One local authority is investing in a property fund which is designed to own and manage accommodation for homeless people on waiting lists.
Croydon Council is initially investing £10m into Real Lettings, which has been designed to produce a return for investors that come from an increase in property values and rental income. It has been set up in partnership by fund manager Resonance and Broadway, a homelessness charity, reports Inside Housing.
Real Lettings is expected to secure 9 one and two bedroom properties in London for Croydon Council, and the investment is part of the council’s 2014/15 budget.
Croydon Council is the first local authority to invest in the fund and will nominate the tenancies whilst Broadway will place households in the homes purchased by Resonance.
Resonance hopes to create a seven-year, closed-ended fund which will provide returns of 5-8% after inflation. It will bulk buy units from a panel of five to ten developers and landlords and then guarantee 100% occupancy and take on management and maintaence risk.
The fund is hoping to make up London’s shortfall in temporary accommodation available to homeless people who are supported by Broadway. If it is successful, the council plans to invest more money later on.
Dudley Mead, cabinet member for housing, said: “With house prices going up beyond what is affordable to the council, we have to look at alternative and innovative ways of buying property to increase the supply of housing available to the council. This will ease the pressure on the council in managing homelessness and means we can place families in good quality accommodation as opposed to costly bed and breakfasts.”
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