Most property investors are acutely aware of the housing crisis which Britain is currently facing and many, working in the private property marketplace, are exploring new ways of increasing accommodation supply for those who are most in need. Today, we look at what social value is and how it can be created within social and affordable property projects.
Social Property With Amy Varle
- Part 1: Rob Introduces Amy Varle From Social Property Investment
- Part 2: What Is The Difference Between Affordable Housing and Social Housing?
- Part 3: What Is The ‘Housing First’ Homelessness Strategy?
- Part 4: A Landlord’s Guide To Tenant Referencing (In Social Property)
- Part 5: An Introduction To Collaborative Working With The Third Sector
- Part 6: The Highs And Lows Of Working In Social Property Investment
- Part 7: Where Is The Best Place To Invest In A Social Property?
- Part 8: How To Find The Perfect Social Tenant For Your Multi-Let
- Part 9: Universal Credit & What It Means For Landlords and Investors
- Part 10: What Does The Homelessness Reduction Bill Mean For Landlords?
- Part 11: What Is Social Value and What Does It Mean For Property Investors?
When Does Your Property Project Qualify As A Social Housing Investment?
by Amy Varle
Over the last few months, I’ve noticed a stark increase in the inquiries I’ve received regarding the investment in – and development of – social and affordable housing projects.
Affordable housing stock has reduced by almost half over the last ten years and with recent events such as the Grenfell Tower fire, many people have been questioning the general standard of social housingavailable for those who are less privileged.
With local councils currently selling homes three times faster than they can replace them – more than 12,000 council houses have been sold since 2014-15, whilst only 4,309 have been built – the private sector has become a major developer of social housing in recent years.
History Of The Social Housing Crisis
In August 1980, under the Thatcher conservative government, The Housing Act was passed by Parliament, allowing the introduction of Right to Buy for council homes across the UK. This was seen as a watershed event for councils all over the country and changed the landscape of social housing forever.
Nationally, 1 million houses were sold within 10 years. Many new owners saw the value of their assets surge in Britain’s second big housing bubble – the Lawson Boom of 1986-88 – whilst the number of houses managed by London’s councils shrunk from 840,000 in 1984, to just over 500,000 by the end of the century.
Alternative Social Housing Models
Some of the best examples of investment in affordable housing can be traced back to the 1970s, when the Housing Act of 1974 introduced state funding for housing associations. The change in policy aimed to address and alleviate the acute housing shortage of the time and reflected unanimous political support to explore and expand a ‘third-arm’ of the traditional housing sector.
Housing association ‘hybrid’ models newly-allowed housing’s integration into the delivery of public services, a radical improvement on the under-managed and neglected local authority tower blocks of the 1950s and 60s. The development of mixed-sector funding models encouraged the buoyancy of this period, which resulted in the significant growth and transformation of the third housing sector. By 2015, total UK housing association stock stood at 2,828,000.
21st Century Social Property Investment
Most property investors are acutely aware of the housing crisis which Britain is currently facing and many stakeholders in the private property marketplace are exploring new ways of increasing accommodation supply for those who are most in need.
You may be thinking of becoming involved in a ‘social’ housing project of your own and this can cover a broad spectrum of activity; from architects planning and designing economical tiny smart homes, to developers creating innovative co-living environments.
Depending on the type of accommodation created and the specifications of the units, as well as the people residing there and the quantifiable impact it makes upon them, a social housing project may be ‘socially valuable’ – and may even demonstrate a monetary saving which can be used as solid supporting evidence when making funding or grant bids and planning applications.
When Does A Social Housing Project Begin to Demonstrate ‘Social Value’?
The term ‘Social Value’ refers to wider financial and non-financial impacts of organisations, services, programmes and interventions, including the wellbeing of individuals and communities, social capital and the environment.
In housing, you can provide accommodation which benefits disadvantaged or vulnerable groups both directly and indirectly; though it isn’t always easy to demonstrate just how valuable a housing solution actually is.
PRS (Private Rented Sector) Homelessness Solutions And ‘Making It Count’
‘Making it Count’ is a cost effectiveness indicator tool by the national charity for single homeless people, Crisis. It helps to quantify the social value being created when private sector rental housing projects provide accommodation and/or support services for previously homeless individuals.
The ‘Making it Count’ tool allows a housing provider to quantify value created in monetary terms, considering the average level of public services and temporary housing placements which would likely have been accessed, had the person sustained their homeless stature. Data is calculated by taking individual tenant circumstance into account and so the figures produced are considered as accurate.
The Difference Between an Affordable Housing Project And One Which Creates Social Value?
Privately-owned, affordable rental property is just that – there is no official way to quantify the value it creates.
A socially-focused rental property will provide permanent housing and link into a level of supporting services too – the occupants will generally be vulnerable or disadvantaged in some way and likely display a diverse range of needs, risk, and behaviour.
Case Study: 6 Bedroom Social HMO
- Tenant A – Age 65, ex-homeless, ESA claimant, undergoing cancer treatment
- Tenant B – Age 33, ex-homeless, participates in work program
- Tenant C – Age 33, ex- homeless, participates in work program
- Tenant D – Age 47, rehabilitating with support from criminal justice services
- Tenant E – Age 25, ex-homeless, domestic abuse victim receiving support
- Tenant F – Age 44, no social issues, downsized due to bedroom tax
By assessing each tenant’s individual circumstances, history, and level of need, we are able to calculate:
- Quarterly Saving (Housing) £28,019
- Quarterly Saving (Non-Housing) £10,925
- Total Annual Government Saving: £155,776
Key Points To Consider If You Want To Invest In Social Property
- Housing needs in the borough – Speak to the local authority and housing associations in the local geographical area.
- Planning permission requirements – Think in advance about the permissions you will need, which will vary greatly area to area.
- Housing strategy – What type of housing solution do you want to provide? What demographic of occupant or buyer will you aim to serve? How will the project look in five years’ time?
- Contributions – Will you project provide affordable housing alone or a blend of mixed-use.
- Design quality and standards – What is your vision for the construction and design of your project – and most importantly, is it realistic?
- Working with registered providers – Can you align with registered social housing providers in order to create hybrid solutions?
- Rental or sale – Will you project be for rental or sale? What is the demand in your chosen location?
- Affordability – Test affordability of sale and rental prices – it is crucial the numbers stack up.
- Delivery – How will the project be delivered, what services will be incorporated and how will the operational management be structured?
You can read more about Amy Varle’s journey in property by clicking here.
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