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The Key to Navigating the Growing Supported Living Mortgage Market

Supported Living Mortgages

31 May 2023

Author: Adam Camm

Supported living is a rapidly growing sector in the UK’s housing market, offering long-term accommodation for individuals with disabilities, mental health conditions, or the elderly to name a few. As this market continues to grow, investors are increasingly interested in securing mortgages to invest in this market.

 

Recent statistics show that the supported living market is growing at an unprecedented rate. According to a report by LaingBuisson, the sector has grown by almost 30% since 2015, with around 60,000 people now being housed in supported living accommodation across the UK. With this rapid expansion, there has been a corresponding increase in the number of supported living mortgages being taken out by investors.

 

But what is the key to navigating the growing supported living mortgage market? We’ve asked Nick Louis, Mortgage and Protection Advisor for his thoughts on how to steer through as the amount of supported living mortgages increase, and to answer some common questions investors may ask when considering those who live in supported living for a mortgage.

 

Over to Nick…

 

The demand for supported living mortgages has grown steadily over the past few years, with a 48% increase in the number of such mortgages taken out between 2015 and 2019. However, with a complex market and unique challenges, it can be challenging for investors to secure the right mortgage for their supported living investments.

 

Investing in supported living properties can be a lucrative opportunity for investors, but navigating the mortgage market can be challenging. Below I’ve answered some frequently asked questions that we get asked by Investors:

 

Q: What is Supported Living?

Supported living, in its simplest form, enables people with a range of needs to live in a property with added support when they would find it difficult to live alone. Examples of tenants that benefit from supported living are asylum seekers, sufferers of domestic abuse, those who are homeless and those with learning difficulties to name a few.

 

Q: Does the Term of the lease affect the lenders available?

The length of the lease does affect the lenders available. The most commonly acceptable lease is a 5-year lease, and there are lenders that will consider shorter leases. If the lease is longer than 5 years you may struggle to find a mainstream lender that is comfortable with it, which means that it could be considered on a Semi-Commercial proposition.

 

Q: What if I want to provide 24 Hour Care? 

The number of lenders that will accept 24-hour care is very limited and this could restrict you being able to let the property. If the property is to be used for 24-hour care, the lender will want to understand if the person providing the care will sleep in the property.

 

Q: The Registered Provider have asked about housing tenants below the age of 18, where do I stand with this?

The lenders are more cautious with tenants under the age of 18. Having a minor in your property will most probably mean that you will have a carer in the property 24 hours a day, which will restrict what lenders are comfortable with the property.

 

Q: Are Break Clauses required in the Lease?

A break clause allows both you and the landlord to give notice to end the tenancy early. There’s no standard format for a break clause. In most cases, you can only use the break clause on or after a certain date. Some contracts only allow you to use the break clause at an exact point in the tenancy, but not after that date has passed. Most lenders will require a break clause as part of the lease agreement.

 

Q: Does it have to be residential home care?

Supported living doesn’t just have to be residential home care, larger commercial care homes can also be financed whether this for child or elderly care, although this type of finance will be considered under full commercial lending.

 

 Q: Will my Lender allow Supported Living Tenants?

Mortgage lenders are starting to understand supported living more, with more lenders allowing supported living under their lending criteria. There are only a limited number of specialist and semi-commercial lenders that do offer supported living as standard and it is important to understand if your lender is one, before signing a lease with a provider. Please contact your present lender to confirm this is acceptable, as you could be in breach of your Mortgage Terms and Conditions.

 

How we can help

 

The supported living mortgage market is a rapidly growing sector in the UK’s housing market, offering significant investment opportunities for those willing to navigate the complex market.

 

Our team of expert advisers have a wealth of experience in the supported living market, and we are dedicated to providing tailored mortgage solutions to suit our clients’ unique needs. We understand that no two investments are the same, and we work closely with our clients to provide the best possible mortgage solution for their needs.

 

If you are considering a supported living mortgage but unsure where to start, you can speak to one of our friendly advisors by getting in touch here.

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