Should care providers set up another company or CIC to take the lease on a property?

Posted in: Supported Living, Posted on Thursday, 09 December 2021, Posted By: Lisa Brown

Many supported living providers I speak with are unsure who can take the lease on a property. There are three main options: 

1) The support or care organisation takes on the lease themselves 

2) The support or care organisation forms another company or CIC to take the lease 

3) Another organisation takes the lease on the property, this could be a registered provider (RP) or registered social landlord (RSL), housing association, charity or CIC works alongside the support or care organisation 

Option 1 can be fine if you are providing unregulated care or support, if you are regulated by CQC and your tenants have long term support needs you often need to demonstrate there is true separation of care and tenancy arrangements which makes this option problematic.  

Option 2 creates this separation, however it means you need to run two companies, with the additional cost and time this incurs. Its also worth considering that property investors often struggle to get mortgages on property leased to companies with less than 12 months trading accounts so it can be a challenge to get the first property for a new company. 

For options 1 and 2 you still need to negotiate with housing benefit departments to get enhanced rates, and do all the property maintenance and management. Do you have a build team on hand able to repair damages quickly if needed? What happens if you get a leak on a bank holiday can you deal with this?   

Option 3 is often the simplest route for those providing regulated support, as there is true separation between care and tenancy arrangements. Currently local authorities are only able to claim back 100% of enhanced housing benefit (EHB) from central government if there is an RP leasing the property. An RP will negotiate the EHB and will take on all property management. Read more about working with an RP 

Property Investor Care/Housing Provider

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