Cheyne Capital Management has launched a social housing fund in the UK.

The investment manager said the Cheyne Social Property Impact Fund will aim for a “balanced approach to financial and social return”.

The fund has been seeded with equity from Big Society Capital, an anchor investor.

Cheyne said the fund would look to generate stable, long-term, inflation-linked returns alongside “positive social outcomes” by delivering social housing and supported living.

The sector’s reliance on government grants, which have been withdrawn, is unlikely to be restored in the foreseeable future, Cheyne said.

In a report released last week by the Investment Property Forum (IPF), potential for equity investment in UK social housing was found to be limited.

Presented at the IPD/IPF Property Investment Conference in Brighton last week, the research detailed how shared-ownership housing and intermediate rental housing is better suited to more equity investment than core social housing. 

Cheyne said its new fund was expected to provide a financially robust investment that satisfied growing investor demand for socially constructive investments.

Jonathan Lourie, chief executive at Cheyne Capital, said the reduction in government grants and the altered market structure provided an opportunity to enter the sector and be providers of responsible private capital.

“Our investors share our conviction that financial and social returns are complementary and will lead to superior outcomes over the long term,” Lourie said.