The Cost of a Broken Model: Lease-Based Supported Housing

In recent years, lease-based Specialised Supported Housing (SSH) has quietly emerged as a fast-growing model in social housing — one that’s often framed as innovative, flexible, and responsive to the needs of vulnerable tenants. On paper, it offers a way to deliver housing for people with high care needs without the need for public sector capital outlay. Instead, private investors fund the homes, lease them to registered providers, and those providers, in turn, let them to tenants referred by local authorities.

But behind the scenes, this “asset-light” model comes with serious questions. Who’s really in control? What happens when the rent doesn’t cover the costs? And how much risk is being offloaded onto housing providers — and ultimately, the tenants themselves?

This isn’t just about spreadsheets or regulatory checklists. This is about homes — homes for people with complex needs, often vulnerable, sometimes voiceless. If the system propping up those homes is shaky, so too is the stability of the lives within them.

And that’s why this matters.

The Promise vs The Reality – What It’s Supposed to Deliver, and What’s Actually Happening

Lease-based SSH was sold as a win-win. Investors would step in with the capital to develop or repurpose homes tailored for people with learning disabilities, autism, mental health needs or other complex support requirements. Registered providers wouldn’t need to own the bricks and mortar — they’d simply lease the properties and focus on managing tenancies, ensuring care packages were in place, and keeping people safe.

The promise? Faster delivery of much-needed specialist housing. More choice for residents. Greater flexibility for councils under pressure to reduce care costs. And a sustainable model where everyone — tenants, providers, investors — benefits.

But in reality, too many of these arrangements are built on shaky ground.

The Regulator of Social Housing (RSH) has now raised the alarm: lease terms are often skewed heavily in favour of investors, providers are taking on disproportionate risk, and the entire model depends on assumptions that don’t always hold up — like full occupancy, consistent housing benefit levels, and zero disruption to tenant care needs.

When a tenant moves out or a care package changes, the financial model can collapse. Providers are still on the hook for inflation-linked lease payments, even if a property is empty or deemed no longer suitable. There’s little wriggle room, few break clauses, and often not enough capital to absorb shocks.

And the real kicker? When things go wrong — and they are going wrong — it’s not investors who feel the immediate consequences. It’s tenants, support staff, and stretched local authorities picking up the pieces.

Risks Unpacked – From Voids and Cashflow Crises to Governance Gaps and Unbreakable Leases

Scratch beneath the surface of lease-based SSH and a familiar pattern emerges — one where financial fragility, governance failings and overdependence on external parties put the whole operation at risk.

Let’s start with voids. If a property stands empty — even for a short while — the registered provider still owes full lease payments to the investor. Unlike traditional social housing, where rental income can be smoothed across a broader stock base, lease-based SSH is all about cashflow. If that flow stops, the whole business model starts to wobble.

Then there’s the issue of cashflow crises. Many of these providers operate with minimal reserves. A few delayed housing benefit payments or unexpected maintenance bills, and suddenly they’re struggling to meet their commitments. Some have tried to expand rapidly to offset losses — relying on incentives for taking on new homes — but this often just magnifies the problem. It’s a short-term fix that stores up long-term instability.

Governance gaps are another red flag. The RSH has highlighted numerous cases where boards lacked the skills or independence to challenge dodgy lease terms, understand the scale of liabilities, or plan for future costs. In some cases, there have been conflicts of interest between providers and landlords, and deals signed with more concern for getting homes on the books than safeguarding tenants’ futures.

And let’s not forget those unbreakable leases. These aren’t flexible contracts that can be adapted when circumstances change. They’re often rigid, inflation-linked and stretch over decades — locking providers into costly commitments with no easy way out. The landlord shoulders all the risk, while the investor walks away with guaranteed returns.

When you put all these factors together — volatile cashflows, under-skilled governance, and lopsided lease deals — you end up with a model that looks more like a ticking time bomb than a sustainable solution. And when it goes off, it’s tenants who feel the blast.

Who Really Pays? – Residents, Taxpayers, and the System

When the glossy investor brochures talk about Specialised Supported Housing, they use words like impact, social value, and ethical returns. But when the financial model starts to crack, it’s not the shareholders or fund managers who pay the price — it’s the people who were supposed to be protected by the system.

Residents pay first. When a landlord collapses or hands back homes to an investor, tenants face uncertainty, disruption, and sometimes outright eviction. Many have complex needs. They rely not just on housing, but on consistency — the same faces, the same routines, the same place they’ve come to call home. Disruption here isn’t just inconvenient. It’s dangerous.

Taxpayers pay next. The SSH rent exemption means local authorities and the Department for Work and Pensions are footing the bill for these arrangements — often at premium rates, far above standard social housing rents. When those homes are mismanaged, under-occupied, or ultimately abandoned, public money is wasted. The system ends up paying for housing that hasn’t been maintained, support that wasn’t delivered, or care placements that fall through.

And then there’s the social housing system itself, already under pressure. When lease-based SSH schemes fail, it’s often other housing associations, councils, or voluntary sector organisations who are asked to step in — absorbing the shock, picking up the pieces, and doing so with fewer resources and less room to manoeuvre.

The uncomfortable truth? This isn’t a model built for long-term care. It’s a financial instrument. A cashflow vehicle. And while the rhetoric might focus on vulnerable adults and specialist support, the reality is that many of these arrangements prioritise investor returns over resident outcomes.

Regulatory Blind Spots or Bold Steps? – How the RSH is Responding

To its credit, the Regulator of Social Housing hasn’t looked the other way. Since the near-collapse of First Priority in 2018, the RSH has kept lease-based SSH firmly on its radar. Its latest report makes clear: while the model has delivered individual homes successfully in some cases, the broader system is riddled with vulnerabilities — and those vulnerabilities are getting harder to ignore.

The regulator has flagged concerns over everything from unbalanced lease agreements to poor governance, conflicts of interest, and providers scaling up too fast without proper risk management. In some cases, it’s stepped in with interventions. In others, providers have quietly deregistered or failed altogether.

But here’s the challenge: regulation happens after the fact. Providers have already signed long-term leases. Tenants are already in place. The money is already moving. By the time warning lights start flashing, there’s often little room for course correction — unless freeholders (the investors) are willing to renegotiate, which they rarely are.

What’s missing isn’t just oversight — it’s structural accountability. Freeholders aren’t regulated in the same way. They’re commercial entities. Their contracts are designed to protect their returns, not safeguard tenant wellbeing. And the RSH’s power doesn’t extend into those investor boardrooms, where the real decisions are made.

So, while the regulator can — and should — keep raising the alarm, the real question is whether government, housing policy-makers, and the wider sector are ready to rethink the model entirely. Because at this point, tweaks and technical guidance won’t fix a system whose foundations are commercially motivated but publicly subsidised — and whose risks are socialised every time a provider goes under.

Where Do We Go from Here? – Questions for Policymakers, Providers, and the Sector

The lease-based SSH model wasn’t built with failure in mind — but failure is happening. And while the regulator continues to step in where it can, the deeper issues demand a sector-wide reckoning.

For policymakers, there’s a choice to be made: do we continue to allow private equity and investment firms to play such a central role in housing the most vulnerable? Or do we invest in genuinely sustainable alternatives — models rooted in social purpose, not short-term returns?

For registered providers, the warning is clear: if you can’t control the lease, the rent, the tenant flow, or the care package, then you’re not in control of your own viability. Governance needs to be sharper, contracts need to be smarter, and decisions need to start with what’s best for tenants — not just what gets homes on the books fastest.

And for the wider social housing sector, there’s a need for transparency and honesty. The current model might be delivering high satisfaction scores in pockets — but it’s also exposing residents, staff, and public money to avoidable risk. We can’t keep patching over cracks and hoping they don’t widen. The cracks are already showing.

At Housing Sector, I’ve always believed that real change starts with asking uncomfortable questions. This is one of them: how much longer can we pretend this model works — and who are we failing when we let it carry on?

Because if the answer to “who really benefits?” isn’t “the tenant” — then we’ve already lost our way.