What can the property owner expect to receive in rent?
Rents will be agreed through negotiation with the LA/AHB. The maximum rent to be agreed under the terms of social leasing will be 80% (85% in the case of apartments) of the current market rent. Rent reviews will usually take place every three or four years.
The cost of the repairs shall be offset against the agreed rental payment until the value of the works is repaid. The LA/AHB will agree with the property owner on a case by case basis what the appropriate offset period will be. These arrangements may include scenarios whereby the offset is by way of a rent-free period; a consistent reduction over the duration of the lease or a term which is scaled against the duration of the lease as in the table below.
Cost of repairs
Minimum duration of lease
Offset to be cleared by
Up to 10,000
10 years
Year 8
Up to 20,000
15 years
Year 12
In excess of 20,000
20 years
Year 15
Overall, the benefits of the long-term lease arrangement to the property owner include -
guaranteed rent
Avoid losing rent during vacant periods
No dealing with tenants and day-to-day maintenance
No need to collect rent or finding a new tenant
Avoid advertising costs
