Croydon Council is set to make a £10m social investment into a property fund run by homelessness charity Broadway in a bid to ease the borough’s housing problem.
Croydon Council’s initial commitment – which may rise to £20m if successful – is being invested into the Real Lettings Property Fund, run by social impact fund manager Resonance and the charity Broadway.
Resonance aims to create a seven-year, closed-ended fund that will provide returns of 5 to 8 per cent after inflation.
The fund buys homes and leases them to Broadway for use in its social lettings project, Real Lettings, which provides affordable accommodation in the private rented sector for former homelessness people.
Through its investment, Croydon Council hopes it will help ease the borough’s housing problem. Real Lettings tenancies last for two years and personalised support is given by the lettings team to help tenants successfully move on in the private sector.
The Real Lettings Property Fund was launched last year with initial investment of £16.3m from five founder investors. It aims to reach at least £45m this year and eventually buy up to 220 properties across the capital.
Croydon Council's overall commitment of up to £20m is expected to secure 94 one- and two-bedroom properties in London for the council over the coming months. The council will nominate the tenancies.
The investment comes from Croydon Council’s 2014/15 capital budget. The fund is designed to produce a return for investors that comes from rental income and any increase in property values.
Other investors into the fund have included L&Q Foundation and Big Society Capital together with a number of charitable foundations which are investing their endowments.
Councillor 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.”
Daniel Brewer, managing director of Resonance, added: "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. We're hoping a number of other London Boroughs will follow suit."
Homelessness support charities St Mungo’s and Broadway will merge this April, with Howard Sinclair, current chief executive of Broadway, leading the newly-merged organisation.
