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.
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. justhousingleeds.co.uk
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.