Glossary
Provider lease
A lease of a home to a registered provider, housing association, council or care provider, who places and supports the residents.
Also searched for as supported living lease, lease to a provider.
What it means
A provider lease lets a home to an organisation rather than to the people who live in it. The provider places the residents, gives or arranges their support, and pays the rent to you whether or not every room is filled. Leases to providers are often long, with rent reviews that are fixed, linked to CPI with a cap, or to the open market, and they are often full repairing and insuring, so the provider repairs and insures. Read the break clauses, what happens to the lease if the provider's funding changes, and the handback condition. Most buy-to-let mortgages don't allow a lease like this, so you need a specialist lender and its written consent.
Worked example
ExampleA worked example: a ten-year lease to a provider at £1,650 a month, reviewed every year by CPI capped at 4%, with a provider break after five years.
- Year one
- £19,800 of rent
- Year ten at a 2.5% CPI assumption
- £1,650 × 1.025⁹ = about £2,061 a month
- If the provider breaks at year five
- Months to re-let, reinstatement, then a standard-let rent
A long lease is only as good as its break clauses and the provider behind it. Model the break as well as the full term.
Information, not advice. Example figures are fictional and for illustration only.