Private scheme to tackle housing crisis raises £500k in 5 days
A social impact investment scheme designed to tackle the housing crisis in some of Britain’s most deprived areas has raised £500,000 of private investment in the first five days since its launch. The Loanstock project from Equfund aims to provide new homes for those who otherwise would not be able join the housing market by allowing them to invest their own time in building or renovating a property in return for the deposit and financial support.
In 2011, just 105,000 homes were built – the lowest level since the 1920s – which has exacerbated the housing crisis caused by banks’ reluctance to lend and escalating mortgage qualification requirements. To tackle both of these issues, Equfund is appealing to investors to fund community self-build projects.
Private investors can lend support to the project by applying to invest at Equfund.com, which aims to create at least 23 new homes in Toxteth, Merseyside through raising a minimum of £1.5m investment. 500 hours of ‘work equity’ will earn those assisted by the scheme a percentage of the finished property’s value as a deposit, allowing easier access to mortgage finance, as well as gaining trade skills and experience.
Andrew Mahon, Director at Equfund commented: “We are thrilled at the response we have seen to the new Loanstock opportunity, which we believe reflects a renewed interest in social investment at a time when communities have been torn apart by the housing crisis, public sector cuts and riots.”
“The government has neglected the housing shortage for too long, disregarding the warning signals and allowing the situation to become a full-blown catastrophe. With this new Loanstock issue, we intend to use private investment and ingenuity to tackle a major government problem. The fund will help those most affected by the housing crisis to buy their own home, whilst at the same time creating new properties in a market that desperately needs them and restoring pride in neglected communities.”
The Loanstock issue has a minimum investment level per individual of £1,000, with a maximum permitted amount of £250,000, and a closing date of 30th September 2011. Investors are able to select the term of their investment, from two to five years, and a fixed level of interest, from 0 per cent to 5 per cent, payable gross at the maturity date. Despite the economic climate, many of Equfund’s past investors have chosen a lower percentage rate in order for their capital to achieve a greater social impact.
Mr Mahon continued: “The investments we have already seen have been a broad mix – from regular investors to first time investors looking for a way to make a difference, whilst earning more interest than their bank can offer.”
“We often receive investment from individuals who, in addition to receiving financial returns, want to see community benefits and also from businesses who, in addition to underpinning their CSR commitments, like to support targeted investments. Our offering meets both these agenda.”
Inspiration for copycat Government scheme
The lack of new housebuilding combined with a rising number of the ‘hidden homeless’ figures over recent years, has led to nationwide attention and a copycat ‘social impact bond’ scheme from the government itself. In Toxteth, the focus of Equfund’s latest Loanstock, recently hit the headlines when it was revealed that ex-Beatle Ringo Starr’s place of birth was among the swathe of derelict homes located in the region that are destined to be demolished by the local authority despite the housing shortage.
Mr Mahon continued: “Prior to the credit crunch, self-build housing almost equalled new home construction levels of the major housebuilders, although it was seldom associated with the provision of affordable housing. Now, given the context of the housing crisis, the benefits and cost effectiveness of community self-build can’t be ignored. In addition to providing decent, affordable new homes, support from schemes like ours allows ongoing private investment in to solve a desperate housing shortage problem.”
“The physical involvement by future owners in the building of their home engenders a great sense of pride and self worth; more importantly, it binds local people together and promotes community wellbeing. With the support of socially aware investors, we can now help fill the void left by the government spending cuts ensuring that enterprising communities have access to funding, thereby, enabling both property and neighbourhood ownership.”
“If we give people the financial tools to invest in and rebuild their communities, we will be helping to heal much of the damage that years of under-investment and urban mismanagement has brought.”
