DOMIDAS INVESTMENTS
...where property meets purpose
What we do for investors
We provide our investors with a property investment strategy that offers secure profitable income, excellent capital growth, and a positive social impact. Read on to find out how we achieve this.
Working with registered social housing providers, we help property investors purchase the right properties in the right localities to meet the shortfall between social impact housing demand and its undersupply.
We take the headache and guesswork out of property investing by using our analysts to source properties in the most suitable areas. We then match you directly with commercial tenants, e.g. housing providers and associations, rather than the vulnerable persons themselves. Thus, you need not worry about void periods, yet can rest assured that your investment is helping people in need. The properties are let on a full repairing and insuring lease. The benefit of a full-repairing and insured lease is that you, as the landlord, do not have to worry about paying for the property's upkeep.
How Social Impact Property Investing Works
Our method of property investing prioritises social impact, but not at the expense of sound, profitable returns. Our approach involves strategic planning, meticulous property sourcing and FRI leasing. We streamline process management and maximise investor benefits with suitable reverence for capital growth, all whilst contributing positively to real communities. It is important to recognise that these deals are considered to be businesses in their own right. They are considered to be "going concerns"; this boosts their value and increases capital growth. See below for an outline of what is included:-
Strategy call
It all starts with a 30-minute strategy call in which we discuss your requirements and the best strategy to achieve your objectives.
Property sourcing
We source the appropriate property in accordance with your requirements and the sponsoring provider's specification.
Effortless FRI Leases
Our FRI lease (Full Repairing and Insuring Lease) offloads maintenance and repairs to commercial tenants, freeing you of the responsibility, thus simplifying your investment experience.
Property conversion & refurbishment
We project manage any property conversion or refurbishment, ensuring it meets with the sponsoring provider's specification and standard.
Long leases with commercial tenants
Using long-term leases (5-25 years) with commercial tenants, e.g. housing associations, we are able to provide reliable, long-term income for our investors.
Streamlined Process Management
Our process management system offers peace of mind to overseas investors, ensuring commercial tenants easily fulfil their contractual obligations and thus smooth out the complexities.
Maximising Investor Benefits
We guide investors to fully leverage the government’s tax and additional incentives for social housing property investments, enhancing profitability and impact.
Capital growth
As you own the property, and especially because it is considered to be a business - i.e. a "going concern" you can enjoy excellent capital growth in addition to stable income without voids.
The Strategic Advantage of Social Impact Property Investing
Investing in social housing is a compelling proposition, particularly when properties are developed exclusively for this purpose. The Full Repairing and Insuring (FRI) lease stands at the core of this investment strategy, giving our property investors a shield against the vagaries of the market.
It ensures rent certainty because the housing association manages all maintenance, utility costs, and day-to-day operations. This translates to significantly lower overheads and minimal rent leakage compared to other residential sub-sectors.
In an economic climate where inflation looms large, our investment promises a buffer with a steady income stream that is less susceptible to market downturns, tenant inconsistencies, or unforeseen maintenance expenses. This stability is not just crucial for maintaining regular rental payments to investors but also for forecasting year-on-year income growth, further bolstering the investor's financial health.
Our unique proposition lies in the long-term FRI leases, with rents indexed to the Consumer Price Index (CPI). These are highly prized by institutional investors for their security and inflation-proof nature. By investing in a sizeable portfolio of social housing properties, savvy investors can diversify and secure high yields while mitigating inflation risks. This strategy not only ensures a high-income stream but also presents a lucrative exit opportunity. Partnering with us, investors can position themselves to capitalise on profits and facilitate capital growth.
In summary, social housing investment offers a robust, inflation-resistant avenue for generating stable returns, making it an attractive addition to any investment portfolio. The recent government announcement in 2024 of a £3 billion increase in the Affordable Homes Guarantee Scheme, which provides low-cost loans to housing providers, demonstrates its commitment to the sector. The government's continued support of the lease-based model with its indexed-linked long-term leases (typically 20+ years) shows their desire to court private investors whose valuable contribution allows for the construction of new homes and the upgrading of existing properties, ensuring high-quality, affordable housing.
The diagram below shows how agreements and money flow in a typical transaction
Global Hitters
Global Hitters renowned for their worldwide operations and local impact often lack the time to engage in extensive property sourcing and the intricacies of daily management. Through a network of seasoned professionals, Domidas is well-placed to help foreign investors manage their investments that serve the social good yet offer decent returns. With UK property values rising and a robust legal framework, your investment is secure, socially responsible, and managed by experts who handle the details.
Prosperity Preservers
Prosperity Preserver investors are Visionaries of Value who look beyond the horizon, focusing on long-term capital appreciation. They build wealth with purpose and precision. If you resonate with this foresight, trust in our commitment to secure properties poised for capital growth while aligning with your social aspirations.
Virtuous Vanguards
As pioneers of ethical prosperity, Virtuous Vanguards lead with integrity and seek visionary investments for a better tomorrow. Do you believe that profitability and principles can coexist? With Domidas, you’ll find a partner who understands your dual desire for hands-free investment management and meaningful returns. Join us in our commitment to humanity and the planet, ensuring your financial portfolio is as benevolent as it is robust.
Revenue Trailblazers
As a Revenue Trailblazer, your sights are set on maximizing rental yields, turning each property into a high-performing asset. While capital growth remains on your radar, the immediate, robust rental returns drive your investment strategy. At Domidas, we specialise in pinpointing social housing opportunities that promise above-average yields. We assess areas of high demand and vulnerability, ensuring your investments support social welfare and lead the way in rental profitability. Partner with us and blaze a trail to financial success, anchored by a steady stream of rental income.
Security Stewards
Security Stewards seek to maximise occupancy and minimise voids. By partnering with Domidas, this type of investor can have peace of mind as we help them negotiate long-term lease agreements with corporate tenants who guarantee to pay the rent. They, in turn, let only to government-funded vulnerable people.
Stability Patrons
For the Stability Patron, investing is about peace of mind and certainty. You value the ability to ‘set and forget,’ trusting in Domidas to handle the intricacies of your social housing portfolio. With us, your investment operates on autopilot, delivering consistent income returns without the fluctuations of the traditional rental market. With over 1 million people awaiting social housing, the demand is steadfast. Embrace the ease of hands-free investing, knowing your portfolio contributes to a pressing social need while ensuring your financial wellbeing.
Who is it for?
Social housing investing is not for everyone. However, at Domidas Investments, we have identified at least 6 investor types who have found social housing investment both profitable and extremely fulfilling, knowing they are helping the most vulnerable people in our society. Peruse the ones below. Which type of investor are you? Get in touch with us to discuss.
What are the rewards?
Working with the team of experts at Domidas can lead to substantial returns on your effort, as explained in the true example outlined below. After perusing this example, please feel free to get in touch should you require further explanation or wish to get started right now
UNDERSTANDING
PROPERTY METRICS
Many of the myriad financial terms used in evaluating property deals are variations on three fundamental metrics: Capital Appreciation, Yield, and Return on Investment. These three distinct concepts each provide different insights.
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CAPITAL APPRECIATION: This is the increase in the value of the property over time. It’s the difference between the current market value of the property and its purchase price. Capital appreciation is realised when the property is sold or appraised at a higher value than its purchase price. Capital appreciation is a simple measure of growth that doesn’t consider the time factor. For this reason, it is sometimes expressed as a “year-on-year” figure. Here, a different but related metric is used - the Compound Annual Growth Rate (CAGR)
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THE COMPOUND ANNUAL GROWTH RATE (CAGR). In simple terms, each year a property grows in value, the increase in value also grows in value. This is known as compounding. The CAGR takes both time and compounding into account, allowing for the effective comparison of different property deals. Its somewhat scary formula is shown in the formula panel.
It represents one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time. Its concept can be applied to virtually any asset growth metric to arrive at that metric’s “year on year” equivalent and thus accurately compare investment opportunities.
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YIELD: Yield refers to the annual income generated from the property, usually from rent, relative to its value or cost. Yield provides an ongoing income stream and is a measure of the property’s ability to generate cash flow. It’s expressed as a percentage and can be calculated as
GROSS YIELD (before expenses) or
NET YIELD (after expenses).
Property deals that emphasise Yield alone are often trying to hide the fact that capital appreciation may be low. This is not necessarily a problem if high income is your strategic objective.
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ROI: RETURN ON INVESTMENT measures the total return on the property investment, including both capital appreciation and income (yield), relative to the cost of the investment. It’s a comprehensive metric that considers all profits from the investment, not just the income or the increase in value.
In property evaluation, we often prefer to use a more precise measure of ROI known as Return on Capital Employed (ROCE).
RETURN ON CAPITAL EMPLOYED (ROCE)
ROCE is a crucial ratio in property investing that assesses the profitability and efficiency of the capital invested in the property. It is more than just comparing profit/income to property price. It is the ratio of the profit/income generated by a property to the cash/capital you have tied up in the property. expressed as a percentage. It looks at how well your money is working for you on a pound-by-pound basis. Its formula is shown in the formula panel..
IN SUMMARY:
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CAPITAL APPRECIATION is about the increase in the property’s value over time.
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YIELD is about the income the property generates annually compared to its price/value.
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ROI combines both capital appreciation and income to give a total percentage return on the investment.
Each of these metrics provides valuable information for different aspects of property investment and helps investors make informed decisions based on their investment goals. At Domidas, we help clients maximise all three metrics and more.
CASE STUDY: TRANSFORMING LIVES AND INCOMES:
A SOCIAL HOUSING SUCCESS STORY
An investment journey with heart
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Initial Purchase: A 6-bedroom townhouse, purchased for - £1,000,000
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Refurbishment & Transformation: In partnership with an approved housing provider, the property was upgraded and converted into 7 studio apartments designed to support vulnerable individuals at a cost of £286,250.
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Other costs and fees: Stamp duty - £43,750; Fees £4,000
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Duration: Held for 6 years.
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Legal Framework: An FRI (Full Repairing and Insuring) lease was established, ensuring a guaranteed stable income stream.
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Occupancy: The housing provider let the units to vulnerable individuals, with rents fully covered and guaranteed by government programs.
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Sale: The property was sold as a going concern, which enhanced its value and marketability— it was sold for £2,500,000.
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Impact: A shining example of how social housing investments can generate respectable returns and contribute positively to society.
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The Rewards - are outlined below:
THE REWARDS /INVESTOR BENEFITS IN THIS EXAMPLE:
Capital Appreciation over the 6-year period
= Selling price- purchase price
= 2,500,000 - 1,000,000 = 1,500,000
This is equivalent to 25% of the initial price per annum for each year of the 6-year period or, to put it more formally, a compound annual growth rate (CAGR) of 22.14%. See the panel opposite for a discussion of CAGR
Return on Capital Employed (ROCE) at the end of the first year
= [Annual Rental Income ÷ Capital Employed*] x 100
= [£330,000 ÷ £1,334,000] x 100
= 24.75%
Therefore, the Return on Capital Employed (ROCE) at the end of the first year is approximately 25%
Combined ROCE (Year 1)
= [Combined Returns in Year 1 ÷ Capital Employed] x 100
= [(Annual Rental Income + Capital Appreciation**) ÷ (Capital Employed)] x 100
= [(£330,000 + £221,400) ÷ £1,334,000] x 100
= [551,400 ÷ £1,334,000] x 100
= 41.32%
Therefore, the combined Return on Capital Employed (ROCE), including both the annual rental income and the estimated first year’s capital appreciation, is approximately 41.32% at the end of the first year. Please note that this is a simplified calculation, and actual capital appreciation may not accrue evenly over the years.
Combined Return on Capital Employed (ROCE) for the entire project
= [Combined Return ÷ Capital Employed] x 100
= [{(Annual Rental Income x 6) + (Capital Appreciation)} ÷ (Capital Employed)] x 100
= [(£1,980,000 + £1,500,000) ÷ £1,334,000] 100
= 260.87%
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Therefore, the Combined Return on Capital Employed (ROCE) for this property investment over the period is approximately 260.87%. This means that for every £1 invested, the return was nearly £2.61 over the 6-year period, considering both rental income and capital appreciation.
* Capital employed is calculated using the formula in the panel below
**Capital Appreciation is calculated using the CAGR in the formula panel below
THE FORMULA PANEL
What is Social Impact Investing?
Why the time is NOW?
The impact of PIP reform
Landscape of Social Housing
Shifting sands of rental reform
Resources
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DOMIDAS
INVESTMENTS
71-75 Shelton Street, Covent Garden, London,WC2H 9JQ.
United Kingdom
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The Social Impact
Property Market Explained
Social housing investment is a strategic approach where investors provide the capital for properties that serve as affordable, stable homes for the underprivileged. It creates societal value for the community as well as financial returns for the investors.
Who needs social housing?
Social housing is a vital sector that provides shelter and stability to those in need. It encompasses various subsectors, each addressing the unique challenges faced by different vulnerable groups in society. From supporting the elderly and disabled to offering refuge for survivors of abuse and the homeless, social housing is more than just accommodation; it’s a lifeline.
Our consultants at Domidas Investment will help you navigate this diverse market to suit your interests and risk profile.
General needs housing includes low-income families and takes up 83% of the social housing market. Social renters have a poverty rate of 46%, and there is a significant deficit in social housing, with over 1 million households waiting for social homes.
There’s an increasing trend of autistic adults experiencing food and shelter insecurity and homelessness. The UK government has committed that 10% of homes built via the £11.5 billion new Affordable Homes Programme will be for supported housing, which includes provisions for autistic and other neurodivergent individuals.
The demand for supported housing is projected to increase significantly. For example, the number of supported housing units for older people in Great Britain will need to rise from 460,000 in 2015 to around 625,000 in 2030.
An ageing population drives the need for social housing that offers accessibility and supportive services for the elderly, ensuring comfort and dignity.
This includes people who have fled their home countries seeking safety during times of war and unrest. The data indicates that recent migrants, including asylum seekers and refugees, are a small but growing part of this sector.
There’s a growing call for adaptable social housing that caters to those with medical conditions or disabilities, enhancing their quality of life. Approximately 24% of disabled people are in social housing compared to 8% of non-disabled people.
Young people requiring support, such as care-leavers, demand social housing that offers stability and a foundation for their future.
The number of new homeless households is six times higher than the number of new social homes built, with 52,800 households accepted as homeless last year compared to only 8,386 new social rented homes built.