Fund to help the Real Lettings Property Fund model replicate nationally, beginning in Oxford, Bristol, and Milton Keynes.
In cities across the UK there are a huge number of people that are ready for independent living but currently stuck in hostels or emergency accommodation because the private rented sector cannot properly assess them as potential tenants. Without different models of support they will remain in a precarious housing position and continue to cost local government as they fund this temporary accommodation.
The fund will buy residential properties to provide a stable base for individuals and families who are homeless or at risk of homelessness. The experienced homelessness charity St Mungo’s looks after the leases on the properties and supports the tenants in line with their needs to break down the barriers they face to moving into good rented accommodation. Over the life of the fund, the aim is to provide support to over 1,000 adults and children.
This is just one solution amongst many required to address the big picture in homelessness, but it is effective in addressing immediate, chronic need where there is a lack of suitable housing stock for Local Councils.
The Fund measures the positive impact on tenants in terms of their increased ability to access other private rented accommodation as they build savings and a track record as a tenant. It also measures progress towards employment and building resilience against homelessness through social connections and financial management skills. In its second social impact report last year, the Real Lettings Property Fund reported a 98% success rate in tenants maintaining tenancies, alongside other positive indicators of impact.
Depending on the total size and the average property price, the fund will purchase between 400 and 500 homes which meet the fund’s specific economic criteria. These are then leased for a minimum of five years to the homelessness charity, St Mungo’s. Tenants who are previously (were previously or are) homeless or at risk of homelessness move into the homes and pay rent which is set at the Local Housing Allowance rate for the local area. This rent is returned to the fund, once the charity’s costs are met. Investors receive a return through a combination of this rental yield and the capital appreciation achieved on the properties at the end of the life of the fund.
Our investment into the Real Lettings Property Fund seeks to develop the social investment market in a number of key ways. First, to replicate on a national scale a model piloted in London with encouraging signs over its initial period of operation. Second, to help encourage greater Local Authority participation in social investment – reflected in the co-investors Resonance has brought into the fund. Third, to support the capacity building of frontline delivery organisations through access to the properties bought by the fund – St Mungo’s in the first instance, but potentially additional organisations who are capable of operating in similar ways.
- Total fund size: £30 million
- Big Society Capital investment: £15 million
- Co-investors: Oxford City Council, The City Council of Bristol, Milton Keynes Council