Croydon council is set to invest £10m into a socially-orientated property fund that will buy homes to rent to the borough’s homeless community. It is thought to be the first local authority to go down such a route.
The Real Lettings Property fund, run by social impact fund manager Resonance and homeless charity Broadway, launched last year with an initial investment of £16.5m from five founding investors.
Over the year, the fund aims to reach at least £45m and eventually buy up to 220 properties across London.
The fund is open to private investors that are either independently certified as sophisticated investors or classified as elective professional clients. The minimum investment level for individuals is £50,000. The fund is designed to provide a return from rental income and any increase in property values.
It also aims to ease the borough’s housing problems and offer a route bank into independent living. The tenancies last for two years and personalised support, such as helping individuals build up options for moving into other private rented accommodation and progressing towards work.
Frank, just one of the people that has benefitted from the initiative, explained how he and his three-year-old son had originally been housed in a bed and breakfast. He added that he felt his life “was back on track” because he’d been able to move into a flat because of the scheme.
Daniel Brewer, managing director of Resonance, commented, “Croydon have shown real leadership by using their balance sheet, rather than just relying on increasingly tight revenue budgets, to provide for some of their more vulnerable families.”
It’s hoped that other London boroughs and councils elsewhere will follow Croydon’s lead and use similar initiatives to address homelessness and other social issues.
Simon Chisholm, investment director at Resonance, said, “The attraction is the combination of a well-tested social impact model with a financially attractive way to put capital to work supporting that.
“It could also help attract a broader investor base to impact investment, since the scale and asset class of a fund like this can be suitable for pension funds and other institutional investors.”
Impact investment is a form of socially responsible investment that aims to make measurable benefits to society or the environment, alongside a financial return. The strategy has been gradually growing in popularity and a 2013 survey found 3 million investors were considering it this year.