1. Shared Ownership Fund
Of great interest to ethical investors, Assetz is planning a shared ownership fund to begin to bring private investor equity into the affordable housing market.
A specific initial scheme has been identified in East Anglia for £10 million which will offer 50% shared equity to homebuyers and charge a 3% rent per annum on the shared equity element. Investor returns, delivered as growth rather than income initially, are expected to be in the order of 8% per annum. Assetz is looking to raise up to £4 million to fund this initial scheme and are working with one of the UK's leading affordable housing consultancies and a number of housing associations, to help being more property into the marketplace.
Further larger affordable housing funds are expected in the future if this one is a success and appeals strongly to investors. This fund will launch in November and close in January 2006. Commission for IFAs will be 3%.
2. New Build Student Property Fund
New build student halls are very much in demand from institutional investors seeking high yields and diversification from traditional commercial property.
Assetz is planning a fund to provide developer finance for a 1,000-bedroom student scheme in Yorkshire, with a gross development value of £44 million, due for completion in the summers of 2008 and 2009 in two phases. Priority returns (not guaranteed) for investors are likely to be 15% compounded per annum and above that level of profit there would be an additional profit share potential to be split between the investor, developer and fund manager. The fund will launch in November and close in January. The commission for IFAs will be 5%.
Stuart Law, Managing Director of Assetz comments:
"The Finance Act this year may have closed the door on hopes of direct residential investment in pensions, but Assetz intends to continue designing and delivering genuinely diverse commercial vehicles allowing access to the more interesting and profitable residential property market sectors for both pension investors and private investors.
"The UK residential market is currently very strong and with the imbalance of supply and demand expected to take at least a decade to work its way out of the system, this growth looks set to continue. These funds are not targeting standard residential property, however, but instead specialist sectors, further increasing their growth potential. Demand for affordable housing is very much greater then for normal residential, and the student sector is undergoing serious growth as more students and attend university due to record A-level results and Government policy."
