Supported housing deals rarely collapse because the idea was wrong. More often the detail gets lost. An introduction happens by email, the viewing is arranged by phone, the numbers sit in a spreadsheet and the commissioner's view arrives on a call. Six weeks later nobody is sure what was agreed or who is waiting on whom.
What are heads of terms?
Heads of terms are a short, usually non-binding summary of the main commercial points two parties have agreed before formal documents are drafted. In supported housing they typically cover the parties, the property, the term, rent and service charges, the care and support arrangement, responsibility for repairs and compliance, and what happens if either side wants to leave.
The five stages of a deal
- Introduction: both sides know who the other is and why they are talking.
- Qualification: the basics are confirmed, including area, client group, property and capacity.
- Diligence: regulatory standing, property documents and financial position are checked.
- Terms: the commercial points are proposed, discussed and settled.
- Heads of terms: the agreed position is written down and signed off, ready for the lawyers.
At each stage the next step is usually obvious. It tends to be held in one person's head.
What to settle before you instruct lawyers
The points that most often reopen late are the term and break rights, who carries void risk, how rent is set and reviewed, who is responsible for compliance and repairs, and what the commissioner has agreed to fund. Settle them before the lawyers are instructed, when changing them costs nothing.
Run the deal from one place
The most useful discipline is to keep the whole deal in one place, with the documents, questions, answers, decisions and dates attached to it. A new colleague should be able to read it from the top and understand where things stand.
OTHRS Deal Rooms are built for this. A Deal Room is a guided transaction workspace that runs from introduction to completion. It shows the next step at every stage and keeps a permanent record of what was done.
Checklist before the lawyers
- Parties and their verified status confirmed.
- Property, term and break rights agreed.
- Rent, service charge and review mechanism agreed.
- Care and support arrangement and commissioner position confirmed.
- Compliance and repair responsibilities allocated.
- Exit and void risk allocated.
Frequently asked questions
Are heads of terms legally binding? Usually not, apart from specific clauses such as confidentiality. They record intent and speed up drafting. Take legal advice on your own deal.
Who writes them? Often the parties agree the points and a solicitor drafts the document.
Should the commissioner be involved early? Where a scheme depends on commissioner funding, yes. Their position affects rent, term and the care arrangement.
Can commissioners use Deal Rooms? Yes. OTHRS is free for local authorities permanently, including Deal Rooms.
Run your next deal from one place. Sign up at othrs.ai.
