Homelessness charity Broadway has launched an investment fund for the private rented sector.
It aims to provide affordable accommodation for vulnerable people while generating a return for investors.
The Real Lettings Property Fund aims to raise £15m to £20m to buy up to 100 one- and two-bedroom flats in London in the first year.
These will be let through Broadway’s private letting agent arm, Real Lettings, which works with landlords and other letting agents across London to find accommodation for people at risk of homelessness.
The fund is expected to generate an annual income of around 4%, with investors getting a share of the capital growth when property is sold on.â?¨â?¨
Daniel Brewer, founder of Resonance, the firm that will select, purchase and manage the properties on behalf of Real Lettings, said: “The fund will deliver real social impact by helping individuals build their resilience to prevent a return to homelessness, progress towards being work-ready and building confidence to eventually move into fully independent private tenancies – all social impacts that will be measured.
“At the same time it can deliver a commercially risk-adjusted return for investors on a significant portfolio of London property without the risk of voids. We’re now lining up the first 30 units to complete in the first quarter of 2013.”
Howard Sinclair, head of Real Lettings and Broadway, said the decision to launch the fund has been driven by caps on housing benefit.
Sinclair said spiralling rents have made it increasingly difficult to source sufficient properties from traditional private landlords.
A further cap, which will limit a household’s overall benefits to no more than £500 a week, is due to be implemented next April.
Sinclair cited research by Citizens Advice in Hackney, which mystery shopped rental properties advertised in the area on Rightmove and Gumtree in June. Of the 1,585 homes for rent in Hackney, only 143 were affordable within housing benefit limits, and just 14 had landlords willing to rent to people on benefits.