What is supported accommodation?
- 10th February 2021
- Information
Around 600,000 people in the UK live in what’s known as supported housing or supported accommodation. This type of housing provides an environment where vulnerable adults can live as independently as possible, but with varying levels of support. This support can come in several different forms depending on the residents’ age, ability, and specific needs. Supported accommodation might provide assistance with personal care, medication and doctors visits, housework and cooking, shopping, and managing money. Importantly, there’s often a focus on socialisation, meaning many vulnerable people who might otherwise live alone get to be part of a community.
The principle of providing safe, connected, reliable housing is that a home tends to be the starting point for other changes. It can make it much easier for people to secure an income or move away from an addiction, for example.
How does supported housing make a difference to society?
One of the biggest benefits of supported living – of which there are many – is the flexibility it offers. Residents might receive a few hours of support a week, full time care, or anywhere in between. Support workers are provided the facilities to work in an agile manner with those in their care, which in turn affords residents varying degrees of independence.
This independence – in contrast to things like hospices and care homes – can be hugely beneficial for residents’ progress, mental health, and sense of freedom and autonomy.
Supported housing is designed for both long and short term use. Some units will be required for the long term, for example in the case of an elderly resident who is no longer able to manage their private home. Some will be used in the short term – in many cases by those who are moving from homelessness into work and more permanent accommodation.
The benefits of supported housing don’t just lie with those who use it. Social accommodation programs take the strain off of hospitals and other care facilities such as refugees and homeless shelters (which are often designed for emergency use rather than a long term solution).
Social accommodation programs take the strain off of hospitals and other care facilities such as refugees and homeless shelters (which are often designed for emergency use rather than a long term solution).
What are some examples of supported accommodation?
Supported accommodation is usually provided by charitable organisations. One such example is United Response. The charity supports adults and young people with disabilities with a strong focus on helping them to maintain their independence and make their own choices. They offer supported living (helping people within their own homes) and in some cases provide supported accommodation for those with more acute learning disabilities, physical disabilities, or mental health needs. UR also assists people with finding permanent housing, jobs, activities, and educational resources.
Like United Response, Nacro is a charity that works with both adults and young people. Their expertise lies with people who have experienced homelessness, abuse, and addiction issues. They also focus on helping people who have come out of care homes, prisons, and the armed forces. Nacro works in a cooperative fashion with its staff, its service users, its contractors, and local councils to develop intelligent solutions and ensure holistic help for entire communities.
Funding models for supported accommodation
In order to be able to support vulnerable residents, supported accommodation models must be underscored by solid business plans and cash flow management. Private investment provides much needed growth for the sector. From the perspective of the investor, there are two main routes to investing in supported accommodation as an asset.
1) Become a Social Registered Provider
In this case, a property is owned outright. The owner then applies to become a Social Registered Provider (SRP). This can be a charity, a housing association, or an individual. Providers such as United Response and Nacro are examples of SRPs.
2) Lease-based model
Lease-based providers of specialised supported housing, Regulator of Social Housing, 2019
Instead of becoming SRPs themselves, private landlords, investors and REIT partners can now provide accommodation to established SRPs. This is a relatively new model that has allowed much needed expansion in the sector due to the much smaller amounts of capital required by the typically 3 to 7 year lease cycles (although can be longer). In this scenario, rents are set by the Social Registered Provider, not by the owner of the property, but maintenance costs are often covered by the SRP too. All costs of the care provided within the property will be handled between the SRP and the local council. The only transaction for the investor will be between them and the SRP.
Instead of becoming SRPs themselves, private landlords, investors and REIT partners can now provide accommodation to established SRPs. This is a relatively new model that has allowed much needed expansion in the sector due to the much smaller amounts of capital required by the typically 3 to 7 year lease cycles (although can be longer). In this scenario, rents are set by the Social Registered Provider, not by the owner of the property, but maintenance costs are often covered by the SRP too. All costs of the care provided within the property will be handled between the SRP and the local council. The only transaction for the investor will be between them and the SRP.
In many cases, the rent owed is covered by Housing Benefit. These Housing Benefit payments essentially ‘underwrite’ the rental stream, significantly reducing the possibility of non-payment. Specialised supported housing (SSH) is not capped by the local housing allowance rates due to the fact the accommodation often needs certain enhancements to be suitable for the residents.
If you have a traditional property, or something that you have previously rented out in the private sector, some charities such as EHSL will work with you to reconfigure eligible properties into self-contained units that will be suitable for their purposes. Not all properties will be accepted – they’ll need to meet (or have the potential to meet) the specific needs of the charity at the time, which can be to do with size, condition, and type (e.g. single-story for wheelchair users, self-contained flat, or HMO). It will also depend on whether the local authority supports the scheme. It’s unlikely that these properties will qualify for a typical buy-to-let mortgage or traditional finance in general – which is one of the reasons why the sector is so undersupplied.
Features of leases available in supported accommodation
- Long leases – Leases in this sector tend to be longer than private residential leases because SRPs need to guarantee space for vulnerable people. They are generally 3-5 years but can in some cases be longer than this in some cases.
- Full repair and maintenance – The SRP takes responsibility for all day-to-day repairs and maintenance while the landlord generally looks after the structure of the property and is responsible for insurance. In some instances, and in particular on longer leases, the tenant may coverlook after everything. This is known as a full repair and insure (FRI) lease.
- Inflation linked – Supported accommodation leases are typically contractually uplifted by consumer price inflation on an annual basis.
The benefits of adding supported accommodation to your investment portfolio include long term security, a hands-off experience, and the chance to provide housing for SRPs and the vulnerable people who desperately need it. Speak to us about exploring inflation linked, government funded leases further by emailing info@assetzexchange.co.uk or calling 0333 011 9830.