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Social Housing Tenancy Agreements: What Investors Need To Know

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Social housing in the UK provides a range of accommodations for those in need, including low-income families, the homeless, individuals with disabilities, survivors of domestic violence, and asylum seekers. This sector benefits from the largest share of a £6.4 billion social impact investment, showing how important this area of investment is to addressing social challenges and supporting vulnerable populations in the UK.

Compared to private housing investments, social housing presents unique opportunities. The government or local authorities usually support the rent, with housing associations covering any rent gaps. This ensures stable income for investors. Additionally, unlike traditional rental agreements directly with tenants, these agreements are with organisations offering longer leases and including repair and maintenance terms.

Investors should be aware of the specifics of social housing tenancy agreements because they outline the obligations and protections not typically found in standard property investments. Understanding these agreements can lead to more secure and socially impactful investments. By investing in social housing, investors enjoy high-yield financial returns and contribute to ethical investments, aligning financial goals with positive community impact.

What are Tenancy Agreements?

A tenancy agreement is a contract that outlines the obligations of both the landlord and the tenant in social housing accommodation. It specifies the landlord’s right to receive rent for letting the property and the tenant’s right to live in the accommodation. They legally bind both the landlord and the tenant with rights and responsibilities that both parties must adhere to, ensuring that the statutory rights of both the landlord and the tenant are clearly defined and protected.

Housing Association Tenant Rights 

As an investor purchasing a social housing property, you must understand the rights and responsibilities of such an investment. The housing association should provide a written tenancy agreement detailing these rights and responsibilities for both the tenant and yourself, the landlord. Housing association homes are typically leased under an assured, assured shorthold, or fixed-term tenancy. As the investor, you need to verify which type of tenancy agreement will apply to the tenants of the property you are acquiring.

Starter Tenancy

Tenants new to housing association properties could be offered a starter tenancy. They typically last 12 months, a trial period to ensure both parties abide by their rights and responsibilities.

After the initial 12-month starter tenancy period, tenants can transition to an assured or fixed-term tenancy. However, as an investor, it’s important to note that if eviction proceedings have been initiated against a tenant or the starter tenancy has been extended, the tenant cannot progress to a fixed-term tenancy.

Assured and Assured Short Hold Tenancies 

An assured tenancy means that the tenant can live in the property for the rest of their life if they wish. Most tenants of housing associations have assured tenancies. They will only end if they choose to leave or are evicted. Housing Associations may issue new tenants an assured shorthold tenancy. The term is usually fixed anywhere from 12 months to 10 years.

This tenancy of a dwelling-house, which is let as a separate dwelling to another individual who is either a single tenant or a joint tenant, must be at least one of the tenant’s principal homes, and they mustn’t be registered to another address. 

Any tenancies created after 27 February 1997 are automatically assured shorthold tenancies unless an assured tenancy is explicitly created.

One of the most important differences between an assured tenancy and an assured shorthold tenancy is that the landlord can use section 21 to regain the procession of the property without stating a reason.

Demoted Tenancy

There are fewer rights with a demoted tenancy, as tenants can be evicted quickly if the tenancy is demoted. The local council or the housing association can request that a court demote a tenancy if the primary tenant, a household member or a visitor is involved in any of the below activities:

  • Involved in or is party to anti-social behaviour.
  • The tenant or anyone in the household uses the property illegally.
  • Making any threats to behave in the above way.

Fixed Term Tenancy 

A fixed-term tenancy typically lasts around 5 years, and the landlord will decide when it is renewed.

If a fixed-term tenancy agreement is implemented, the tenant is responsible for the rent and any obligations. Once this agreement is set, changing any of the terms and conditions is very difficult. Before this kind of tenancy agreement is offered, it is advised to ensure the contract outlines all the rights and responsibilities of both parties clearly.

Secure Tenancy 

Secure tenancies through a housing association aren’t common, and they would have started before 15 January 1989. It may be possible to carry over a secure tenancy to another property under the same housing association.

It won’t be possible to have a secure tenancy if:

  • Tenants have previously been demoted.
  • They live in supported housing run by a housing association and have formed an agreement after 15 January 1989.
  • The council transferred the form to a housing association after 15 January 1989.
  • The tenant works for the housing association, and the home is part of the job.

Restrictions on Renting Social Housing

In the UK, renting out social housing has restrictions. Landlords are given a lease agreement with the local housing provider, but these terms will vary. This means investors cannot rent their property on the open market as they have a tenant in place. However, this agreement also ensures the housing provider will pay your rent regularly and on time. 

Social housing in the UK is in high demand, higher than ever, due to the high numbers on the waitlist in the UK. This means that once tenants finally secure a home, they don’t tend to move on quickly. The lease agreement with the local housing provider and the high demand for social housing within the UK also allows for long-term occupancy levels, so you won’t need to worry about your investment property sitting unoccupied.

Research carried out by The English Housing survey showed that privately rented properties are, on average, rented by a tenant for 4.1 years. However, according to Government statistics, two-thirds of new social housing tenants were lifetime tenancies. Long-term tenants are investing in the property they live in, which they see as their home. Therefore, they are more likely to take care of the home and report any issues. These aspects make social housing a sector that investors should consider if they are looking for affordable properties that provide long-term tenants and the reassurance that the UK Government pays for the rent.

Here at Yield Investing, we work closely with a reputable housing provider in the UK where there is the greatest need for social housing, like in the North East of England. Investors purchase a property for social housing, and then we lease it back to our provider. 

Rights and Responsibilities of Social Housing Tenancy Agreements FAQs

Do you have to be a registered provider to offer social housing?

No, offering social housing does not require legal registration as a provider. Although the Housing and Regeneration Act of 2008 established the Regulator of Social Housing to oversee registered providers, ensuring they meet specific standards, not all social housing and supported living providers choose to register. Being unregistered doesn’t mean the organisation cannot provide high social housing standards. There are various reasons why a provider might opt out of registration, including the potential high costs versus the benefits, which can depend on the provider’s size.

Social housing providers can operate under different structures, such as charities, housing associations, public limited companies, private limited companies, or a combination thereof. This diversity means investors should thoroughly understand a provider’s organisational structure and assess their standards and benefits individually before making investment decisions.

Can housing association tenants be evicted? 

Yes, housing association tenants can be evicted, but it’s a process governed by strict regulations. It typically occurs due to severe breaches of the tenancy agreement, such as persistent non-payment of rent or anti-social behaviour.

Who sets rent in social housing?

Rent in social housing is usually set by the housing associations themselves, following guidelines provided by the government to ensure tenant affordability. Since housing associations follow government guidelines, rents are designed to be affordable for tenants, which can lead to lower vacancy rates and consistent rental income for investors. Investing in social housing often aligns with social impact goals, opening access to various grants, incentives, or favourable financing terms to support affordable housing projects. 

Learn More About Investing in Social Housing in the UK

We know you’re looking for financial security, and trusting your investment strategies is essential when making life-changing decisions. Yield Investing’s social housing/supported living developments provide access to low-risk investment opportunities that offer a secure return on investment – so you can rest assured knowing you’re making a sound financial decision.

We have a wide range of social housing investments that cater for all kinds of budgets:

  • Low-risk development projects.
  • Refurbished older properties.
  • Hands-free property investments.
  • Focus on passive income.

Whatever your financial goals or budget, Yield Investing ensures that you find exactly what you’re looking for — securely and affordably! Contact us today to get started.

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