Is Social Housing Best as Part of Your Portfolio or All of It?
Is Social Housing Best as Part of Your Portfolio or All of It?
We believe that having social housing somewhere in your portfolio is essential. This is largely due to the strong covenants often available, steady and secure yields, and the potential for hands-off property management.
But the real question is: should you go all in and have 100% of your portfolio in social housing, or should it make up just part of a broader investment strategy?
Here are some pros and cons to help you decide.
Going All In
Focusing solely on social housing means you will get to know the market, or the specific sector you are investing in, extremely well. You will develop a deep understanding of what works and what does not. As a result, you can stay ahead of legislative changes, rate shifts, and fluctuations in supply and demand. Rather than being caught out, you will be able to identify opportunities before others do.
Social housing is very much a relationship-based business. The more time you spend in the sector, the more connections you will build. Over time, those relationships can become a valuable asset.
The possible downside?
You may be putting all your eggs in one basket. If policies change or regulations tighten, it could have a significant impact. As long as you deliver a high standard of work and maintain strong relationships, you are likely to be fine. However, if you make a mistake or underperform, it could damage your reputation in what can be a close-knit market.
A Diversified Foundation
Alternatively, you may prefer to adopt a more diversified approach. Including social housing as part of a broader portfolio can provide a stable and reliable base.
Government-backed tenancies and strong operators help to reduce many of the typical challenges faced in property investing. With predictable income, no voids or arrears, and minimal variation in maintenance or management costs, social housing offers consistency and peace of mind.
In summary:
Whether you choose to focus entirely on social housing or include it as part of a more varied portfolio, the most important thing is to understand your strategy, risk appetite, and long-term goals. Either way, it is a sector that deserves serious consideration.