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Social housing investments offer a unique opportunity for the property market

As the UK housing shortage worsens, government initiatives are encouraging private investment in social housing, with subsidies and tax incentives available to landlords, offering an interesting opportunity for those looking to diversify property portfolios.

What exactly is social housing investment?

Simply put, social housing investment refers to the process of investing in properties that are specifically used for social housing, including council houses, housing association properties and living facilities. Prices within the social housing market typically begin from £80,000 and generally offer returns of 8-10%.

Below we break down why this opportunity is ideal for property investors.

Investing in something socially responsible

Social housing is an ethical investment that makes a genuine contribution to society, assisting more than 250,000 people currently homeless and many more vulnerable people needing a permanent place to call home. The demand for social housing is expected to grow in the coming years due to population growth, changing demographics, and increasing levels of homelessness.

According to the BBC, English councils spent more than £1.74 billion on housing homeless people in hostels and B&Bs between April 2022 and March 2023. Not only is this incredibly costly, it also fails to provide a permanent solution to the problem.

With councils spending millions on poorly maintained temporary accommodation, there is a gap in the system to provide high quality properties that people can call home. By engaging in social housing, investors are helping to create affordable housing and secure, long-term tenancies for those who need them.

Long term returns

Social housing can offer tenants a longer lease than private housing, with a flexible tenant in a council house usually signing a tenancy for at least five years, making social housing a low-risk investment option which can provide steady rental income over several years.

These investments are 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, with no service charges or property management fees to cut into financial returns.

Little to no maintenance required

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.

Investing in social housing can eliminate many of the headaches typically associated with being a landlord while creating a passive income because housing associations provide secured contracts with income backed by the central government.

The housing association then pays 100% of rent directly to investors, who can enjoy uninterrupted rental income with attractive yields from 8% or higher.

Diversifying your investment portfolio

Investing in affordable housing is a viable strategy to diversify an investment portfolio. It offers an alternative to other investment types that can be more volatile, like stocks and shares. As it’s such a low-risk investment, you can reduce the overall risk exposure in your portfolio, and balance out any more traditional high-risk investments you’re putting your assets into.

This approach is becoming increasingly popular among UK property investors as the demand for affordable housing grows.

Tailor my Property

Tailor my Property has an extensive network of investment, property and financial experts who can help you diversify your portfolio and plan for opportunities like social housing investments accordingly.

Get in touch today to find out more.


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