Residential fund manager Hearthstone Investments is set to launch the UK’s first residential property authorised investment fund (PAIF).
The TM Hearthstone UK Residential Property Fund, which will invest in a portfolio of private rented sector properties, has received the green light from the Financial Services Authority.
It will be open to retail investors to make tax-free investments beginning at £1,000, either directly or through platforms such as ISAs and SIPPs. It will also be open to institutional investors.
Hearthstone chief executive Christopher Down said the group is aiming to launch the fund in July and is in talks with UK housebuilders to seed the fund with an initial £30m-£50m portfolio.
As well as acquiring existing stock from housebuilders, Hearthstone will work with developers to support future acquisitions from new residential developments.
Hearthstone’s target for the fund is £250m in the first 18-24 months, rising to more than £1bn by the fifth year “as support for the new residential funds industry becomes more widespread”.
It is working with specialist authorised fund operator Tutman to raise the equity.
Down said: “The approval of our fund is a milestone for our industry. The UK’s private investors can for the first time gain exposure to the UK’s largest asset class, residential property, something they instinctively understand and value as a long-term investment.
“Institutional portfolio managers can diversify their existing property portfolios yet avoid the need to make illiquid, highly concentrated direct investments which require intensive management.
“With the UK’s first residential PAIF, Hearthstone has created a new source of residential investment and we are excited by the potential of this fund and those which will follow.”
Sophia.furber@estatesgazette.com
