Resonance targets North West debut by end of 2017
An investment company which buys properties to house homeless people is set to announce its first acquisition, more than 70 homes, in the region by the end of the year, with tenants due to move in by March 2018.
Resonance is a social impact investment fund that creates and manages funds to create social change, while generating profit for investors. One such fund is its national homelessness fund, which sources and buys homes, refurbishes them, and leases them to homeless charities. Resonance’s national homelessness fund has already seen successful schemes in Bristol, Oxford, and Milton Keynes.
John Williams, senior investment manager, confirmed that the company has been in discussions with councils since April about which city to launch in first. He said: “It takes between six to 12 months to launch in a city but I can confirm we are looking to announce a site in the North West by the end of the year.”
In order to purchase its first site, the fund needs at least £10m of investment which will buy between 70 to 80 homes. Resonance is still raising money for that fund, with high net worth individuals, charities and councils among the likely investors.
Williams added: “The property fund will raise the capital which will buy the homes and these homes will then be leased across to a homeless charity in the city for at least five years. At that point the homeless charity effectively becomes the landlord of that property and will use the property to house individuals and families who are at risk of becoming homeless.”
Williams would not confirm how much of the £10m had been raised so far, but said an institutional investor to match the funds raised from other sources has contributed.
Resonance aims to house tenants within a matter of months after a scheme is announced, and Williams confirmed that tenants for its North West site should be moved in by March 2018. Each property bought will be done so on an individual basis.
Williams said investors will see a return of between 5% and 6% each year, along with shared equity from the sale of the fund.
St Mungo’s is Resonance’s partner charity in London, and Williams confirmed the company has a regional charity partnered for its first project. He said: “We are now working with a similar homelessness charity who currently operate around the key cities in the North of England. It has been around for many years and have an excellent track record in supporting this tenant group.”
The charity partner takes on the rent for the property and collects it from the tenant. This way the charity absorbs the risk of debt and arrears, maintains the property and supports tenants.
Williams said Resonance is acquiring two-bed properties across the region. He said: “The fund will purchase homes, mainly two-bed flats or houses, off the market. The fund is a cash buyer and therefore there is no debt involved and we can acquire very quickly. The money will refurbish the homes to at least the Decent Homes Standard before handing them over to the homeless charity.”
Resonance rarely builds properties, instead acquiring them. Rather than buying blocks of flats, the fund typically purchases single units across the city it is launching in.
He added: “The 70 or 80 homes have to work on a yield basis. We look at the price, the cost of the refurb, the income we get from the rent and local housing allowance and if that hits a certain yield then it’s worth the investment. Up North, there are higher-yielding properties than in London.”
He added: “We’re looking at two other projects in North West cities to announce in the next six to twelve months, after this first one has been launched. There’s no reason why we couldn’t do one scheme in Liverpool and one in Manchester.”
Resonance has occupied a King Street office in Manchester for the past five years, and has offices in London and Bristol.
