Investors are asked to take a punt on housing the homeless

LONDON LETTER:THE NUMBER of people sleeping rough on British streets is up by a fifth, with fears that a new welfare reform Bill approved by the House of Lords late on Wednesday night will add to the numbers. The Bill introduces new curbs to a number of long-term benefits, including housing benefits.

However, some unusual methods are being taken to cut the numbers on the streets.

Homeless charity Broadway is to bring in property investors, who normally prefer housing the wealthy.

The charity has hired corporate financiers Resonance to raise a £100 million fund over the next three years, beginning with an immediate target of £15 million.

The groundbreaking fund will buy one- and two-bedroom houses across London and let them out to the homeless, paid for by local housing allowances and other public sector help.

The seven-year fund will offer returns of approximately 4 per cent over five to six years after inflation – less than investors might hope for in other circumstance, but “risk-averse”, the charity says.

Like any fund, investments are at risk if property prices fall, though the more immediate threat lies in fears that the Conservative/ Liberal Democrat coalition will cut housing benefits further.

Buying up to six homes at a time, but never more than 20 per cent of a development, the charity plans to deal with up to 10 developers, guaranteeing occupancy. Broadway has already housed people who do not qualify for social housing but who can hold down a tenancy in 220 homes leased across the capital by its Real Lettings subsidiary.

Through other means, it has housed 4,000 more people. However, leases to Real Lettings from landlords have been coming too slowly, says the charity.

Demand is outstripping supply, and cuts in housing payments imposed by the Conservatives/ Liberal Democrats worsen the situation. The financiers hope to raise £15 million this summer and £30 million next year from housing associations and charities.

Spurred by the London example, Resonance has already attracted interest from homeless charities in Nottinghamshire and Scotland, who are keen to set up similar funds.

Pointing to the increase in homeless numbers, Broadway’s chief executive Howard Sinclair warned they will rise further this year as the effects of cuts to housing benefits are felt.

“There will be an increasing need for more homes as the cuts continue to take effect. The fund provides a smart solution, with a yield for investors, while enabling Real Lettings to expand its housing stock,” he said.

“It’s a model we would like to see others take up. It’s very simple: investors get a bit of return and we do some social good,” he said, adding that Broadway is already in talks about potential purchases.

Statistics from the department for communities and local government recorded last autumn show increases in the numbers of people sleeping rough almost everywhere in England.

In total, 2,181 people were listed as sleeping rough on the survey night in England – up from 1,768 the year before – but charities warn that the figures only scratch the surface.

Predictably, the figures are worst in London, the southeast and southwest, partly because people travel south to escape the worst of the northern weather.

However, the biggest year-on-year increases were not found in the usual quarters, but instead in the East Midlands, where numbers are up by 55 per cent, and in the northwest, where there is a 40 per cent rise.

In all, almost 4,000 people in London slept rough on some nights in the year to April 2011. British citizens made up less than half of the total.

Eastern Europeans numbered 1,016, including 404 Poles. There were 105 Irish.

Sinclair is not optimistic that demand for Broadway’s services will fall: “Do I think that the figures will get worse? Yes, I think this is the start.

“As people get into debt, as the benefit changes take effect, as people get evicted, this problem will become more acute.”

This was the case despite the decision by the government to keep homelessness grants, he said.

Most prevention efforts are funded by local authority funds, which have been cut by 20 per cent by local authorities: “Councils have cut these services, and the government has done nothing to stop them.”

A survey by Homeless Link, which represents agencies attempting to cope with the numbers, last week reported that half of all such services have faced cuts.

Seventy-five hostels or homes have closed, with the loss of 2,206 beds every night, while the number without a free bed on any given night has risen by six percentage points to 83 per cent.

Despite starting the fund to help the homeless, Broadway has its own financial issues.

In recent months, it has cut pay for its own staff and increased their working hours in order to try to keep its own figures in the black.