The story behind the Fund
After the success of the Real Lettings Property Fund in London, which purchased over 250 homes providing move-on accommodation for those in danger of homelessness, Resonance has been focusing on taking the successful formula to other cities in the UK with similar need and attractive property market dynamics.
The Fund has started buying homes in three cities, initially Oxford, Bristol and Milton Keynes, and the first tenants moved into their new homes in June 2016. Resonance worked with Local Authorities in these areas to see how the Fund could help ease their housing shortage as well as working with charities and social enterprises in those areas that are able to offer support to those needing housing.
In these three areas, the Fund is working with St Mungo’s, who are the key partners in the Real Lettings Property Fund in London. They support tenants who are ready for independent living but who struggle to access the private rented market and are often therefore stuck in hostels or expensive bed and breakfast accommodation. The support includes assistance to get into work, set down roots in the community and to save for a deposit so that tenants can eventually move into the private rented sector with a track record of maintaining a tenancy.
This Fund, as with the Real Lettings Property Fund in London, is sourcing and purchasing one and two bedroom properties in the targeted cities. Once these are refurbished they are leased to a partner charity or social enterprise that lets them to families and individuals who may be at risk of homelessness. The number of homes purchased and the number of people helped depends on the local demand and the size of the Fund.
The Fund seeks to offer investors a commercial risk-adjusted return on their investment, including both rental yield and capital appreciation on properties. Risk is reduced as investors benefit from a widely diversified portfolio leased on fully repairing and ensuring five year leases effectively enabling the charity to underwrite the operational maintenance, management and void risks.
The Fund achieved a first investment close of £30m in December 2015 and will be raising further investment and expanding to additional cities in 2017.