Maximising Income and Impact: A Comparative Analysis of HMO Rent And Supported Living Leases

For property investors, understanding how to evaluate the rent on a supported living property can be a challenging feat. The rent in supported living properties is often lower compared to the expected rent in the open market. However, the overall income generated can be significantly higher due to various lease terms and benefits. In this blog post, we will compare HMO (House in Multiple Occupation) rent with a supported living lease and shed light on why the latter can be a highly lucrative and impactful investment.

Benefits of Supported Living Leases

1. Voids Covered by the Support Provider

  • The support provider covers any void periods, ensuring consistent income for the landlord.

2. Maintenance Coverage

  • Maintenance costs are often covered by the support provider, relieving the landlord of this responsibility.

3. No Management Fees

  • Unlike HMOs, supported living leases usually involve no management fees, further boosting the landlord’s net income.

4. Longer Lease Terms

  • Supported living leases typically offer longer terms, providing stability and predictability for the landlord.

5. All Bills Covered

  • The support provider covers all bills, reducing the landlord’s financial obligations and management efforts.

6. Damages and Wear and Tear Covered

  • The support provider often covers damages and wear and tear, minimizing maintenance costs for the landlord.

Evaluating Income: HMO vs. Supported Living Lease

Let’s illustrate how a lower rent figure in a supported living lease can translate to higher net income when compared to a traditional HMO.

Example:

  • Market Rent for HMO: £2,500 per month
  • Rent Offered in Supported Living Lease: £1,500 per month

Considering associated costs such as council tax, utilities, maintenance, and agency fees, the net income from the HMO is £1,355. On the other hand, a supported living lease yields a net income of £1,387.50. Although the HMO generates a higher rent figure, the supported living lease ultimately leads to a net increase of £390 annually for the investor.

The Value of a Supported Living Lease

Investors not only benefit financially but also contribute to their community by providing high-quality homes to those in need. While setting up a supported living lease may require specialized knowledge and assistance, the long-term benefits in terms of income and positive societal impact make it a worthwhile addition to any property portfolio.

In conclusion, evaluating the potential of a supported living lease is crucial for property investors looking to maximize their income while making a meaningful difference in the lives of others. With the right approach and support, this investment opportunity can prove to be a lucrative and rewarding venture, aligning financial gains with social good.

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