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Six considerations for supported living leases

30th September 2022

Christine Janaway is a fellow of the RICS and worked as a valuer for many years specialising in care homes. She has since consulted for charities like Mencap and Guide Dogs for the Blind helping them to source specialist properties and maximise their portfolios. Here are her top considerations for supported living leases: 

  • Supported living leases are a form of commercial lease. The tenant is the RP or care provider that takes on the lease and although they may be a charity or non-profit organisation they are still seen as a business. Some supported living providers may ask for an ‘Armageddon clause’. This is generally tied to their funding drying up and allows them to break the lease if something significant changes. Larger associations are more likely to ask for this and less likely to need it, sometimes the smaller ones don’t know to ask for it.   
  • The more restrictions you place on a lease the less the rent value could be. As an example, a tenant will pay more for a variable rent review clause in comparison with an upward only rent revue clause as they know the rent could go down as well as up. This could be an additional risk for the landlord but not necessarily a big one if you’ve done your research into the rental value.  
  • It is not necessary to put your deposit in a deposit protection scheme and companies like the DPS are not geared up to deal with commercial agreements. A better option would be a ringfenced client account.   
  • On bigger schemes (20 rooms and up) it is good practice to have an asset management plan attached to the lease that sets out what maintenance is going to be carried out and when. The tenant then reports back each year on what’s been done to protect the value of your investment. 
  • Larger providers are likely to have a standard lease and not be open to negotiating terms, smaller ones are more likely to allow some flexibility.  
  • Dilapidations are paid for by the tenant at the end of the lease and can include removing adaptations that have been made and restoring the property to its former condition if they’re on a full repairing lease. If they’re on an internal repairing, then the dilapidations are severely curtailed.  

Christine Janaway joined our mastermind in June, watch her talk here[login]. 

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