Frequently asked questions
The important questions, answered directly.
The questions raised most often about this model, including the ones prompted by the failures elsewhere in the sector, answered directly.
Isn't this the same as the schemes that collapsed?+
It sits in the same category, which is why it is the first question to address. The failed schemes shared two features: the lease sat with a thinly capitalised middleman rather than a real institution, and the property was sold well above its bricks-and-mortar value. Both are verifiable in any deal: the identity of the lessee, and an independent valuation. Here, the lessee is a named local authority or housing association, and an independent RICS valuation is provided before purchase.
How can the yield be strong and the risk be low?+
It cannot, and no such claim is made. The return comes from buying below market value and adding value through refurbishment, and an institutional lessee reduces void and arrears risk. It does not remove risk: property values can fall, refurbishments can overrun, and leases end.
If it is hands-off, do I really own it?+
Yes. You hold the legal title. Hands-off describes who does the work, not who owns the asset, and conflating the two is what caught investors in the failed schemes.
Council tenants: won't the property be damaged?+
The lease is held by the local authority or housing association, not by an individual tenant. Under the lease, the institution is responsible for the rent and for the condition of the property. That structure is what removes individual-tenant risk.
What is the catch?+
Time and liquidity. Conveyancing and refurbishment run in months, not weeks, and property is not a liquid asset. Releasing capital means selling, which takes time. The model suits capital that can stay invested; it is not suitable if you may need quick access to it.