if you’d like to know more about the opportunities we are able to offer right now.

Written by John Forth CIHM, Property Consultant at Portolio

Get in touch on 07714 758 320 or email to [email protected]