The UK local authority pension fund has now invested a total of £20m in the National Homelessness Property Fund. The fund buys and renovates properties which then leases to the social housing sector and homelessness charities.
Greater Manchester Pension Fund (GMPF), one of the largest public sector pension schemes in the UK, has invested £10m (€11.6m) in the National Homelessness Property Fund 2 (NHPF2) to purchase homes for people facing housing crisis across the Greater Manchester region in North West England.
GMPF’s latest commitment comes on top of an initial £10m (€11.6m) seed investment into NHPF2 at the fund’s launch in December 2020 and brings the total raised by the fund to £65m (€76m). Other investors in the fund include Big Society Capital, Greater Manchester Combined Authority, Bristol City Council, Oxford City Council and Liverpool City Region Combined Authority.
The fund operates by buying properties, renovating them to a good standard, ensuring they are both safe and energy efficient, before leasing them to the housing sector and homelessness charities to provide individuals and families facing housing insecurity or rough sleeping with a secure home.
The fund’s managers Resonance Impact Investment Limited, a subsidiary of social impact property fund manager Resonance, have set a total fundraising target of £300m, which they hope to raise from institutional investors, including pension funds and local authorities, by the end of 2023. Resonance plans to use the capital raised to acquire approximately 1,500 homes and house around 7,500 people over the fund’s 15-year lifetime.
Since launch, NHPF2 has provided homes to around 60 to 80 people of a total of almost 3000 individuals and families who have been housed in more than 1000 properties across the UK since the launch of Resonance’s first property fund in 2013.
In the Greater Manchester region there are currently 4,180 households living in temporary accommodation of which 59% have children living with them, and 97,000 households are waiting for a social home. The fund has partnered with Let Us, a group of five ethical housing providers in the region, who in addition to providing affordable housing, also offer support to tenants to sustain their tenancy, as well as help with finding employment and dealing with health and addiction issues among other things.
Commenting on their recent investment, Cllr Ged Cooney, chair of the Greater Manchester Pension Fund, said: “Aiming to deliver a competitive risk adjusted return to ensure we meet future pension obligations, as well as delivering measurable and positive social change in the Greater Manchester area, NHPF2 is providing a sustainable and place-based solution for economic growth in the region and beyond. I look forward to seeing the fund scale up its efforts to house more local people at risk of and experiencing homelessness.”
Growth in place-based impact investment
Initially aimed at tackling housing insecurity in the Greater Manchester region, the NHPF2 is expanding to other regions, including Bristol, Oxford and the Liverpool City Region, which the fund managers say will allow investors to focus their investments locally while benefitting from a nationally diversified return, with a targeted internal rate of return of 5-6%.
Speaking to Impact Investor, Paul Handford, communications director for Resonance, explained their property funds were seeing growing interest from both local authorities and their pension funds in place-based investing: “Interestingly, we’ve seen both local authorities and their pension funds coming together to make a positive impact on their local area and the communities in which they operate. This has been the case with both the Greater Manchester Pension Fund and the Greater Manchester Combined Authority investing in NHPF2.”
Handford said interest was being driven by rising awareness of ESG, and impact investing in particular, as well as demand from pension fund members. “Interest in place-based investing is being driven by a recognition of the importance and benefits of integrating ESG into local investment decision-making, but also by a growing awareness and interest from taxpayers and pension fund members in what their local authorities and pension funds are doing to invest in the city or region where they live.”
According to housing and homelessness charity Shelter, one million households are waiting for social housing in England and currently, 120,000 children are living in temporary accommodation. In addition, 60% of adults living in temporary accommodation are women and 274,000 people are currently homeless.