ONE of Europe’s biggest hedge funds is planning to invest £850m in social housing over the next three years in a bid to tackle Britain’s acute housing crisis.
Cheyne Capital’s first deal is with Luton council to build 400 homes that will be available at low rent.
This would be one of the first direct private investments in social housing from a large City institution. Pension funds and insurers have in the past lent smaller amounts to housing associations.
Details of Cheyne Capital’s move emerge at a critical time for the social housing sector. It is under pressure from the run-away property market as well as the chancellor’s decision to cap rents and benefits and force housing associations to give tenants a right to buy their own homes.
The Luton venture will see Cheyne Capital develop 400 homes on a site that already has outline planning permission. The investor will charge CPI-linked rents on the houses for 20 years. Luton council will manage and maintain the new properties.
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This is the second deal the asset manager has done with the Bedfordshire council in a year, having spent as long working up a viable model with lawyers and advisers. The first was for 80 homes, which are now close to completion.
Partnerships with other councils and housing associations are expected to follow, including one with Sheffield council.
Cheyne Capital intends to invest in building facilities for people with learning disabilities and homes for the elderly as well. Just 30 miles from the capital, Luton has 10,000 people on its housing waiting list.
Luton councillor Tom Shaw said: “We have more than 1,000 people in temporary accommodation and some of them will go into these flats. This is much-needed housing and we know that the rents won’t climb sky-high each year.”
Cheyne’s Shamez Alibhai, who will manage the fund, says such deals could be the solution to the housing crisis.