The Property Unleashed Podcast

A Landlord’s Guide To Social Housing Leases And Safer Cash Flow

• Mark Fitzgerald • Episode 372

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Buy-to-let is getting squeezed from every angle, so we go straight to a strategy that many landlords are eyeing for stability: leasing property to social housing and supported living providers. 


Emily joins us to explain what these leases really are, why they’re suddenly “hot,” and how they can offer long-term, predictable income while also creating genuine social impact during the UK housing crisis.


We get clear on definitions that are often muddled online. Social housing in this investing context often means leasing to a provider for temporary accommodation or emergency housing. 


Supported living is different from a care home and typically involves residents who need an element of support. In both cases, your lease is with the provider, not the end user. That changes everything, from day-to-day management to void risk, and it’s why people describe the model as more hands-off than standard residential letting.


Then we dig into the details that decide whether this is a smart move or a painful one: how rent is funded via local authority pathways, what “government-backed” does and does not mean, the split of responsibilities under different lease structures like FRI, and the compliance and property standards you may need to meet. We also unpack the financial reality, including why some leases sit near market rent, when exempt accommodation budgets can change the figures, and how commercial valuation based on income can create refinance options for portfolio growth.


If you’re curious about supported living property, social housing leases, guaranteed rent claims, provider due diligence, and commercial uplift, this conversation will give you a grounded framework to evaluate real deals. Subscribe, share this with a landlord who’s rethinking their strategy, and leave a review. What property do you own right now that might fit this model?


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Welcome And Sponsor Message

SPEAKER_02

So we've still got a great session here. We are still rocking and a rolling, as I'd like to say. Today's event is sponsored by our property investing community, education to action, taking the knowledge that you have and helping you take all of the steps with the mentors and coaches there. So do feel free to check out that platform. If you want to have a go, you can check it out for just a pound. So that leads me now to our next specialist, our next insights as well. I'm going to bring Emily to the stage. She's a fantastic business lady. She's done lots of different strategies herself, which she'll tell you all about. It's amazing that she's given us the time today to come and speak to us about something that's quite close to her heart, which is so social housing and supportive living. And of course, it could be a tool or it could be a strategy that you want to use on property investings or property investments that you're finding as you're going forward. Hello, Emily, great to have you on today. How are you?

SPEAKER_00

I'm good, thank you. How are you, Mark?

Why Social Housing Is Growing

SPEAKER_02

I'm very well, I'm very well, thank you very much. And it's an absolute pleasure to have you. So without further ado, I shall give you the stage and leave you to it. Thank you ever so much, and I'm looking forward to this one.

SPEAKER_00

Thank you. Right. Can you see that? Does that look okay?

SPEAKER_02

Yep, all good.

How Provider Leases Actually Work

Supported Living Vs Temporary Accommodation

Funding Flows And Why Rent Pays

Maintenance Responsibilities And FRI Leases

Compliance Standards And Property Adaptations

What The Numbers Really Look Like

Commercial Valuation And Capital Recycling

Property Types That Fit The Model

Location Rules For Different Needs

Risk Checks On Providers And Insurance

SPEAKER_00

Cool. Right. So thank you for having me, first of all. I am really excited to come on here and speak a little bit about sports living and social housing. I think this is a strategy which is getting a lot of attention at the moment. Naturally, it's a really good strategy for investors, but there's also the side to it that is, you know, social impact as well. So I'm going to touch on that a little bit today. Um, I think that this is definitely um quite a hot topic in the property world at the moment, and part of that is just because Bid Solette is naturally not going in the right direction. So this just provides a little bit of a safer exit strategy. So yeah, we're gonna get into it. So at the moment uh in the UK, what we do have is a housing crisis. Um, so it's something that has been around for a while, it's something that's not getting better. Um so what I'm gonna do is talk a little bit more on social housing. I think that sometimes people kind of cross between supported housing. There's so many terms out there, and that it's really important to differentiate the two things. Social housing, generally, from an investor's point of view, what we would be looking at is sort of leasing to a provider who's going to use the property for temporary accommodation, emergency housing. There'll be different terms out there, but they all kind of fall under the same thing. Um, at the moment, um, statistics there are a lot of families and a lot of children who are on a waiting list for council housing at the moment. Um, and what we are seeing is year on year that gap is actually widening, it's actually getting a lot worse. So, um from an investor's point of view, it's something for us, it's you know, it's a social impact of doing something in the housing vulnerable people, which is fantastic, but also it's a bit of a recession-proof property strategy as well. So the opportunity for landlords, this is what we've got at the moment. So, with obviously Vitalat, naturally, we'll touch on that later, and I know we've probably chatted on it before, it is not ideal at the moment. I think that having a lease with a provider is a lot more secure. Now, what you would have with this is generally a longer term lease, so it can be anywhere from five to 25 years. In some cases, it might be shorter, sort of three years. But what you are doing is essentially leasing your property to a company rather than the tenant. And this is really key for us to talk about as well because in temporary accommodation, um, there's so many terms out there that the council call them customers, um, they might call them clients. What they are not are tenants, so kind of like service accommodation, they essentially they're on guest licenses rather than um AST. So you've got the control over the property as well, which is really important. Um, you've obviously got the long-term stability as well, generally the maintenance is taken care of, and in some cases you will get a little bit above market, it really depends on the provider, and then there's the social impact as well. I mean, housing people who are coming out of like B's, or they perhaps have not had a very nice experience, and there's a reason for them having to move, you know, out of the family home. I think that's really key. I mean, everyone's here because we're running a property business, um, but that's also quite a nice thing to think about with this strategy. So essentially, the UK housing crisis is getting worse, and there's always going to be a need for temporary accommodation, which is what we're looking at in sort of social housing today. Um, what is happening at the moment is a lot of councils are utilising sort of like hotels and BBs, and they're starting to sort of clamp down on that because it's not it's not suitable for someone to be, you know, with children in that type of accommodation long term. Um so for private landlords where we've got the stock that's ready and available to go, this is a really good opportunity for us to release to the housing associations who are then dealing with the council and getting those nightly paid accommodations. So supported living is slightly different. So I just wanted to start by explaining a little bit about social housing and what that looks like, and then touching on supported living, uh, and then coming back to what that would actually look like in a real life example for properties that people here may have or may be looking to kind of add into their portfolio over sort of coming months or years. So, supported living is actually quite different, and I think, like I said before, there's so many times out there that it can get quite confusing. Um and ultimately for us, what we're kind of interested in is not so much the tenant type because we don't see what happens beyond that lease. That's the beauty of the strategy, it's more so sort of the funding and the margins and what that might look like to you and I uh as a lease. So supported living is is different. Now, a lot of people get it confused with care um or care homes. Supported living is is not that, it is someone who requires an element of support. Temporary accommodation is different, that is where someone just needs the accommodation, they do not need support, you know, they do not need a care worker, they're two different things, but your leases essentially with the provider, they're gonna look the same. So, tenants in a supported living lease, they hold they hold a tenancy, but that tenancy is with the provider who you are leasing to. So, a little bit about how it works. So, as a property investor, um, your lease would be with either a care provider or a housing association or charity. It's never going to be with the end tenant, the end customer, the end user. Um so essentially what we're doing here is a company let. So the first benefit to that is you've got complete control over the property. With um an AST and especially all the rules and regulations that are coming into play, with a company let naturally, if they were to ever say default on rent or anything like that, you are within your rights um to get rid of them immediately. We don't have that pleasure with tenants, unfortunately, with it being their main residential home. So that is quite important. Also, with sort of proposed changes that are coming in in you know, sort of May onwards, where we're looking at having say rolling monthly tenancies, this is going to be fixed. Okay, so the shortest lease that we generally do would be sort of three years, and generally it's five, it can be up to 25 years as well. So that is um what I'd say sort of a set and forget type strategy. Um and again, yeah, we've got the benefit of it being a company. The funding, this is really important as well. So when you lease to a company, um, being a housing association, a charity, a care provider, whatever they might be, the way that they are getting paid is directly by a local authority. Um, generally through housing benefit, and it depends on kind of which route it goes down. But essentially what that means is it's it's and we hear this time being flown around, it's government backed. Um but they are being paid in order to pay you, and that's really, really important. Whereas obviously with a normal tenant, we're relying on income, circumstances change. We know that they're constantly having that stream of funding, which means us as a landlord, we are safe, we know our rent is going to get paid on time. So, yeah, the rent is paid by the provider to the landlord, and then they are receiving the money from the council and then the government. The other key benefit to this type of strategy. So it's uh I think with sort of your residential leasing, what a lot of people don't account for, and I see it quite a lot, is actually your voids and actually your management as well, and your maintenance. So if you have you know constant issues throughout the year, that can really eat into your profit margins. Generally, with these types of leases, again, it does it varies, it varies depending on sort of the provider that you go with, but they will take care of a lot of the management and they'll take care of the maintenance and they'll take care of sort of minor repairs and things like that. Generally, with the longer leases, it's a full FRA, so they'll uh they'll take care of everything. Usually, what we see is it will be more of like an internal and it will kind of go that way. So, exempt accommodation. So I thought what's the easiest way to try and explain this? Essentially, exempt accommodation means that certain um sort of providers they're not capped by local um housing allowance, which in short, in plain English, what this means is they have higher budgets, which means they can pay more for certain properties. So it's more to do with, you know, uh the care side of it, if they need amendments and things like that. It means that they've got a bigger budget to pay the rent, which is really important. Um, and this is something that um for us is quite important when it comes to sort of a longer lease, um, because we'll we'll get into sort of commercial value and how that affects that. So the care provider, so again, there are sort of different, you know, different providers out there. So you may end up leasing to a charity, a care provider, a housing association. Essentially, their role is to deal with the end user who's in the property. Um, so they would be responsible for speaking to the tenant, making sure they're okay if they've got issues with the property day to day, they would deal with that. In terms of maintenance as well, and they generally have sort of their own management teams that are in place to deal with that, and then compliance. So, again, it's it's really important to note that depending on which route you go down, you may still have some responsibility, for example, to maintain your normal compliance, like your gas safety, your EICRs, your EPCs. Um, but in terms of like servicing boilers and bits and bobs like that, and generally that's taken care of. The exception to that is if you've got a longer-term lease, when we're sort of getting to 10, 15, 20 year leases, uh, everything is is taken care of within that. So, why are landlords walking away from buy-select? So I think there has been a real surge of interest in supported living and social housing recently, and I think that's got a lot to do with the changes that are coming in around sort of biceps. Um everyone's looking for a new strategy. A lot of people are just selling up at the moment, and that's got a lot to do with, as we know, um in short, it's becoming more stressful, it's becoming less financially viable, it's not really making much sense. And this kind of fixes a lot of those problems. If you're looking to hold staff and hold a portfolio and lease it out, you don't have these same problems that we've got with standard buy selects. So touching back on the lease agreement and understanding them, FRI leases. Yes, we tend to see them with the longer term. That generally is going to fall under sort of social housing more so you 10, 15, 20, up to 25 year leases, those are generally going to be FRI leases. So they are responsible for the boilers, they're responsible for the day-to-day maintenance, they're responsible for the compliance around the property. With the shorter leases, it's key to understand that generally it's what I'd call sort of a light FRA. So FRI rather, so it's more internal, structural remains your responsibility. Occasionally, sort of the plumbing and the heating will still remain your responsibility. I think it's really important to know that as we go along because this is a fantastic strategy, but there are a lot of things to consider with it as well. So guaranteed rent, um, ultimately, that's something, and again, we're going to touch on this because there's conditions to it and there's things to consider. But with this type of strategy, there is always going to be funding. Your rent is going to be as guaranteed as you can get it, essentially. So, government-backed funding. So, just to touch on this again, um essentially the provider who is going to lease the property from yourselves, though they are going to get funding from local authorities, meaning councils. Okay, so they've got certain budgets, again, depending on who their end user or the end tenant or end customer, whatever you want to call them, they're going to have certain bots of money, which is which is essentially funded by the government, goes to the council, goes to the provider. Um, and that de-risks it in the sense that unlike or or instead of that, you know, you had a residential tenant in there, you are relying on income. There are providers out there who don't necessarily have sort of contracts behind them, and it's something that I'll come come back to later. And I think it's more to explain that this, you know, there are risks to every strategy, and this isn't picture perfect. I see a lot of content out there that kind of explains supported living, you know, care leases, they're so fantastic, there's no problems with them. But you do need to know what to look for as well, because there are sort of new providers out there who potentially just crossing their fingers and hoping to get a contract and leasing property, and that's where the problems can arise. So the other thing to consider with this, especially something like social housing, especially a temporary accommodation route. So if a housing association was to lease your property from you, temporary accommodation is not is not something where they will stay in the property for a guaranteed period of time. Ultimately, it's a stop fill. Um it's it's an interim solution for the council to house people before they moved on into longer-term accommodation. So, what that means is if they were to rent your property from you and they had, we might call it a booking, say, for two weeks, and then they didn't get another one for three, that's never going to be your problem because you get your rent at the start or the end of the month, however it falls. Um and those voids are essentially all on them. You know, they're the ones doing the move-ins and the move outs. So that's really quite important. Um, I think that when people compare numbers um, you know, to sort of the residential market, they I don't really see a lot of the time people accounting for, well, actually, I might only have a tenant for six months and then I'll have to remarket it and it might be empty for two. Um, and that's something that's really important. You know, if you've taken on a five-year lease, it does not matter whether they've managed to fill it, it doesn't matter whether they've only had a few people in there. And that's never going to be something that concerns you. You get your rent on time every month, and it's predictable as well. So I know we've touched a lot on, you know, potentially this is an alternative strategy for buy-solette, um, but also service to accommodation. Uh so we we've done a lot of work with old properties that were running a service to accommodation, and they were just a little bit inconsistent. I think anyone here who's done service accommodation, you know it can run like this, and especially if you're leasing the properties as well. And and with this model, you essentially know what you're getting every single month. So if you're running a service accommodation and you move over, you know, January, you're not going to be struggling to sleep at night, which yeah, it's always the worst month for SA. So moving on, um, maintenance and management, so just a little bit of side by side for what it would look like. Um, traditional management, so naturally we would assume that you're self-managing, but even if you've got a management agent, the other thing to consider with that is you would be paying them out of your rent, whereas generally when we're leasing to a supported living provider, they are managing within the rent, if that makes sense. So you're not losing that margin. Management fees are really expensive now for residential lettings, they are starting to creep up. Um, and ultimately, despite having a manager in there, if you've run into problems with rent and getting rent paid on time, there's not an awful lot you can do about it. Um, and we we all know that's gonna get a little bit worse. So, supported living. So, in short, if it is leased by a charity, a housing association, a care provider, um, you will never deal with the tenants, okay? The tenant, the customer, the client, whatever we want to call them, you'll never deal with them. They're never gonna be your concern. They are being managed by the company that is leasing your property. So your only dealings will ever be with them. Um and generally, because we know that management is taken care of, the only dealings you're really gonna have is then paying the rent. So the provider handles all of the maintenance. We know we've got no voids, rent arreas again, will come back to sort of the strength of providers and things to be wary of, but you're generally gonna get bent on time. So a truly passive hands-off income, it's about as passive as you can get, conditional to getting a really strong provider in there. So, a few things to consider, and again, it it depends which route we go down. So, social housing, you know, whether that's temporary accommodation or actually you rent to the council and you're doing private. But sort of social housing. The property standards and the compliance isn't always the same for a residential tenant. So, of course, we need our standard stuff: our EPC, EICR, gas safety. Sometimes there are additional bits of compliance that we need to consider. One is legionella testing. Certain providers like to have that in place. Another might be asbestos. You know, we want to have a test for that. It really does vary, but it's something to be in and know about that your standard compliance doesn't always cost it. When it comes to going more down supported living and a little bit more specialist, there may be additional things like fire risk assessments, and we may need emergency lighting, we may actually need to do some adaptations to the property to make it suitable for the end tenant as well. So, with some of the properties that we've kind of helped deal with in the past, what that looks like to you as a property owner is the provider would take over the lease of the property and actually they would fund and pay for adaptations. So that might be a ramp, for example, for a wheelchair user. It might be that they put in a wet room downstairs because it's suitable for the person who's going to use that property. The key thing to note with that is generally it's done at their expense, and whenever you get the property back, it looks the way you gave it to them. But it's just things to be aware of, and that you know, it's not always a case of here's a property, there you go. Rather, we've got to ensure the property is suitable for what they need as well. So speaking on the most important part for a lot of people here, we're all here for business. Financially, what does it look like? So we've touched on all the benefits of doing, you know, a company led to a provider. Why is that better than service accommodation or buy to let? We know now longer-term leases, less hassle, you know, maintenance is generally covered, voids aren't really a problem. But how does it look financially? And I think this is really important because there is a little bit of misinformation out there. And again, I'll go back to my point that there are so many providers out there, and all of them will have different budgets, and depending on the sort of end user in the property, they're gonna have bigger um you know, parts to play with, if you like. Um and that being said, they are still running a business. So um, as Mark always likes to say, it's always about finding a win-win. So a traditional bicep, um, again, we've touched on all of the issues that comes with. Yeah, I'm not really keen on bicep, I think of uh express that on this call. Now we know that, yeah, we can see what our yields look like on that. We also know I've noted here six to 12 month ASTs that could end up looking like monthly monthly rolling after me as well. So with supported living, and I'm gonna be really careful how I explain this one, and because again, it varies. Some supported living leases actually look closer to market rent. So if you've got a three-bed bungalow for you know, just for an example, and you can get 1200, you may only end up getting 1300 pounds for it, but you would get it on a longer-term lease. So the way I would look at that is well, I haven't got to deal with any voice, I haven't got any maintenance, I certain forget it, and also I might have the commercial uplift, which we'll come to a little bit later. However, with certain types of supported living, and a really good example I put here is like an HMO, for example, they may have, you know, if they've got sort of a higher need user in there, they would naturally have a larger budget per bedroom. Um, so that's the ones where we can start getting, you know, above market rent. It's a different, it's it's done in a different way. Generally with your long-term, so you really, really long-term stuff like your 10 years and your 25, you specialized leases, those are the ones that actually you may end up getting below market rent or somewhere in between your LHA and your market rent, but you've also got your property lease for 25 years. So it does vary. There are instances where you'll get market rent, but all the benefits on a long-term lease. There are instances where you will get significantly above market rent, but it might be shorter term, it will probably need a lot of adaptations, and that's just really key to think about. So, um, what we have at the moment, so just going back to sort of the start, we know that we have um essentially a housing crisis. That's where we're at. Now, the local authority they have a legal obligation to house vulnerable adults. So, whether that is someone who is in need of a long-term housing solution, so it's temporary accommodation, whether it's a carelaver, so it's a child who grew up in care, and now they're sort of being moved on to the next step. Whatever that looks like, it all falls under the local authority. What we have at the moment, and I I actually read a really interesting statistic the other day, and I think it was 2024, but actually more sort of council social houses were sold and demolished and actually built. So the problem is getting progressively worse. Now, what do we have as property owners, portfolio owners, landlords, and people looking to develop portfolios? Well, we have instant stock to essentially fill that gap. We know that the demand is there and the supply is not. With that, number one, you know, ultimately we're getting a better return. We've got a more hands-off approach, it's a safer exit strategy than the alternatives, and but with that, you are you've got a social purpose as well. You know, you are genuinely helping people that need it, and I don't think that's spoken about enough in our industry. So, the other benefit to this type of strategy is your commercial valuation. So I did a little post on this the other day, and again, it's one that I see flying around, but there's butts to it, so I'm always gonna give you there things to consider with it. Um so your traditional valuation, and I think this is a nice sort of example for this one, might be say, you know, a BRR deal. So you'd buy a property, you're gonna do, you know, control your numbers, you do your refab, and then you've got your end value. And that is gonna be based on bricks and mortar. You know, local market rent, we we're going to assume with that one that we're gonna put a tenant or a family in that. Commercial valuation is slightly different, it's actually based on the commercial yield in plain English, how much the property makes and the commercial element of that property. Long-term leases are really key here. Um, and I'm gonna do a little case study a little bit later on on that. But essentially, you've got not only the cash flow of potentially a much better deal. So if you've got, say, an HMO and you're renting it room by room to support a living operator, you're making more money, but you've then also got the option to pull the commercial value of that property out, refinance it, and go again. And that's what a lot of people are doing to grow their portfolios. So we'll go into that a little bit more later. So, property transformation. So, for this particular strategy, we've kind of just assumed okay, well, we might have just sort of regular three-bed terrace houses or family homes or bungalows. Um, but actually, there's a way we can be a little bit more strategic with this as well. So I can give you a really good, really simple example. We had a property not too long ago, it was actually in the East Midlands, and it was a two-bed bungalow. But because it was a two-bed bungalow and it had another reception room, we essentially put a partition wall in, and then we could see three people in there. And naturally, the owner of that property got more rent. So, kind of how you would, you know, just with a normal BRR deal, creating extra bed spaces is is really quite key and something to consider with this strategy, especially for I mean for supported living, but also for social housing, so temporary accommodation. A lot of um providers, they will, and it's it's it's interesting. So I think landlords that are new to the space will kind of have their property and they'll go, well, it's really lovely, and it's had a brand new kitchen in. In simple terms, providers don't care. They don't care whether it's got, you know, it's got to be compliant and clean and you know, decent standard, but they don't care whether you've got Howden's kitchen or whether you sourced it from France, you know. What they are doing in their head is bed space, bedspace, bed space. That's how much we can give you. So if we create more bed spaces, there's gonna be more margin and more rent for us. Um, larger family homes, HMOs, um HMOs are an interesting one and because where they work and family homes don't in sort of social housing, is if you've got a large HMO, and generally the local housing allowance, if you go per room, it works out to be a lot stronger than it would on, say, a three-bed um, you know, terraced house. So where you've got, and I mean, to give you a case study, we we had one um again that was in the East Midlands, and where it was, it was sort of a mix of HMOs, so you would get a shared room rate, and others were self-contained. This large unit had a mix of those both figures. Um, so the rent, the total combined rent, um was actually higher than it would have been had they been rented out as sort of apartment by apartment or room by room, and that's something that we're currently working on actually to convert into a long-term lease. Large conversions as well, so residential properties. I think what I'd like to touch on with that is actually getting a larger property and making it suitable for a provider, so doing the adaptations, putting wet rooms in. Um, it's definitely one for another day, but what we've been doing recently as well is we've actually seen clients who have gone through a change of use and converted their residential C3 properties into children's homes, which is a whole different game. Um, there's lots of lots of funding in that, and actually that's a really nice, a nice cause as well, um, for children in care. But that is another example of how you could convert a standard C3 property into something that is effectively going to generate you more income. So, capital recycling. So, how could you refinance and essentially pull money out and you know go again? And which is all what we all want to do. So buy and reconfigure. Okay, so what you would want to be doing, and this is assuming that the people watching are you know naturally looking to buy, but if you buy properties that are underutilized, they're in poor condition, they need work, if you can buy them at a good price, you know, that that normal refurb, you're gonna you're gonna get the equity out of the property, you're gonna get the uplift, and that's your site sort of starting point of how you would make money out of this deal. Um you can refinance the property, pull the money out, um, and then once you've got a lease in, you can do it again with the capital uplift and then go again and keep scaling. Now, with sort of the commercial uplift, one thing that I would say it's really important. Now, disclaimer I'm not a uh mortgage advisor, can't give you financial advice, but I actually did speak to um someone who does commercial lending just to kind of get their solid take on it before I came on and uh spoke to everyone around it. Now, the thing to consider is the main thing to consider is you do need a strong um provider. If you have a provider who is popped up on company's house and they've been trading for three months and they've actually, you know, they're not backed by the government, that is not gonna bring a commercial uplift to the property. If it's someone who's been going for a long time or a decent amount of time, they've got a couple of contracts, you know, they're established. That is it's the the strength of covenant, right? It's they're they're the ones that you want in your property. Now, you essentially could, once you've got the lease in, it depends on the lender. Some will do it after like three months, but most commonly it's sort of nine to twelve months. So, say you've got someone in your property, after that period of time, you can basically re-um refinance the property and pull out that commercial uplift as well, which is something that we see happen quite frequently with investors that buy children's homes where you get a significant uplift because of the change of use and then the lease, and then you pull it out and you go again, which is the strategy that you know anyone who's looking to scale, we're looking to recycle our money as much as possible. So repurposing on new space. So commercial to ready is a great strategy here, um, where we've got um old rundown hotels or BBs, and actually converting those into self-contained flats, for example, um, that is something that you know, if it was big enough, that is something you could potentially look to secure a longer term, you know, sort of 10, 15, 20, 25 year lease on. It's perfect, it works for sort of time accommodation, social housing, it can work for supported living as well. But what we've got to remember with supported living is if the level of support is more physical, you know, disabilities and things like that, does it have a lift? Means it's sort of all things that we've got to consider. But that's where essentially what we what we're trying to say is look for properties that are they're struggling, you know, the current use of the property isn't quite working. There's an opportunity there for you to earn off it multiple times. So, how would one go about getting into sort of social housing and supported living? What is the best way to do this if you're someone who is completely new to it, you don't know where to start? Um, so partnering um with um providers, number one. Now, what is quite key here um is that a lot of them are quite closed off to working with individual landlords. You will find some are more open to it. So I think there's companies out there that are really big and dominant, and everyone knows, but the smaller um providers, not the startups, we don't want the startups because they're no good, but the smaller providers, they're the ones that are going to be more open to kind of a better negotiation. A lot of the bigger providers, they're looking to pay probably below market rent because they're that big, they can scale, they've got stock coming everywhere. So it's kind of knowing the right ones to go with. Um, speaking of which, this is obviously what myself and Mark do. Um, so if you've got properties, we'll touch on this in the end, but do come and have a chat with us, and we can kind of have a have a chat through it with you. Your guaranteed leases, yeah, we've absolutely touched on that. So let's have a look, next one. So coming back to commercial uplift, this is what I wanted to touch on a little bit earlier. So, where you've got, and this is just a little case study, where you've got a standard property, uh, and for this example, your annual rent is 26,400 and the property is worth 350. If we were to put in a really creative supported living lease or perhaps a care lease, um, and that annual income was 48,000, you get the uplift from that commercial part of the property. So, as you can see here for this specific example, again, we know we've got to leave at 9-12 months. It depends on the strength of the provider, and there's other things to consider. But actually pulling that money back out after a year and putting it into something else, it's this is really key. And if you're gonna take anything from this, I think it's how commercial uplift through supported living and social housing needs are really important. Okay, so location. Why are towns and cities okay? Let's chat a little bit about this. So, this is not always specific to supported living. This is probably a little bit more specific to social housing. Um, so the reason for that is temporary accommodation or social housing being sort of like private rented accommodation through the council, so long-term social housing. They will want to pop them within their borough. So what that means is they're gonna want them to integrate with society, they want there to be, you know, hairdressers, shops, things around them, somewhere for them to potentially go and have a look, you know, and have job opportunities. In the city centre as well, you're generally gonna find um they've got sort of travel um routes as well, there's bus links or spaces for them to shop. That's generally quite important. Um, however, the flip side of this, with some um supported living or sort of like care opportunities, they actually want properties in the middle of nowhere. They want it to be rural, they don't want it, you know, to be on a busy built-up housing estate near a main road. So again, it it depends which route you which route you go down. But the thing to note with this is actually every property type does work for this strategy, but it's also dependent on the demand at the time, so it's got to be timed right. I mean, things like gibbon gross, those are quite easy to kind of move over onto this straight away. Generally, what you'll find is there will always be like an influx of need in certain cities at one time. Okay, so um again, just me talking about commercial uplift again, so just a little another case study. Um so we can see that with um you know, any type of property, this specific property was three bed semi-detached, monthly rent was 1200, net yield 4%, residential valuation 300,000. Now splitting the property into a four bed property um and putting in adaptations to make it more suitable for um sort of the exempt accommodation the higher rates and generating 3500 we then get the additional obviously additional income so more cash flow and then the commercial uplift to the property as well this was just an example it's not a it's not a real life one as well so real world repurposing so essentially again I think we've already touched on this you want to if you're starting out you want to take your tired worn out properties as you would do especially if you're purchasing you know something that requires a refurb and it's tired it's outdated there's a value add to that property and adding extra bed spaces and that's really important that's a really easy one as well if you're just kind of getting started larger scale opportunities um old care homes um BBs run down hotels converting them into self-contained that is um yeah really great strategy as well it just requires a lot of capital so not great if you're just starting out um and HMOs as well so interestingly enough so I'm based um around the Nottingham area and where someone asked this the other day I saw it on a thread and they were like why are there so many HMOs being sold but actually that's a really good opportunity I mean with what's going on and all the changes that are coming in in May to residential the student market's a little bit rocky here. There's a lot of stock and where there's a lot of stock there's going to be more you know room for negotiation around pricing. So actually taking on those properties and you're taking them from the you know the vendor who's like right this doesn't work student market doesn't work don't want to do residential lettings so I'm just gonna sell it and getting creative with the type of lease you're gonna put in there especially if you put a really strong provider in there you'll then be looking at that and go right I'm gonna get a great deal I'm gonna put in a great lease and then I'm gonna get the commercial uplift as well so lots of benefits to this strategy. Mitigating risk okay so and I've touched on it a few times a little bit sort of earlier on that this isn't a picture perfect risk free strategy. And like every other property strategy there is there are sort of upside downsides as things to consider due diligence being one of them and so we've got a little role we don't work with startup housing associations care providers unless they've got some sort of funding and they're backed it's a little bit too risky. Birmingham is a really good example where there's lots and lots of companies crept up and essentially a lot of these companies might just be rent to renting and then they're trying to get some sort of contract or they're just feeding off of someone else. So you want to see you know how long's a company been going do their financials look good and does this lease look airtight and does this work for me? Like anything else that's really really important robust lease terms. So generally with any sort of um especially more the specialized stuff where you know it might be like a high risk antenna you just want to ensure that everything is covered within there. You just want to protect yourself generally with larger companies they will just have kind of like set leases that you can't really amend and it's something that you agree to or you don't with smaller ones we've known them to alter things and it'd be a little bit of a negotiation um which is always nice to have and compliance as well so that's it you just want to ensure um that the property is the correct use so you know is it a C3 is it a C4 is it a C2 what do they need the other thing to actually consider here and it's one that I'm going to touch on briefly but if you look to go down this route your building insurance is that's really important and and also your mortgage you want to ensure that your product and your building insurance allows you for these types of leases not all of them do. Sometimes you've got to go down like a specialist broker route but what you don't want to do is ever not think about it and touch wood it never happens but you get into a situation where like your building insurance is void. Yeah there are certain things that you have to change when you go down this route. Generally that's because with sort of temporary accommodation a lot of brokers will just assume oh my goodness they're high risk you know they're gonna set the place on fire or whatever it might be. So they just have to you just got to ensure as a property owner that you're just ensuring everything's covered and as should be so mitigating risk so with any sort of provider so if we're talking about supported living they are generally going to be CQC registered and you can actually find out so if it's a if it's a children's care provider they're going to be offset registered. If it's supported living there'll be CQC. This is all public information so if you're ever dealing with a company and you want to have a look that's something that you can find out quite easily um a failed provider yeah that's something that you want to look out for. Essentially all we're looking for here is have they popped up out of thin air or have they been going a little while? Are they credible? Almost like you would do with just a normal tenant you know you're gonna look out you're gonna look at their credit file you're gonna check their income check everything is as it should be it's exactly the same just with a strategy we're just doing our checks making sure everything you know feels right everything's comfortable we're mitigating risk as much as possible so partnering with the right people yeah so specialist sources there are people out there uh myself included who work with um providers and essentially we know what they need what property types we know what sort of compliance is required um and we kind of do a lot of that work so actually um a lot of sort of landlords with stock if they've got questions and they're like oh actually can I do something with this I would suggest coming to us at the end of obviously end of today I will leave my email at the end just so we can have a chat. Again it's really important to note that it is it's depending on the demand at the time um especially with just standard sort of family you know residential properties at the moment I think we've got a lot of those in Nottingham it seems to be a harder place to shift unless it's a bungalow so this is something that's changing all the time okay so yeah I think that is kind of as much information as I've got for you today. So I just wanted to touch on everything as best I could I mean if there's anything that you're gonna take if there's one thing that you're gonna take away from today it is it's definitely a good time to have a look at this. And the reason is there's so many property investors and landlords out there who all they've ever done is sort of white.

Live Q&A And Practical Next Steps

A Real Deal Story And Final Wrap

SPEAKER_03

So what we are seeing at the moment is a lot of properties that are going up on the market or they're being sold off market, things that work just student accommodation, things that are worn out and having this kind of knowledge and being able to restructure those properties um is yeah is something to really look at um we know that from the info we've gone over today this is um it's a little bit more um you know risk-free as well it's longer term it's hands off it's as hands up as you can get it so with that um I've left my email just at the end of this slide and if anyone wants to obviously come and have a chat and jump on a call and drop us an email and or give mark a message and we would be keen to chat to you some more lovely thank you very much Evelyn nice to nice to see you how are you I'm good thank you how are you yeah not too bad not too bad at all but thank you so much for that it was really well explained you know sometimes we need uh an idiot's guide to these new strategies and uh in the nicest way that was so well explained so thank you thank you so much for that I mean it's it's it's almost too good to be true isn't it but I know and you know there's an awful lot of especially adults young adults that are still being looked after by elderly parents some of them are only know what it's like to be in an institution if you could think about that for a minute and I think as property developers we have a right to help we have a moral obligation to produce property for for this sector because councils do not have the money to build them and I think it's just a lovely lovely thing and it's really good for the moral compass as you say yeah I mean it it's just such a lovely lovely thing to be involved in so I really tap my hat off to you that you're you're getting involved in that so well done you I just wanted to go through a couple of questions that I've got here if that's okay um we've got we've got a first question we've got from Domixia or Emily so this is for Emily do we need a HMI like a HMO license for supported living so if you if it's a property that is an HMO and they are going to be using it room by room generally you would you know if it's an HMO property um and it requires an HMO license they would want to see that what you don't need to do is change the use of the property so there's a lot of I mean at the moment but as we know you know regulations change pretty much every month at the moment there's always no information but at the moment no and supported living is something that can be done under C C3 or C4. And you don't need to change the use of the property okay that's that's very good thank you very much for that and would my property therefore need to be set up within a company structure or a personal name that's more of a tax question isn't it but what's your thoughts on that? Yeah it's more of a tax question you've always got to be careful answering those ones haven't you so in terms of if you were purchasing your property it it doesn't matter and if you had the choice I'd say definitely purchase it in a company it's one to ask a tax advisor but it's definitely definitely the way to do it but ultimately it doesn't matter you will have a company let with yourself which is either personally you the landlord or your company good good good brilliant I mean let's let's let's see if there's any more questions coming through I just wanted to tell you a little story actually Emily if you don't mind you know me I like a story I'm very observant I am I should have been a police officer really I'm very good at spotting things and I suppose it's because I'm in the property industry and I'm always looking for opportunities but I was driving down this lane on the outskirts of the town near me and I saw four half-built properties. There were detached properties that were half built up to about head height and clearly the grass had grown the building had come to a stop and it really did look like a forgotten building site. So me being me made a note of the address and I made some inquiries and found out that the particular site had gone into into insolvency. It had run out of money because essentially what they were building would never have been worth it at the end. I mean I'm in the northeast so the the GDV values for a four bedroom detached property might only be 300,000 so you know when I looked at the numbers the builder was never going to make any money and and it would never be built. So I so I I looked into it what I actually found was is that I stumbled into this supported living world I found myself contacting adult care because obviously supported living it would be a good way forward for it because it could be four we actually looked at turning it into 12 one bed apartments because you know with a bit of restructuring dormer roofs and it could also have parking for an ambulance although you don't need that it also had garages that we could turn into the care providers living accommodations. I literally created this supported living site with no I had no idea what I was doing Emily I was on Zoom calls with adult care a housing benefit commissioners out of my depth I promise you however the moral of the story is is that it nearly came together as a package it nearly worked unfortunately I got another register provider found out about it and sort of bought the site for more money I won't go into the detail but what I found was is that it doubled the GDV. So it turned this site into something that couldn't make money at 1.2 million it the the GDV doubled to two and a half to two it actually went up to 2.8 million because the it's their rents for life they're they're really really strong and and even trusts and pensions will start wanting to get involved when the site's big enough so I think that the moral of the story is is that if you're out and about look for sites especially new builds because you as you as you know as as I know it's easier to build from scratch because then it can be bespoke but look out for land that's not being used or bungalows that haven't quite been finished developments that you think could work. And the reason they like this one Emily is because it was actually on the edge of town but it was on a bus route and it was by a big supermarket. So it actually taught me a lot on what care providers need. So they're the people that are actually providing the care they need to get to work and get home again. And the registered providers they love it when it's out of town and not you know not really causing a disturbance so I just thought that was a a great story to to to tell everyone that we just need to be really really we need to get our eyes open to get out there and look for some of these developments that wouldn't make money under the current sort of situation the housing situation but they most certainly will make money with an enhanced rent that you get from local authorities. So be when you're out there driving around look out for these building sites because they can be very profitable can't they yeah absolutely I think when you start it's you know you saying that I'm like oh I've got some bungalows that are have they've been like that for ages near mine I'll have to uh send you some videos when I'm walking the dog later so I'll have a look at that and Emily here's the thing I sometimes I need to find the courage to get involved in these things I'm not just the perfect we all can suffer from a little bit of imposter syndrome especially when you're entering a world that you don't know about but what I would really I challenge myself all the time I try and stretch my knowledge I try and stretch the the network around me but the you know I was talking to Alan from adult care I wrote him we get on quite well it's all about building relationships because they just want to house vulnerable adults there isn't a commercial interest for them you need to understand that you can't talk numbers but what you can do is talk about giving them what they want so I I would say that adult care commissioners local authorities they're all people just wanting to get people housed so if we can put that hat on where we want to help people then why why can't we pick the phone up and talk to our local authorities? Why can't we have the courage to to go down this road? So I suppose what I'm saying is is that I think all of us should look at supported living is what I'm saying.

SPEAKER_00

You know and if we can work with you and Mark to make that transition really easy then why not you know just a quick question here from Jane because we're conscious of the time now we have got another speaker she just says Emily how could you could you please just briefly explain how you work with landlords yeah of course I'll keep it as brief as possible and essentially we work with a lot of providers already um so that's in the care space supported living social housing we can essentially what we do have a lot of the time is requirements in certain areas that's one way we can help is if you've got property in that certain space. But we are always open to if you've got properties or you're looking at properties and you want to explore whether that would be an option and what it would look like we'll have a chat with you and kind of talk you through your options. So um yeah always just reach out and and have a chat with us I'd be happy to get a separate call and go through to you as well.

SPEAKER_02

Amazing stuff amazing stuff well Emily an absolutely great presentation so concise so to the point but also easily digestible I have to say it was it was really good if you look at the uh comments in the chat a lot of people really enjoyed that I always appreciate your time and what you're doing as well absolutely doing an amazing job as James rightfully said it is a very rewarding sector to be involved in and what we're trying to say to everybody here is you know if you've got a property you're interested in this obviously you have to check your own compliances as well but we will be more in more you know we will be happy and more than delighted to have a little chat with you about what you've got what opportunities you're looking at and then of course how you can set yourself up for success going forward. So thank you ever so much for that today Emily it's great to have you on also if you've got your email and everything if you want to type it into the chat yourself uh just so that people can contact you and things then that would be great if that's all right with you.

SPEAKER_03

Yeah of course I can see a couple someone said my email wasn't working so I'll have to um so what I'll say I'll put in here just wanted to quickly ask a question we've got someone ask I think it was Malvin was asking about you know when does when did we get that commercial valuation what does that actually mean and I was just typing it in there that commercial valuations are based on the rental income not the bricks and mortar is that correct so yes it's it's based off the rent that it's generating unless you kind of change the use of the property so if you went down the route of like you know turning it into C2 children's residential home you would get the uplifts both sides if that makes sense but generally it's to do with the fact that it's it's a revenue generating property and you can sell it as that but again I touched on it it's got to be running for like a certain amount of time you've got to have a certain strength of provider in there for it to count and I think it's um yeah it's one to always speak to like a commercial lender on absolutely and you're right changing use class Silly Generous would would almost certainly be a commercial valuation the way I've always looked at it is if it can be defaulted to a family home then it probably won't get a commercial valuation that's the way that I've always thought about it.

SPEAKER_02

But yeah great great uh great answer thank you very much really enjoyed that Emily really enjoyed that thank you so much for having me amazing amazing well thank you to you both there uh let's move on to our next speaker now but no great to have you Emily thank you for your time today bye