The Hurdles of Financing Supported Accommodation

Financing supported accommodation is not straightforward. For investors and developers, the pathway is often narrower than in the private rental market, with lenders cautious about risk and valuations that don’t always reflect true income potential. At Goldfinch, we’ve navigated these complexities first-hand. This blog outlines the key challenges — and how experience, clarity, and the right partnerships can make the difference.

For those new to supported accommodation, the first piece of advice is simple: find a specialist mortgage broker. The pool of lenders willing to fund supported housing is much smaller than for private rentals. Why? In part because banks and lenders fear the headlines. Repossession involving vulnerable tenants makes for difficult publicity, and most lenders prefer to avoid that risk altogether.

They also prefer certainty. Many will not lend until a lease is signed, yet leases are rarely confirmed until a property is ready. Letters of intent carry limited weight. That creates a catch-22 for new entrants.

Rates vary depending on the type of care. Where accommodation is provided without overnight stay, rates can mirror those for private sector buy-to-let mortgages. Add daily care and support — feeding, personal hygiene — and the rates shift higher. For investors, this can still work, but the detail matters.

Valuation is another challenge. Most HMOs for supported accommodation are valued on a bricks-and-mortar basis, even if the net yield is stronger than private rental stock. Occasionally, with the right planning classification or a long-term blue-chip lease, a commercial valuation is possible. But in practice, very few providers meet the strict definitions of “blue chip” (often £10m turnover, national presence, five years of operation). As a result, valuations are often lower than anticipated, despite robust rental income.

That said, the landscape is evolving. As more landlords enter the supported accommodation sector, new financial products are emerging. Valuers are gaining comparables. The system is slowly adjusting. But right now, investors need to go in with eyes open.

For our investors, transparency and security are non-negotiable. Every opportunity we offer is asset-backed and carefully structured to withstand these financing hurdles. To learn more about how we protect investments while creating long-term housing solutions, download our Investor Pack today.