Have you ever thought about diving into the world of property investment in the UK? You’re not alone. Many overseas investors are recognising the potential of the UK’s social housing sector. But how do you navigate this unique landscape? At Yield Investing, we work with foreign investors to help them support the UK’s affordable housing market and increase their property portfolios with low-risk investments that generate high rental yields.
In this blog post, we’ll break down the 11 steps our investors follow to make your property purchase experience as smooth and stress-free as possible.
How to Invest in Social Housing in the UK: Week by Week
Once you’re ready to make a social housing investment in the UK, our team will begin to walk you through the 5-week process, covering 11 steps to complete your purchase. Each week contains several important steps to ensure your transaction is completed as quickly as possible, with all the necessary legal requirements to purchase a UK property. We’ll cover each week in-depth in this blog post, but here’s a quick breakdown of what each week includes:
- Week 1: Reserving the property, instructing a solicitor and providing proof of funds
- Week 2: Apply for a search indemnity policy
- Week 3: Preparing funds for completion
- Week 4: Review and sign purchase completion documents
- Week 5: Complete the transaction & final paperwork
Let’s look at each of these weeks in a bit more detail so you know exactly what to expect and how Yield Investing supports you in this process.
Week 1: Getting Started
Step 1 – Complete the Reservation Form and Pay the Reservation Fee
Once you’ve decided to purchase a social housing property in the UK, we’ll kickstart the process by sending you a buyer’s reservation form. This form is essential as it officially reserves the property for you. You should take the time to fill it out accurately, sign it, and return it to your designated point of contact in our team. Within the buyer’s reservation form, you’ll find all the necessary payment details for the reservation fee and our bank details. Once we have received the completed reservation form and fee, we’ll finalise your property’s reservation.
Step 2 – Complete and Sign the Client Care Letter
Yield Investing is committed to ensuring you have the best legal representation for your property purchase. To facilitate this, we’ll issue a memorandum of sale to your chosen solicitor (in this post, we use Brearley Law as an example), who will act on your behalf throughout the transaction. Upon receiving the memorandum of sale, the solicitor will send you their client care letter. This letter outlines their services, explains the transaction process, and details their fees. To initiate the transaction and instruct the solicitor to act on your behalf, you should sign and return this document promptly.
Step 3 – Complete the CREDAS Link
We prioritise security and efficiency for all of our investors. Brearley Law uses the CREDAS app, a trusted tool among solicitors, to streamline Know Your Customer (KYC) and Anti-Money Laundering (AML) checks. You’ll receive a link to CREDAS via text message from Brearley Law. This link will either guide you to download the app or take you to an online platform where you can log in using the details provided in the text message. The CREDAS link simplifies this process, requiring you to take a photo of yourself and upload proof of identity, proof of address, and evidence of the source of funds. Rest assured, this is a fully secure method for completing the necessary ID checks.
Step 4 – Send Source of Funds
Just like any other property purchase in the UK, we require documentation verifying the source of your funds for the property purchase to comply with legal and financial regulations. If you haven’t already uploaded your source of funds to CREDAS, you can send it directly to Brearley Law. Typically, they will request a bank statement covering the past three months, demonstrating the presence of the required funds in your account. If the funds have been recently deposited, you’ll also need to provide evidence of the source of those funds. This source could be your salary, proceeds from a property sale, a bonus cheque, or any legitimate source of income.
Week 2: Progressing the Transaction
Step 5 – Searches
In this phase of the transaction, we introduce the concept of a search indemnity policy, which can greatly simplify and expedite the process. All you need to do for this step is email Brearley Law and request that they provide a policy for your property to request a search indemnity policy.
A search indemnity policy is essentially an insurance policy that eliminates the need to apply for searches from the local authority. Typically, local authority searches can take 4-6 weeks to be completed and can cost around £400. In contrast, a search indemnity policy, which costs approximately £100, offers not only cost savings but also a significant reduction in the transaction time.
A search indemnity policy covers any loss incurred due to adverse entries that would have otherwise been discovered in standard searches. The costs associated with these adverse entries can be claimed by the purchaser from the insurance provider. Additionally, building insurance is required to lease the property to the housing provider. This insurance safeguards you against severe damages to the property, such as flooding, fire, or natural disasters, providing an extra layer of protection.
Week 3: Preparing for Completion
Step 6 – Prepare the Funds and Start the Transfer to Brearley Law
Brearley Law will issue a completion statement detailing the total funds required to purchase the property, as well as their bank details. To speed up the process and prevent delays in the funds reaching their client account, it’s crucial to start transferring the funds to Brearley Law promptly. For overseas purchasers, timely fund transfer is especially important to avoid potential severe delays in purchasing your property.
Week 4: Nearing the Finish Line
Step 7 – Review the Property Report Prepared by Brearley Law
With the search indemnity policy in place and all enquiries satisfactorily answered, Brearley Law will prepare a comprehensive property report. This report provides essential information about the property, including details about its location, lease, title, boundaries, utility supplies, and more. Take the time to read and fully understand this report. If you have any questions or need clarification, please don’t hesitate to forward them to Brearley Law or Yield Investing.
Step 8 – Sign and Send Back the Completion Documents
Once you’re satisfied with the property report, Brearley Law will issue the contract and transfer forms. These crucial legal documents will either be sent to you via email or through DocuSign for your convenience. Simply sign these documents and return them to Brearley Law as soon as possible.
Week 5: The Final Steps
Step 9 – Confirm You’re Happy to Complete
Upon receiving the signed contract and transfer forms, Brearley Law will work with the seller to set a completion date. To proceed with the purchase on your behalf, Brearley Law will require your confirmation. Simply send them an email confirming your readiness to complete the purchase.
Step 10 – Complete the Transaction and Purchase the Property
With your confirmation in hand, Brearley Law will finalize the transaction with the seller on the agreed-upon completion date. Once this process is complete, Yield Investing will take the reins, managing all aspects of the lease signing and post-purchase care. This includes coordinating lease agreements, rent payments, and ongoing communications.
Step 11 – Complete the Buildings Insurance and PMIS Form
As part of the final steps, Yield Investing will assist in arranging a building insurance policy on your behalf. Buildings insurance is a requirement under your lease and costs approximately £400 per annum. This insurance provides valuable protection, covering liabilities arising from severe property damage, such as flooding, fire, or natural disasters.
Additionally, you will receive the Property Management and Information Form from Yield Investing. Completing this form promptly is essential as it enables the housing provider to set up your details in their systems and establish a standing order for rental income. This step ensures a smooth transition into the rental phase of your property investment.
What Next?
Congratulations on taking the first steps towards your property investment journey with Yield Investing! We’re dedicated to making your experience as seamless as possible. If you have any questions or need further guidance at any stage of the process, please don’t hesitate to contact our advisors. We’re here to support you every step of the way to diversify your portfolio and increase the supply of social housing in the UK.
How to Invest in Social Housing: FAQs
Why social housing?
Social housing properties in the UK are a great investment opportunity for overseas investors. There is an increasing need for affordable homes in the UK, with a queue of tenants waiting. And where there’s demand, there’s opportunity. With their ever-growing demand, government approval and high ROI for investors, social housing property investments provide a consistent rental income with minimal fuss.
Is it good to invest in social housing?
In a nutshell, social housing isn’t just another property venture. It combines stable returns, societal impact, and government support. If you’re intrigued by the prospects of social housing in the UK, our detailed breakdown of the pros and cons of investing in social housing covers everything you need to know in detail.
