£30m pledged as Reit given the green light

The Houses for Homes (HfH) real estate investment trust (Reit) is in the process of getting Aim Index accreditation, and should be available to investors from August.

The product has been in the pipeline of managing agent Single Access Funding (SAF) for months – but was put on hold briefly following the last Budget, when the government launched a consultation into the legal and regulatory framework around such a Reit.

This closes on June 27, but the Department for Communities and Local Government has already privately indicated there are no obstacles to it going ahead.

Various interested parties have used the consultation to push for tax credits to be extended for such products – but, at a meeting of stakeholders last week, the government made it clear it is unwilling to offer them.

SAF adviser Phil Shanks called the government’s delay of the project with a consultation “disappointing”, given it seemed unlikely it would yield any concessions.

He added HfH will be seeded with a small portfolio of 52 properties nationwide worth £10m but, following its initial public offering, it has a further £30m pledged from two sizeable pension schemes.

It will focus predominantly on social housing for residents with needs such as long-term illnesses and disabilities and, unusually, it will take on greenfield risk by funding the construction of new properties, along with buying existing ones.

The fund will launch offering a 4% dividend funded by rental incomes, as well as providing the returns of its listed equity.

It will be the first fund of its type investing in the asset class, but follows social housing fixed income unit trusts from asset managers M&G Investments and Aviva Investors.

The M&G fund closed to its first tranche of investors in November, having received more than £200m from UK pension schemes.

Rob Gardner, co-chief executive of consultancy Redington, said a number of his clients were invested in the vehicle, adding he was close to sealing two direct social housing investment deals between private sector schemes and housing associations.