Property fund to give FTBs leg-up onto housing ladder
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A £500m residential property fund has been launched today that will help first-time buyers stump up the hefty deposit needed to buy their first property.
The brainchild of specialist property investment firm Mill Group, the scheme is called co-investment and is being touted as a new model for home ownership where the buyer acquires a share of between 25 and 50% of the property with the fund buying the rest.
And for investors, the Investors in Housing Fund will target the residential property sector in London and the South East and aims to provide them with indexed income returns and capital gains from UK housing.
Buyers that use the scheme have to pay a continuing investment fee on the part that they do not own and can also increase the percentage of the property owned at any time. David Toplas, CEO of Mill Group, says that with few first-time buyers struggling to find the 20% to 25% deposit required to get on the housing ladder this has created pent-up demand and has been a key factor in the lack of movement in the mainstream market.
He says: “The Investors in Housing Fund will provide a very simple solution to this stalemate. It’s a win for hard pressed buyers and it is a win for institutions, who can now invest in residential property with a superior investment model without the previous associated issues.”
He says the fund projects a running yield of 6% per annum as part of a projected return of 15% IRR over a five year period on an ungeared basis after all fees and all at a low risk level.
Peter Bolton-King, CEO of the National Association of Estate Agents, says: “A fund such as this will prove to be the only way for many Londoners to be able to afford to buy given the current constraints in obtaining affordable mortgages.
“The residential housing market has been ripe for private sector investment given the consistency of the returns it offers. I hope that this represents the start of a positive relationship between institutional investment and home owners.”
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