Investing in property and letting to companies like Serco, Mears or Clearsprings can offer a stable and profitable income stream. These companies manage accommodation for asylum seekers and other vulnerable tenants in the UK, providing long-term leases and guaranteed rent payments.
This guide will walk you through the process, benefits, and potential risks of leasing your property to Serco, Mears or Clearsprings.
Understanding social housing providers
Letting property to Serco
Serco is a global service company that provides essential services to governments and other organizations. In the UK, Serco manages asylum accommodation and support services, leasing properties to house asylum seekers. They operate in areas such as the North West, Midlands, and East of England.
Letting property to Mears
Mears is a housing and social care provider that works with local authorities and housing associations. They manage and maintain properties for various purposes, including housing asylum seekers. Mears operates across the UK and offers comprehensive property management services.
Letting property to Clearsprings
Clearsprings, trading as Ready Homes, is a provider of accommodation services to the Home Office since 2000. They operate in London, the South of England and Wales.
Benefits of Leasing to Serco, Mears and Clearsprings
Long-term Leases
These housing providers offer long-term leases, typically 5+ years, which ensure a stable income with no void periods.
Guaranteed Rent
Rent is paid in full and on time every month, with no arrears. This provides a reliable income stream for landlords.
Maintenance and Repairs
These companies cover full repair and maintenance costs, excluding latent and structural defects. This reduces the financial burden on landlords.
Utility Bills
They pay for utilities and council tax bills, further reducing the landlord’s expenses.
Property Management
Full property management, including monthly inspections, is handled by Serco, Mears or Clearsprings ensuring that the property is well-maintained.
No Letting Fees
There are no letting or management fees which maximizes the landlord’s rental income.
Types of Properties Serco, Mears and Clearsprings Lease
These companies are interested in a variety of property types, including:
Traditional HMOs (Houses in Multiple Occupation)
Family properties
Former care homes
- Bungalows
Residential and student accommodations
Steps to Invest in Social Housing Stock
Research and Identify Suitable Properties
Look for properties in areas where Serco, Mears or Clearspings operate. Ensure that the properties meet the companies’ requirements and are in good condition.
Evaluate the Property
Before making a purchase, evaluate the property’s letting potential. This includes inspecting the property’s condition and ensuring it meets the necessary standards.
Contact the Housing Management Provider
Reach out to Serco, Mears or Clearsprings to discuss your plans and target property. They can guide you speficially to ensure your property meets their preferences.
How to Finance Property Let for Asylum-Seeker Use
Standard buy-to-let mortgages typically don’t accommodate long-term leases, as they are designed for assured shorthold tenancies (ASTs). Lenders base their terms, conditions, and risk profiles on this type of tenancy. To lease to a housing provider on a long-term basis, you’ll need a specialist mortgage product designed for this specific use.
Finding lenders willing to support this type of property leasing requires a thorough understanding of the lender market and their attitudes towards risk. While mainstream banks might decline your application, independent providers are often more receptive and can provide the necessary finance. Use a specialist finance broker like BIZL to help you secure financing for specialist property investment opportunities like this.
If you need to make significant modifications to attract long-term commercial tenants, you’ll need financing for the conversion. You may be able to fund this with a bridging loan if the works are relatively modest. For works involving planning permission you’d typically need a more bespoke development loan. Once the works are complete and the property is let you’ll then be able to refinance onto a mortgage product.
The real benefit of purchasing a standard property on a short-term loan and converting it for use as social housing is that you can add tangible value to the property. This is both via refurbishments as well as tenanting the property with a lease to a social housing provider. When you then come to refinance the property onto a mortgage product you should expect a valuer to assign a higher value to the property. If so you should then be able to borrow more – typically up to 75% loan to value.
Managing Your Investment
Regular Inspections
Although Serco, Mears and Clearsprings handle property management, it’s essential to stay informed about the property’s condition through regular inspections.
Financial Management
Keep track of your rental income and expenses to ensure your investment remains profitable.
Stay Informed
Stay updated on any changes in government policies or regulations that may affect your investment.
Potential Risks and Considerations
Structural Issues
While Serco and Mears cover most maintenance, structural issues are the landlord’s responsibility.
Market Conditions
Property values and rental demand can fluctuate, so it’s essential to stay informed about the local market conditions. Government policy and spending in this area can and will vary over time, so it is worth paying close attention.
Legal and Regulatory Changes
Changes in government policies or regulations regarding asylum accommodation can impact your investment.
Being realistic with the potential pitfalls is a must, so do your research. Read some more pros and cons here.
Final Thoughts
Investing in property with Serco, Mears or Clearsprings as the tenant offers numerous benefits, including long-term leases, guaranteed rent, and comprehensive property management. By understanding the process and potential risks, you can make an informed decision and enjoy a stable and profitable investment.