This month Community Land & Finance CIC introduced an innovative social impact finance product to the housing sector with the launch of the Affordable Homes Rental (AHR) Fund.

Following an investment of £2,500,000 in the impact fund by Big Society Capital, Community Land & Finance are now open to applications for this new source of loan finance. The Fund is designed to stimulate the development of new homes in locations where property values are simply too high for many local people to buy and there is a shortage of affordable rental housing, both factors which can threaten the sustainability of local communities.

Simon Chisholm, Investment Director for Resonance, which has helped develop the loan fund, commented: “As the Fund can provide up to 100% of the required development finance, it should stimulate the delivery of more community schemes offering whole or partial rental housing.”

With property prices out of reach for local people in some rural areas and banks currently lending less readily, more accessible finance was required to encourage community land trusts and other community-led groups to develop community facilities, and in particular affordable rental housing. A mix of housing provision is important to help small communities to thrive and ensure other community facilities such as schools and shops are well-supported.

The AHR Fund will offer fixed interest loans for both development and ongoing finance over a typical term of 8-9 years, with the repayment profile tracking inflation. It is expected that the borrower would then be in a stronger position to refinance with a conventional lender. It is hoped further investment in the Fund will provide £5 million for onward lending, which should support between 45-50 affordable housing units in total.