Arthur Online takes a look at how taking on social housing is still a viable investment for property managers.
A recent pole of Conservative council leaders found that over 70% believed Prime Minister Theresa May’s £2 billion social housing investment pledge, to overhaul all of Great Britain, was not enough. The statistics seem to back up their argument too. The last time over 250,000 houses were built a year, over 40% of them were built by local councils. Now, those same local councils have been stripped back to such an extent that they do not have the capacity to build anywhere near what is needed. Nor do the large developers look at social housing development as an exciting investment, due to the smaller profit margins. This means, private landlords are now being turned to to take on some of the demand. Whilst some will shy away, this is actually an interesting investment opportunity.
Social housing has always been a good investment for landlords. Whilst the returns may not be as high as those that can be achieved in the private rental sector, a landlord could go to the local council, ensure the housing benefit was paid to them, and get almost all their rent guaranteed. Whilst this is set to change slightly under new universal credit rules, managers will still be able to get their portion of universal credit guaranteed and sent directly to them.
Furthermore, there is never a shortage of tenants. Whilst many may turn down council tenants, by opening up to social housing a manager can vastly increase the amount of tenants that they have access to. This is particularly important in a competitive sector, where tenants can demand a lot more of their property manager, and of the property itself, and avoiding any void periods is the name of the game. The more tenants a manager has access to, the better chance they have of filling their property.
Social housing investment is different to investing in property that may go to the private rental market and command a higher rent. A manager must be wary, when renovating a property that will be used for social housing, not to invest too heavily in the refurbishment. This is because the yield on the property will not be as high as that which you might achieve on the open market. Therefore, a renovation should be completed to a good standard, but not to the level which you may be tempted to.
Many property managers are put off social housing investment due to horror stories of tenants refusing to move out or refusing to pay. First of all, these are risks that are run in the private sector too. Also, with correct management, the chance of these problems occurring can be reduced. Arthur Online’s software offers a connected asset and property management solution, allowing for greater information sharing, a streamlined experience and transparent communication which is key to running a successful operation. The solution is to deliver a software that brings all the stakeholders together on a single platform, which is flexible, allowing it to handle all types of property. This involves sharing the management of workflows, associated documents including contracts, communication and financials. By using a social housing management software, a company can reduce the amount of people needed to manage administrative tasks and instead allow them to concentrate on keeping arrears down.