City of London Corporation and Big Society Capital have invested £500,000 and £5m respectively into a social impact investment fund targeting the purchase of about 240 Greater London properties that will be available for homeless people to rent.

Set up to develop and shape a sustainable social investment market in the UK, Big Society Capital is an independent financial institution that gives organisations tackling major social issues access to new sources of finance to help them thrive and grow.

It is putting money into the Real Lettings Property Fund alongside the City of London Corporation, which is contributing through its new social investment fund as part of its initiative to make London a centre for social investment.

With the number of available rental properties across London at an all time low and demand for social housing increasing, the property fund has been established to purchase affordable, transitional accommodation for those at risk of homelessness or who are homeless and attempting to move out of hostels and other temporary accommodation into the mainstream rental sector.

Established by Real Lettings – an enterprise arm of charity Broadway Homelessness and Support – and Resonance – a leading social impact investment company – the fund has now received £16.25m of investment. Properties purchased by the fund will be leased to and managed by Real Lettings with support from residential developer, United House.

Real Lettings already leases 167 flats from private landlords, on-letting them to people who are either homeless or are at risk of homelessness. Resonance Impact Investment – the FCA authorised investment management arm of Resonance – is acting as Fund Manager, sourcing and purchasing appropriate properties and reporting to investors on financial performance and social impact.

Previous investors into the fund include London & Quadrant Housing Trust (L&Q), Esmée Fairbairn Foundation and Lankelly Chase Foundation.

Broadway’s assistant director of services, Susan Fallis, said: “Big Society Capital’s investment is a real vote of confidence in the Real Lettings Property Fund, which is the first of its kind in the UK, and will have a significant impact on what we can achieve for our clients. One of Broadway’s aims is to ensure every person finds and keeps a home and, through this property fund, we are one step closer to making that a reality for so many individuals.”

Simon Chisholm, investment director of Resonance, said: “This first round of investment in the fund has allowed us to commence operations and start to build the portfolio around clear financial and social impact goals.

“We expect the fund to seek a second round of funding later in the year based on its initial track record. At its core is a simple principle, which we believe will have wide investor appeal – investing in property, for a purpose.”

Nick O’Donohoe, chief executive of Big Society Capital, said: “Big Society Capital is very pleased to be investing into this fund with the aim of proving a scalable investment model to help support homeless individuals successfully transition into long-term, safe and secure accommodation.”

And Alderman Peter Hewitt, chair of the Social Investment Board at the City of London Corporation, added: “The Real Lettings Property Fund is meeting the chronic need for stable accommodation for Broadway’s clients. City of London Corporation is delighted to play its part in this exciting opportunity.”

The Real Lettings Property Fund recently purchased its first property, a two-bed flat in Dollis Hill. Located close to public transport hubs and local amenities, it will be home to a family or a mother and child who have experienced or are at risk of homelessness.

For more information on the Fund call 0345 004 3432.