Yield Sharing Finance – A First in the UK


Jari Moate is an Investment Manager for Resonance, based in our Bristol office.  In this blog he talks about the innovative Sharia compliant, social investment financing model that Resonance developed to deliver homes for Ashley Community Housing to support refugees.

The arrival of people fleeing war and extreme hardship has quietened in the UK headlines recently, but the challenge remains. The numbers forced to leave their countries, especially Syria, continues to outstrip the UK’s ability to provide resettlement services.

Ashley Community Housing (ACH) have a plan. Each year they receive over 300 people exiting UK asylum centres with refugee status who would otherwise find themselves homeless. ACH places them into the organisation’s high quality housing. Many who come are traumatised and have no real understanding of life in the UK. With a secure roof over their heads and time to acclimatise, ACH progress the people they help through a highly successful programme of training in UK culture, healthcare, language and work skills. Successful ‘move-ons’ are people settling into new homes, gaining jobs or going on to further and higher education, plus a simple outcome: family reunions. And key to the success of this unique organisation with roots in Bristol and growing in Birmingham and Wolverhampton, is that ACH is run by people many of whom were once themselves refugees. They know.

There was a problem, though. In 2015, all of ACH’s housing was leased from private landlords. As owners raised rents or sold for capital gain, ACH needed to vary their portfolio and gain more control. In 2016 they asked Resonance to see if we could arrange investment for them to rebalance by purchasing freehold houses. With experience in raising capital for the Real Lettings Property Fund, Resonance was well placed to answer the key challenges.

ACH always know what they want to achieve. While raising finance for social housing has its own difficulties, ACH added two more conditions: that it be social investment, i.e. not the high street, and it be Sharia compliant, i.e. non-interest bearing. Resonance, being impact-led, could tick the first box without trouble. The second was new. Even a previous social finance firm had not managed to crack the problem, or perhaps misunderstood it. Resonance, however, was unfazed, and the result is a UK first: Yield Sharing Finance.

It is best summed up by ACH’s Richard Thickpenny: “ACH and Resonance created the Yield Sharing Investment Model. It can comply with Islamic Law whilst providing a return to investors who come from many faiths or none. It creates a balance, wherein the power between an investor and investee becomes co-operative instead of potentially exploitative. The investors benefit as their investment is directly tied to the success of the investee’s mission, yielding a financial return on a fair and equal basis.”

The first investment was drawn down in Spring 2018, from The Joseph Rowntree Foundation, Barrow Cadbury Trust and The Orp Foundation, whose hard work and vision have been outstanding.

It’s been an enormous privilege to work with ACH – a team whose authenticity shines through. Together with the first investors, the hard work on Yield Sharing Finance has been done. It will be much easier for the next wave of investees to use, thanks to ACH.