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Social housing property investment

Social Housing Investing: The Real Game Changer

The term “social housing” in the UK refers to low-cost housing provided by a local council or housing association. Social housing tenants rent a home from a housing association or the local council, which serves as the landlord. A new type of property investment that is both ethical and profitable has become available for investors who would like to diversify their portfolios. The social housing markets offers advantages for medium and high budget investors, and it looks like we will be hearing about it often from now on.

What is social housing?

People who need a home but lack the funds to buy one or pay full rent can benefit from the government’s social housing programme.

Social housing is a highly regulated sector, where operators are required to be registered with local housing associations. Social housing is massively undersupplied. According to UK Parliament archives, “estimates have put the number of new homes needed in England at up to 345,000 per year, accounting for new household formation and a backlog of existing need for suitable housing.”

However, a report released by the Ministry of Housing, Communities and Local Government said: “Since 2010, this government has delivered over 464,000 new affordable homes, including 114,000 social homes.” The numbers show that, whilst demand remains high, supply remains far away from the government’s target.

What is the social housing market for investors?

The social housing market had always been available to large institutions such as hedge funds, pension funds etc. Taking advantage of the government-backed leases. In the last few months though, developers have started to delve into the social housing market, making the market available to retail investors.

Why is the social housing market advantageous for investors?

The property market prices have skyrocketed in the last few years. Although some thought that Brexit would put a strain on prices, real estate proved its resilience, breaking one record after the other. The only thing that has changed is the buyers’ focus which, during the pandemic, shifted from small apartments in cities to homes in the countryside that make remote working easier.

The market entry minimum can be a five-digit figure and the minimum government-backed lease is 5 years. Investing in the social housing market could be a fine opportunity to start building an investment portfolio based on one of the most resilient assets in the market.

Let’s take a look at the 4 key features:

No Usual Mortgage Hiccups

Investing in the social housing market doesn’t require large amounts of funds. On the contrary, this type of investment is suitable for individuals whose incomes are not high. Although banks don’t offer mortgages yet, the sum of money required to invest is not unachievable for people who always save part of their salaries.

The absence of a mortgage also means that you wouldn’t have the anxiety of negotiating a mortgage with the bank. Another significant advantage is that you eliminate the risk of changing circumstances for the worse, a factor that could affect your budget and your financial planning. Without the requirement of taking out a mortgage, transactions are quick, minimising your stress and anxiety.

Secure Income

When you purchase a Buy-To-Let (BTL) property, renting it sometimes can be difficult. Sometimes you just can’t find tenants, and it also involves risks such as potential inadequate maintenance from their side.

The social housing market is a secure income-generating asset as it is related to government-backed leases with a duration that varies from 5 to 20 years. The guaranteed income deriving from your investment allows you to plan your next investment moves carefully, multiplying the possibility of success.

Portfolio Diversification

It’s no secret that having an income from a rental guaranteed by the UK government is one of the best ways to diversify your portfolio. Although financial markets have broken every single record there is in the last few years, there are always risks that investors should predict and take the necessary actions to minimise them.

Investing in the social housing market can do that for your portfolio. Property is and will likely be a resilient asset when financial markets fluctuate. Investing in property with a government-backed guarantee seems to be the ideal solution.

Ethical Investment

Some economists suggest that investing in the social housing market could start a pioneering collaboration between investors and housing associations. The collaboration could help tackle the UK housing crisis that became even worse because of the Covid-19 pandemic. Affordable homes are what families with financial problems need; therefore, investing in this type of market might help solve the problem for many people.

Got questions? Ask Holborn Property

Careful financial planning and thorough investment research can help you achieve your goals. If you don’t feel comfortable designing a financial plan yourself or you lack the time and knowledge to do it, you should seek the help of a professional fully qualified independent financial adviser. Holborn has more than 20 years of presence in the financial markets and recruits the best advisers to offer top-notch services.

If you are interested in UK property investments, our property experts are on hand to guide you through the process and assist every step of the way. If you would like to find out more contact us using the form below.


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