What is my fall back if I purchase a property for SSH and it doesn’t go ahead?

Supported living project success or failure is influenced more by the commercial and legal structures underpinning the projects than delivery of the actual building itself.

Project origination, partner selection, commercial structuring, council need, rent levels, and development costs all need to be aligned early on. Only when all of these elements are confirmed and committed does a viable, risk-managed, supported living scheme potentially exist.

In our experience, there are a lot of moving parts in the early stages of SSH projects. We often say the whole structuring process is a bit like ‘whack-a-mole’. We aim to acquire a purchase option over the land or property whenever we can, although this isn’t always possible. A purchase option offers a few months to co-ordinate the key elements and work through heads of terms on all of the key agreements between key parties. It also allows the time to confirm indicative rents and costs, to determine development viability.

All of these are good reasons why it’s better not to commit to buying a property until you have confidence that the proposed supported living scheme is viable.

Having said that, many sellers won’t entertain the idea of an option, especially when they have alternative buyer interest. In these cases, if your primary aim is to deliver SSH, then the fall back option needs to be considered before committing to the purchase. If the property being purchased is a residential building, then that’s probably the best alternative use to recoup committed cash.

The biggest issue is if a property is purchased, specially adapted for SSH and then the project does not progress for any reason. In these cases, buildings would typically be over-spec’d for general needs housing. At this point, the first priority should be to gauge interest from other supported living providers or care organisations.  If that route is not available, it will likely be difficult to recoup the enhanced costs of adaptation through an open market sale.