Crowdfunding project to tackle housing crisis off to a flying start

Written by Lori Hall on 5th June 2018

A ground-breaking crowdfunding project to tackle the UK’s housing crisis without fueling the property bubble has been launched by peer-to-peer investment platform Abundance.

The project aims to raise up to £4.25m to fund the construction of 30 social or affordable rental homes and supported living flats.

Louise Wilson, co-founder of Abundance, a Good Egg company, said today that £1.4m had already been invested in the fund by its customers – almost a third of the target. She said: “We have had a remarkable amount of take-up in just a fortnight since the launch.”

The fund is based on a unique model, which enables society’s most in need to have long-term homes while not fueling property prices.

Ms Wilson said: “We are offering long-term, stable homes to society’s most vulnerable people. The tenants will all qualify for social housing and therefore the rent is covered by the Local Authority. We want them to have a home they can feel proud of and the benefits of this filter into the community. It will give them the confidence to find the means to cover the rent themselves without the fear of rent rises or eviction.”

Another key aspect is that the rents will not exceed 40 per cent of a tenant’s income.

The investment is a three-year bond paying 4.5 per cent interest per year, which includes a 0.5 per cent bonus from Abundance. After three years, the initial capital is repaid in full.

The first project being funded, Merseyside Assured Homes, will unfold in Liverpool where more than 20,000 people are on council waiting lists looking for homes or in need of supported living accommodation.

The money will fund 21 mostly three-bedroom social or affordable rental homes and nine two-bedroom supported living flats.

Housing developer Octevo Housing Solutions will build the homes, which will be leased over 50 years to registered social landlord Finefair Housing. At the end of the lease, Finefair Housing has the option to purchase the homes for £1 each. Anyone can invest in the project with as little as £5.

If the initial project is a success, Abundance will look to invest in similar opportunities in other parts of the UK.

Ms Wilson said: “Octevo is the driver of this and it has significant opportunities elsewhere in the country which we would be keen to be part of.”

She added that it is a different kind of risk proposition to other more traditional development finance projects. She said: “This is a long lease with a social housing provider, with all rent supported by the local authority. With development finance projects, they often have to sell most or all of the houses for investors to see a return on their money. That is not the case here.”

Octevo’s director Robert Macmaster said: “We set out to design a viable long-term solution that will ease council waiting lists and prevent housing shortages from continuing to escalate.”

The project comes as new research from the Institute for Fiscal Studies shows home ownership among young adults has “collapsed” over the last 20 years.

For 25 to 34-year-olds who are earning between £22,200 and £30,600 per year, home ownership plummeted from 65 per cent in 1996 to 27 per cent in 2016. Over the same period, house prices have grown about seven times faster than the average incomes of young adults.

Abundance has an impressive track record in the renewable energy sector. In just five years, it unlocked £70m to help fund 31 green infrastructure projects ranging from community wind turbines to geothermal power.

Bruce Davis, joint managing director of Abundance, said: “Everyone wins when more people get access to stable and long-term homes – tenants benefit, communities are stronger and small investors get a fair return.

“Abundance has led the way with our win-win approach to support the transition to a sustainable, green energy economy. Now we want to use the power of crowdfunding to help address the structural problems of the UK housing market.

“We can change the way we finance new developments so that families and young people no longer have to bear unsustainable levels of housing costs.

“We believe that Merseyside Assured Homes can show there is a better way to make the housing market work for everyone, a way which balances investment potential and social impact without fueling the property bubble.”

The new homes will be built on three different brownfield sites in Merseyside, which already have planning consent. They will be built to a high standard, integrating sustainability and energy efficiency. The sites will also aim to foster a sense of local community.

As with all Abundance investments, Merseyside Assured Homes is raising money through tradeable Debentures, with a minimum investment of just £5. Investments are eligible to be held in an Innovative Finance ISA so returns can be tax-free.


Read the Good With Money guide to the IFISA


Since launching in 2012, more than 5000 people have invested £70m directly into projects led by Abundance, with over £10m in profit being returned.

As well as being the world’s first P2P investment company regulated by the Financial Conduct Authority, it was also the first to offer a dedicated P2P investment SIPP. In November 2016, it launched the UK’s first Innovative Finance ISA for renewable energy investments.

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