Recently there has been a lot of investors asking about mortgages and finance for Social Housing Tenants. Especially those investors looking to diversify their property portfolio’s. Historically Social Housing mortgages have been difficult to place and not something first time property investors should tackle. While it remains difficult to get a mortgage for social housing, there are more and more lenders willing to look at the prospect and it will eventually become the norm.
Here are a few of points that you might want to consider if you are venturing into this market –
• There is currently a difficulty in placing a social housing mortgage with buy to let lenders.
• Commercial lenders are more likely to support this type of investment.
• The commercial lenders will likely want to understand your property experience before agreeing to a mortgage. Their preference is that you have previous experience with social housing. If you don’t, they will look to take into consideration your existing landlord history.
• Your overall profile is important to the lender when they’re making a decision which will encompass things like your assets and liabilities and existing portfolio etc
• Lastly, your lease with the social housing provider will be important.
The lender will want to understand different aspects like the length of term, break clauses, the rental amount and who is responsible for the repairs/maintenance. More importantly the type of tenant that will be going into the property. If the tenant type is classed as very vulnerable, this might create reputational risk problem for the lender if they need to repossess and maybe put off by this.
