Social housing: A hassle-free property investment that delivers secure, government-backed returns

If you’re looking to invest for income, social and supported housing can be an excellent way to make a really good return on your money. Entirely hassle-free, your investment will start generating income from day one and you can expect returns in the region of 9% or more.

Read on to find out how investing in social housing can deliver robust returns while also contributing to positive social change.

The UK’s housing crisis presents a potentially lucrative investment opportunity

With more than 250,000 people currently homeless and many more vulnerable people needing a permanent place to call home, the UK’s housing crisis presents a potentially lucrative investment for investors looking to do good with their money.

According to the Office for National Statistics, 278,110 households were either at risk of homelessness or already homeless in April 2021 to March 2022 – and this only accounts for England.

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

Although the government has been working to solve the issue since 2010, it’s clear to see that they are falling short and failing to keep up with demand. 

In fact, it’s estimated that more than £250 billion is needed to tackle the chronic shortage of social and affordable housing. 

As demand for affordable housing continues to rise, investors can help fill the gap in the housing crisis and reap the potential rewards.

Private investment in social housing 

If you’re interested in potentially profitable ways to do good with your wealth, investing in social housing could be a good option to consider.

There are two distinct areas of investment opportunity: 

1. Social housing, which focuses on providing housing for low-income families and individuals
2. Supported living, which caters to vulnerable individuals, with specialised housing combined with care services.

Different types of social housing

The primary purpose of social housing is to ensure that those with limited financial means have access to homes. As such, social housing is targeted towards distinct groups of people, including:

• Low-income families and individuals, including asylum seekers, and victims of domestic violence 
• Key workers – offering suitable homes for those in vital community roles such as nurses, teachers, and police officers
• Transitional housing for the homeless – a short-term option for those experiencing homelessness. Transitional housing offers temporary accommodation and support, allowing individuals time to work towards finding more stable living arrangements.

Enhanced opportunities for supported living accommodation

Supported living accommodation is specifically designed for individuals who need additional support alongside a place to call home. This may include adults with learning difficulties who might need live-in carers, people with mental health needs, or individuals with addiction problems.

Because it can offer more opportunity for independent living and improved care outcomes, supported living accommodation is a popular alternative to residential care. 

For investors, since supported living accommodation is funded in full through the welfare system, it typically attracts higher rents than other forms of social housing – often delivering yields of 9% or more. 

With councils pouring millions of pounds into housing people in often poorly maintained temporary accommodation, there is a desperate need to provide high quality properties that families and individuals can call home for the long term, maybe even for life.

Excellent benefits of investing in social housing

• Enjoy hassle-free, secured income

Investing in social housing, particularly supported living, gives you a unique opportunity to earn passive income and eliminate many of the headaches typically associated with being a landlord. 

Housing associations provide secured contracts with income backed by central government. As well as this reassuring guarantee, this is a property investment that’s 100% hands-free, effectively eliminating the typical headaches associated with being a landlord.

For example, you don’t need to worry about paying ground rent, finding and keeping suitable tenants, or covering letting agents fees. And if the washing machine breaks you won’t need to lift a finger – indeed, you probably won’t even know.

The housing association pays 100% of rent direct to investors, so you can enjoy uninterrupted rental income. Properties offer attractive yields from 9% or more. They also track the Consumer Prices Index (CPI), giving you a stable hedge against inflation.

As a result, such properties may be particularly interesting if you are looking to invest for a consistent stream of passive income and regular, reliable cash flow. 

• Long-term investment opportunities

Social housing and supported living leases typically range up to 25 years, making them a suitable option for investors looking to benefit from a predictable income stream over an extended period.

• Reduced level of risk

Compared to other property investments, social housing offers a reduced level of risk. Long-term commercial leases ensure a reliable rental stream and minimise tenant turnover.

• Completed property developments

By investing in carefully selected, fully completed properties that are already leased, you’ll benefit from immediate positive cash flow. In fact, your investment will start generating a consistent income stream from day one. 

As well as enjoying almost instant income, investing in completed projects can help to eliminate the risks and uncertainties that can come with investing in developments that are still under construction.

• No extra costs

Once the property is purchased there are no extra costs to pay.

Since properties are free from ground rent or service charges, you can relax in the knowledge that you can maximise potential rental income without worrying about unexpected additional or hidden costs cropping up.

All property maintenance and repairs are handled by the housing association, so there’s no need to worry about any unexpected expenses.

• Property and lettings management included for free

Property maintenance is all handled for you. This reduces stress and creates a hassle-free investment opportunity for the long term. 

• A profitable investment you can pass on to your loved ones

If you want to ensure you are maximising your income as much as possible, social housing could be a useful alternative to buying an annuity. 

One reason for this is that, unlike an annuity, you can pass your social housing investment on to your beneficiaries, who can continue to reap the rewards.

The table below illustrates how investing in social housing can increase your retirement income each year over a 25-year period, compared with a savings account, a pension, and an annuity.

*based on Aviva’s predicted analysis

**assumed CPI of 2%

For an initial investment of £88,400, a 25-year lease will deliver a total income of £282,835.60 over the full term. Plus, you still own the property, which is likely to be worth considerably more than the original purchase price.

• Ethical investment for social good

If you wish to use your investments to contribute positively to society and improve the world we live in, social housing properties could deliver the answer. An investment in supported living means you are making a meaningful social impact and supporting the wellbeing and stability of some of the most vulnerable people in society.

A positive way to invest and do good

Each of these factors add up to help make investing in social housing more secure than you may experience with a traditional buy-to-let portfolio. 

With opportunities to invest in a single property or a whole portfolio, you can invest anywhere between £80,000 for a single property or up to £15,000,000 for a portfolio of properties. 

Get in touch

If you’re interested in learning more about the financial and social rewards of investing in social housing, please get in touch.

Email enquiries@alexanderpeter.com or give us a call on +44 1689 493455.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.