When Harmony Children’s Services faced the prospect of a private landlord wishing to sell one of their care homes, they turned to Assetz Exchange to offer alternative lease arrangements to ensure the continuation of care for the children living there.
In this case study, we talk to Mark Raw, Managing Director of Harmony Children’s Services, and James Tedrake, Director of Strategic Partnerships at Assetz Exchange.
Securing long term residential care for three looked after children with Harmony Children’s Services
Harmony Children’s Services is a small limited company providing residential care for children in Huddersfield. In the 11 years of its operation, it has cared for 39 children and still keeps in touch with the vast majority of those who leave the care system at 18, find jobs and raise families of their own. As a former residential care manager, Mark is passionate about providing high quality care that provides stability for children, and the tailored help and support they need.
How did the partnership start?
MR: “I was introduced to James through a contact in the sector. The private landlord who owns one of the 3 properties we rent wanted to sell and I had been looking at the options available to us to ensure we were able to run this home without disruption to the children living there. Prior to the covid pandemic, I had been looking at the option of purchasing the property, but that became impossible, so Assetz Exchange offered me an alternative – that they would purchase the property and lease it back to me.”
JT: “When Mark got in contact with us, this was a new sector of housing for us, but we approached it in the same way as our other property investments that have social impact. We spent time with Mark to find a way to purchase the property that suited him whilst being mindful to create a viable property investment opportunity for our investors. We’re delighted that we’ve found a way to create an example of best practice in this sector with Mark.”
MR: “Yes, I’d support that. One of the things I tell people about James and Assetz Exchange is that they are very flexible and reactive to your needs. James and I agreed on the basic principles of the lease, the rental agreement, timescales etc. and then I came back with a suggested alternative way of doing a couple of things and James quickly considered them and pretty much always came back with a ‘yes, that works for us too’. He took the time to tailor the agreement so that it worked for everyone.”
What was the residential care need?
MR: “Where parents can’t look after children, for whatever reason, there are several options, such as kinship care and foster care, open to them. However, where children have more challenging behaviour or maybe specialist learning difficulties, they become the responsibility of their local authority who will then contract out that care. Harmony Children’s Services focuses on this type of residential care provision.
My aim has always been to run a small residential care business focused on providing long term, stable and high quality care and I currently have 3 homes. The property purchased by Assetz Exchange houses up to 3 children in a home setting managed by an Ofsted registered manager, who has legal responsibility for the children, and a staff team of 2 who work together on a shift pattern to provide the 24 hour care the children need.”
JT: “When we assessed the property, we were obviously concerned with ensuring we were able to purchase it at the right price, that there was potential to sell or repurpose the property, should our partnership with Harmony Children’s Services come to an end, and that we were able to ask a rent that provided an acceptable return to attract investors, whilst also working for Mark’s business model. This type of housing is a good match for us as Mark is aiming to achieve continuity of care for the children over long periods of time and we are looking for long term, stable, property investments.”
MR: “There is also currently a shortage of provision in the sector. I’d estimate that, at any one point in time, there are 200 to 300 children that local authorities will be trying to find places for. There is clearly a need for more homes to make sure that some of the country’s most vulnerable children are looked after safely.”
What is the future for the partnership?
MR: “I’d like to be able to get another home up and running this year and I’m looking at the option to fund the property side of it through Assetz Exchange. It takes a lot of capital outlay, I’d estimate around £80,000 – £200,000, and time to set up a care home and gain Ofsted approval before care provision can start, and that’s if you’re going down the lease route. If you have to find the cash to purchase a property via a mortgage, it’s out of the question for many smaller providers. That’s why Assetz Exchange is providing a viable alternative, especially for smaller care providers like myself.”
JT: “Our first residential care home project with Harmony was very popular with investors. The property purchase provided them with a long term property investment that delivers monthly, inflation linked income and a respectable yield. In addition, investors were able to hear about the immediate impact their investment made in allowing 3 children to continue their lives uninterrupted by any concerns over the security of their home. You can’t put a value on that.”
Would you recommend working with Assetz Exchange to other providers of residential care for children?
MR: “I already have! James is a very relaxed and easy person to get on with and I tell people that if you work with him, he’ll find a happy medium, a solution that works for you. If smaller providers are looking to secure existing care homes where the landlord wishes to sell, or even where they own properties and would like to release capital to expand their provision, I think there are lots of opportunities for Assetz Exchange to support this sector.”
We currently work with care homes, charities and leading supported housing providers to release capital and source, lease and fund social housing. We’d love to talk to any organisation that has a need to raise capital for a property purchase in this sector. Contact us at firstname.lastname@example.org Tel: +44 (0) 3330 119830