In­vest­ment in do­ing good pays div­i­dends all round

A new prop­erty in­vest­ment scheme is of­fer­ing buy-to-let with added feel good fac­tor. Sharon Dale re­ports.

Yorkshire Post - Property - - PROPERTY -

BUY­ING Fair­trade prod­ucts or Christ­mas gifts from a char­ity gives you a warm glow and that same feel good fac­tor is now be­ing ap­plied to buy-to-let.

York­shire-based Just Hous­ing was set up to ex­plore ways of pro­vid­ing high-qual­ity homes for vul­ner­a­ble peo­ple, in­clud­ing refugees.

The so­cial en­ter­prise was born from Chris­tian con­cern and its mem­bers in­clude a sur­veyor, a fi­nan­cial ad­viser and a so­cial worker. They came up with a scheme to source, re­fur­bish, let and man­age prop­er­ties for in­vestors who are happy to know that the houses they buy will be put to good use by some of the most dis­ad­van­taged sec­tors of so­ci­ety.

Its pi­lot prop­erty in the Hol­beck area of Leeds has pro­vided ac­com­mo­da­tion for over 30 refugees over the past five years.

The two bed­room back-to­back was re­fur­bished to cre­ate four fur­nished let­ting bed­rooms plus two shower rooms and a ground floor din­ing kitchen and sit­ting room, be­fore be­ing let. The eth­i­cal and fi­nan­cial suc­cess of the ven­ture has prompted plans to roll it out to the pub­lic.

Just Hous­ing Project Man­ager Nick Lat­timer, says: “What we are of­fer­ing is a prop­erty man­age­ment ser­vice to peo­ple or or­gan­i­sa­tions who would like to in­vest in pri­vate so­cial hous­ing. We are a not-for-profit or­gan­i­sa­tion that aims to make a dif­fer­ence but we aim to of­fer clients a good fi­nan­cial re­turn on their in­vest­ment and a pro­fes­sional buy-to-let ser­vice.

“The idea is that we help the in­vestor search and buy a prop­erty in an af­ford­able area, and we can over­see any re­fur­bish­ment work re­quired. Then we take care of the let­ting and manag­ing.”

He adds: “We be­lieve that our project might be at­trac­tive to eth­i­cally-minded in­vestors and or­gan­i­sa­tions in­ter­ested in mak­ing an in­vest­ment in a tan­gi­ble as­set while, at the same time, ad­dress­ing a real need.

“Coun­cils and so­cial hous­ing as­so­ci­a­tions do a great job but de­mand far out­weighs sup­ply. There are over 20,000 peo­ple on the so­cial hous­ing wait­ing list in Leeds alone and quite a few hos­tels have closed ex­ac­er­bat­ing the prob­lem. It’s very dif­fi­cult to get any­where in life with out a per­ma­nent ad­dress and find­ing one is a par­tic­u­lar prob­lem for refugees. Pro­vid­ing pri­vate so­cial hous­ing like this can re­ally make a dif­fer­ence.”

Co-founder and di­rec­tor of Just Hous­ing Nigel Tapp has a char­tered sur­vey­ing prac­tice in Leeds and is a sea­soned buyto-let in­vestor and prac­tis­ing Chris­tian.

He says: “There was a grow­ing aware­ness among Chris­tians in Leeds about hous­ing need, es­pe­cially among refugees and asy­lum seek­ers and so and a group of us got to­gether to see if we could do some­thing.

“It was a way of putting our faith into ac­tion. We bought the prop­erty in Hol­beck and it has been a God send for a lot of peo­ple, who have been ex­tremely grate­ful.

“I have con­ven­tional buy-to-lets but this in­vest­ment is far more sat­is­fy­ing.”

The aim is to get 12 houses up and run­ning in the next two years and Just Hous­ing is also look­ing at a col­lec­tive in­vest­ment model, where peo­ple can con­trib­ute as lit­tle as £1,000 into a fund that will buy prop­erty.

Al­though ten­ants have so far been refugees and asy­lum seek­ers, the so­cial en­ter­prise is look­ing at help­ing other dis­ad­van­taged groups, in­clud­ing ex-of­fend­ers.

Though some po­ten­tial in­vestors may be con­cerned about what they see as high-risk ten­ants, Nick Lat­timer says:

“At the mo­ment we work with Abi­gail Hous­ing, which of­fers on­go­ing sup­port to the refugees we ac­com­mo­date and that re­duces risk sig­nif­i­cantly. In fact, our ex­pe­ri­ence has been very good. We haven’t had any prob­lems and our prop­erty has been very well cared for. We’d look to have that kind of set-up for fu­ture ten­ants too. We also in­sist on hous­ing ben­e­fit be­ing paid di­rectly to the land­lord.”

The fig­ures, say Just Hous­ing, stack up well and they give the fol­low­ing costs as a typ­i­cal ex­am­ple.

A house can be bought for £80,000 and a mort­gage ar­ranged, sub­ject to sta­tus, for 75 per cent of its value, leav­ing the client to find a de­posit of £20,000 along with re­fur­bish­ments costs es­ti­mated at £5,000.

Based on four bed­rooms let­ting for £60 a week at 90 per cent oc­cu­pancy this pro­duces a gross in­come of £11,232 a year mi­nus mort­gage pay­ments of £4,000 per an­num, man­age­ment fees of £1,500 and a re­pair bud­get of £1,000. This leaves the an­nual net in­come at £4,732, which equates to a gross yield of 13.21 and a net yield of 5.57 per cent.

Nick’s fa­ther Bill Lat­timer was tempted by the fi­nan­cial and emo­tional re­turn and is buy­ing a prop­erty through Just Hous­ing in the Hyde Park area of Leeds.

He says: “What re­ally at­tracted me is the idea that I can help peo­ple who des­per­ately need hous­ing while get­ting a re­turn on my in­vest­ment.

“It def­i­nitely has a feel good fac­tor.”

Just Hous­ing Leeds, 15 Park Place, Leeds, www. just­hous­in­

BACK TO FRONT: The cottage is de­cep­tively large with a huge amount of space in con­verted work­shops at the rear. The own­ers have cre­ated a con­tem­po­rary home while sav­ing all its pe­riod fea­tures.

ETH­I­CAL IN­VEST­MENT: The house in Hol­beck, Leeds, that has pro­vided a much-needed home for refugees.

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