There is a shortage of suitable housing for those with no recourse to public funds. Commonweal Housing is testing an innovative cross-subsidy model to provide sustainable, free accommodation and support to those that have no recourse to public funds as well as families with children in need (under Section 17 of the Children Act 1989 (s17)).
Commonweal Housing has raised social investment of £2.5 million to buy seven properties in South London. These properties will be leased to partner charity Praxis at a subsidised rate to temporarily house and support specific beneficiary groups that have no recourse to public funds. This will then allow them to transition into other more stable forms of living.
Commonweal Housing aims to provide better quality accommodation and support than is currently provided by the private sector in the case of the s17 families, and to provide a sustainable model of transitional accommodation for those that have no access to housing or benefits due to their legal status. The model also provides savings to local authorities working with Praxis. Praxis will also provide immigration advice and support for the beneficiaries housed, to ensure they are given an opportunity to transition out of destitution, access more sustainable forms of housing and where possible, to get leave to remain status.
The investors receive an annual yield of 4.32% on the property acquisition price, underwritten by Commonweal’s principle benefactor, Grove End Housing Limited. The exit is via property sale at the end of the year seven investment time-frame, with any capital appreciation on disposal of properties to be shared 75:25 (Investor: Commonweal). The investment is secured on the property portfolio. However, the investors’ are entirely exposed to any downside property risk.
Commonweal aims to use its charitable resources to test and learn from new models that seek to address systemic failings in sectors through the provision of support and property to charities and social enterprises. These projects could potentially form pipeline for other funds at replication stage.
Commonweal Housing emphasizes the importance of learning and evaluation. The charity appoints an independent evaluator at the start of projects to test the feasibility of the model. It is keen to replicate what works, but to also not waste resources on models that do not generate social impact.