Institutions take the place of mortgage lenders

Nia Williams

January 31, 2011

The specialist property and finance group, with close to £1bn of assets under management, is looking to raise at least £100 million.

The Investors in Housing Fund has been developed to provide consumers with a new way to own and occupy housing. At the same time it overcomes any of the barriers and disadvantages of past residential investment models.

The result is superior indexed income returns, according to the company, in addition to the capital gains in what is a proven asset class that has outperformed commercial property, equities and gilts over the past 30 years.

The Fund is projecting a running yield of at least 6% pa as part of a projected return of over 10% IRR over a seven year period on a geared basis after all fees and all at a low risk level.

Home buyers will be asked to purchase 5% of the property – a deposit amount that is not currently accepted by most mortgage providers as a deposit – and the Investors in Housing Fund will facilitate the purchase of the remaining 95% of the property without a mortgage lender.

Stamp Duty would also not be payable by the home buyer when they buy their initial 5% of the property. In 5 to 7 years the home buyers are expected to buy out the fund, providing an exit for investors.

The ‘No Mortgage’ concept is one that is readily affordable for first-time buyers, with the buyer only having to pay a monthly co-investment charge, which will be comparable to the cost of servicing mortgages at similar or lower loan to values. It is designed for buyers who are intending to stay in the property for at least 5 years. This will provide an attractive income receipt to the fund and drives income distribution to investors.

Mill Group believes that the No Mortgage Co-investment model is particularly suitable for those in higher managerial, professional and administrative careers, who are seeking long-term, secure homeownership and whose income is likely to increase over the medium to long term.

Commenting, David Toplas, CEO of Mill Group, said: “The deposit requirements for FTBs have reached impossible levels with the average in London exceeding 20%. It’s no wonder they are also on average 37 years old!

“Co-investment aims to bring institutional investment into the market by giving consumers the ability to get onto the housing ladder quicker than saving for these levels of deposit.

“For investors it offers a realistic way of investing in the residential market while earning attractive levels of income and participating in future forecast growth.”

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