£500 million investment fund to launch

The £500 million investors in housing fund is aimed at institutional investors. It will allow the buyer to acquire 25 to 50 per cent of the property via a traditional mortgage, with property and finance firm Mill Group purchasing the remaining share.

First-time buyers often struggle to get a foot on the housing ladder because they are unable to find the large deposits required by most mortgage lenders.

The new fund would enable purchasers to use their deposit cash to provide the loan to value ratio required by mortgage lenders on the share they buy.

David Toplas, chief executive of Mill Group, said the fund would help cater for the ‘pent-up demand’ for housing caused by the credit crunch. A spokesperson for the group said it could take six months to launch the scheme.

Steve Carr, head of new business and economics at the Homes and Communities Agency, said : ‘Mill Group’s proposed product has a different focus from the HCA’s private rental sector initiative, where we have been concerned to create a new source of long-term institutional investment in housing built to rent, offering greater choice for people who wish to rent rather than buy right now.’

Ian Fletcher, director of policy at the British Property Federation, said finding new models to support people looking for a home were vital.

‘Institutional investment could make a significant contribution to the current and likely future shortfall of funding for housing, and provide a helping hand for those seeking their first home,’ he added.

Nitin Arora, analyst at equity research firm Clear Capital, said the fund was the first scheme of its nature being proposed, but was optimistic similar propositions would become more prevalent.

He explained: ‘At the moment there is nothing similar to this fund being proposed. I think we will keep seeing innovations like this as risk appetite is now growing dramatically.’

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