Glossary
Provider covenant: Tenant covenant
How reliably a tenant, such as a care or housing provider, can keep paying the rent.
What it means
A tenant's covenant is its financial strength: how likely it is to pay the rent in full for the whole lease. With a provider on a supported living lease, voids are usually nil, so the covenant is the main risk. Look at the provider's accounts, how many homes it runs, its regulator's ratings, whether it has a parent company or guarantor, and how much of its income comes from one council's contracts. A weaker covenant should mean a shorter lease, a rent deposit or a lower price for the risk.
Worked example
ExampleTwo providers offer a five-year lease on the same home, with the same worked-example rent of £1,650 a month.
- Provider A
- Ten years' accounts, 60 homes, a parent guarantee
- Provider B
- Two years' accounts, 4 homes, no guarantee
- Allowance in the calculator
- A: 2% of rent. B: 8% of rent and a rent deposit.
The same rent is worth less from a weaker covenant. Price the risk before you spend on adaptations.
Information, not advice. Example figures are fictional and for illustration only.