The Scottish Government has partnered with Places for People’s fund management business to set up a £150m (€171.2m) fund to invest in mid-market rent (MMR) properties throughout Scotland.
PfP Capital said the new fund will receive a £47.5m investment from the Scottish Government. The investment is part of the Scottish Government’s plan to deliver 50,000 affordable homes by 2021.
The fund will also receive an initial £10m capital from Places for People’s Scottish subsidiary Castle Rock Edinvar.
The fund manager said it expects to raise at least £87.5m of additional capital from third parties over the coming months.
The fund is expected to benefit from index-linked returns derived from the rental income and will target institutional and pension fund investors, with a focus on Local Government Pension Schemes, PfP said.
Once established, the fund expects to source sites for, and develop and operate, around 1000 new MMR homes across Scotland.
Housing Minister Kevin Stewart said: “This investment will support people on low and modest incomes to access high quality rented accommodation at affordable rates and is one of the many ways in which we are delivering on our target of 50,000 affordable homes by 2021, backed by over £3bn.
“Affordable housing is about more than just bricks and mortar. We want everyone to have a safe, warm home and schemes like this will help to create a fairer Scotland, while delivering great economic benefits.”
Chris Jones, a managing director at PfP Capital, said: “This investment will allow us to operate a strategy delivering a significant number of affordable homes to people across Scotland and we are delighted to work with the Scottish Government on this exciting initiative.
“This fund will also provide a great opportunity for institutional investors to fund the next generation of Scotland’s affordable homes and secure stable, inflation-linked returns.”
Richard Jennings, a managing director at Castle Rock Edinvar, said: “This fund demonstrates the importance of financial innovation in delivering affordable homes and Castle Rock Edinvar is delighted to be an early investor.
“We are looking forward to working with Places for People Group colleagues at PFP Capital and making it a success.”