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Supported Living Mortgages; it’s time for change!  

Updated: Mar 26

Piles of coins in front of a house model

The main stumbling block for most property investors looking to lease their property to a supported living provider is finance. They have a supported living provider lined up to take a lease on their property and they want to take out a mortgage, they then discover some serious issues. I know of plenty of property investors who have had such problems with this that they have had to turn down the provider looking to lease their property.  Finance is having a big impact on the supply of supported living property.   

Here are some of the issues: 

Limited products 

There are very few mortgage lenders who are willing to lend when a residential property is leased to supported living providers.  

If the property is larger like a block of flats then the lending often fits the criteria for commercial lending and there are more products available. But many supported living tenants need a flat, house or bungalow to live in and this is where the lending is challenging. 

Vulnerable tenants 

The lenders use the term “vulnerable tenants”. This term in itself feels discriminatory to me. They talk of “reputational risk” if a property investor was to default on payments so they needed to repossess the property and evict the tenants to sell the property. This raises several points, surely a property with a lease in situ is actually worth more money to an investor and so could be sold on as a “performing asset” yes the market for buying these is smaller but there are investors who would snap up such a property possibly at above bricks and mortar value. Secondly, is this direct discrimination against a tenant group who have support needs?   

Higher rates 

Supported living complaint mortgage rates are often higher due to the perceived higher risks to the lender and the lack of competition in this space. I am yet to see how leasing a property to a good supported living provider is higher risk from a lending perspective than letting it to a private tenant and I am yet to see evidence for these justifications. 

Lower Loan to Value 

Often the available mortgage products offer a loan to value at a lower rate than a standard buy to let mortgage. Sometimes there are only LTV of 65% available, this makes it very hard for property investors to stack a deal. 

Stricter landlord criteria 

Property investors looking to get finance on a property let to a supported living provider often are expected to have “landlord experience”. This seems odd as the property investor is not actually managing tenants but this is another barrier for new investors who are considering supported living tenants.  

Change is needed 

These issues have a direct impact on the supply of supported living property. They are part of the reason we have people with learning disabilities and autism stuck in long term hospitals when they should be in their own homes and part of the reason there is not enough quality supported living property available for a whole range of tenants with support needs. 

I have spoken to many landlords who say because of these issues and costs they have taken out standard buy to let lending on properties and not disclosed the tenant type to their lender. This is often in breach of lending terms, which could have very serious consequences, but they felt they had no choice as they felt compelled to create homes for people with support needs who were desperate for a safe, secure home.  

For too long we have accepted this situation and things need to change!  

This situation is something I am passionate about challenging. I feel that by having conversations with lenders we can challenge some of these ideas, which at best, I think may come from a lack of understanding of supported living, or at worst, direct discrimination against those in our society who are most vulnerable.  

My hope is that by opening up this conversation and encouraging more lenders into the supported living space we will increase competition, drive down the rates and make lending more accessible. This will have a direct impact on the supply of supported living property. 

I am having conversations with those in positions to make decisions within banks and institutions and would love to hear your thoughts and experiences about this or if you have connections with people who can influence change please do get in touch. 

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