Croydon Council invests £10m in property-fund

In what is understood to be a first by a local authority, Croydon Council is set to invest £10m into a property fund that will buy homes to rent to the borough’s homeless people and families.

The 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 homelessness charity Broadway. The fund leases properties to Broadway for use in its social lettings project, Real Lettings. The team at Real Lettings provides affordable accommodation in the private rented sector for former homeless people.

The Croydon Council investment was given added impetus this week by the announcement that the Real Lettings Property Fund had won the “Highly Commended” award in the Sustainable Finance Category at this year’s prestigious City of London Sustainable City Awards.

Daniel Brewer, managing director of Resonance, was presented with the award by Fiona Woolf, the Lord Mayor of London, who has put emphasis on the City as an international centre for social investment. 

The Resonance team believes the Real Lettings fund is the largest impact investment fund in the UK, at £26m. It is hoped that Croydon Council’s investment will help to ease the borough’s housing problems and offer a route back into independent living for more than 100 families. 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.

Frank is one person who has benefitted from moving into a Real Lettings home. His local authority had previously housed him and his three-year-old son in a bed and breakfast. Thanks to Real Lettings he is now in a secure, two-bed flat in south east London.

Frank said: “I was housed in a B&B after the house I was living in was sold by my landlord. Living there was very difficult because I am a single parent and I worked unsociable hours. It was impossible for someone to look after my son overnight and I ended up losing my regular job.

“(Real Lettings) found me a property in south east London and it’s a huge relief. I’m now looking for schools for my son and I feel that my life is back on track.”

The Real Lettings Property Fund was launched last year with initial investment of £16.25m from five founder investors. It aims to reach at least £45m this year and eventually buy up to 220 properties across the capital.

Croydon’s overall commitment of up to £20m is expected to secure 94 one and two-bed properties in London for the council over the coming months. The council will nominate to the tenancies while Broadway will place households in the homes purchased by the fund.

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, said: "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."

Susan Fallis, assistant director of services at Broadway Homelessness and Support, said: “By investing in the Real Lettings Property Fund, Croydon Council is tackling homelessness in the borough head on. Their commitment is helping to ensure homeless families in the area get access to high quality but affordable private rental accommodation that may otherwise have been out of reach.”

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