As a property investor, you're always on the lookout for opportunities that offer both financial returns and stability. Two popular options in recent years have been serviced accommodation and supported living. While both have their merits, many investors are finding that supported living offers distinct advantages. Here are the key differences between these two investment strategies and why supported living is becoming an increasingly attractive option.

Serviced Accommodation:

Serviced accommodation typically involves short-term rentals of fully furnished properties, often catering to business travellers or tourists. These properties are usually managed intensively, with frequent turnover and high maintenance requirements.

Pros

• Potential for high yields during peak seasons
• Flexibility in usage and pricing
• Appeal to a wide range of short-term tenants

Cons

• High management intensity
• Seasonal fluctuations in demand
• Increased wear and tear on property
• Potential regulatory challenges in some areas

Supported Living:

Supported living properties are designed to provide accommodation for vulnerable individuals who require various levels of care and support. These properties are typically leased to care providers or housing associations on long-term commercial agreements.

Pros

• Long-term, stable rental income
• Low or zero management or maintenance
• Positive social impact
• Often government-backed rental payments
• Demand exists in every area of the UK

Cons

• Initial learning curve to understand the sector
• Potentially higher upfront costs for property adaptations
• More stringent regulatory requirements

The shift from serviced accommodation to supported living is gaining momentum among property investors. This strategic move offers several key advantages.  Unlike the fluctuating yields of serviced accommodation, supported living provides a consistent, long-term revenue stream, sometimes up to 15 to 20 years, depending on the type of care being given, and often index linked lease terms.

Supported living properties, managed by care or housing providers, require no day-to-day involvement from investors compared to the high-maintenance nature of serviced accommodation.

While headline rates may be lower than peak serviced accommodation prices, the consistent occupancy and lower operating costs of supported living often result in superior net returns. Financial institutions also tend to view these investments more favourably.

With an increased need for individuals with diverse care needs, the supported living sector presents significant growth opportunities.  If you are considering supported living, a structured approach is advisable:

• Research thoroughly to understand care provision models, regulations, and property requirements.

• Understand the different types of care providers in the sector and who operate in your area.

• Assess your current portfolio for potential conversions or necessary divestments.

• Consider a phased approach, starting with a single property conversion to gain experience.
• Seek expert guidance from organisations like Supported Living Gateway for critical insights and introductions.

The key to a successful transition lies in thorough preparation and strategic planning. With diligence, investors can benefit from the stability and growth potential of the supported living sector, creating a portfolio that balances financial rewards with positive social impact.