Investment fund homes in on bargain housing

Many of the key supporters of The Residential Property Recovery Fund are Yorkshire-based investors.

With borrowings, the total fund stands at around 7.5m, and the cash will be invested in houses and apartments which are below the average price in the Midlands and the north of England.

Barney Buik, the executive director of Residential Property Asset Management, the fund's manager, said it had been "tricky to raise cash" for much of 2009.

"I don't know what the tipping point was, but in the first week of December sentiment really changed,'' he said. "The majority of investors are from outside London. I can think of at least eight or nine who are from Yorkshire."

He said he still aimed to complete the planned 10m private fund-raising with institutional and private investors by the end of the summer. The fund managers already have a bank commitment of a further 16m, which will be drawn down after equity investments.

The fund is available to private investors, including SIPPs and SSAS, and institutions. The minimum investor contribution is 25,000.

In a statement, the fund managers said there had been an increase in distressed stock coming on to the market since January, and they believed this trend will continue

The fund has decided to focus on the Midlands and North, regions which have been hit hard by the downturn in prices.

Mr Buik and his fellow directors believe these areas will benefit from regeneration and inward investment "in the medium to long term".

Banks are looking to offload stock that they have written down over the last 12 months, which offers "exciting and attractive opportunities", according to Mr Buik.

The fund has identified several opportunities over the last three months in places such as Leeds, Birmingham and Leicester.

The board is also reviewing a number of off-market residential investments. Once they have been bought, they will be managed by the fund manager's in-house property management team,

Mr Buik added: "We are pleased to have completed the first close of the fund despite the unprecedented difficult economic conditions, which will allow us to pursue a number of the opportunities which we have identified.

"We believe this momentum will follow through to successful further fund closes on a monthly basis over the summer."