UK - The Greater Manchester Pension Fund (GMPF) is investing in a residential property scheme by financing the construction of more than 240 new homes on land provided by the council.

Manchester City Council, the GMPF and the Homes and Communities Agency (HCA) signed a memorandum of understanding on the project, first announced in February, designed to increase home building and make new homes more affordable for the city's residents.

Councillor Kieran Quinn, chair of the GMPF, said: "I'm proud we are able to use the pension fund to invest in the building of much needed homes in Greater Manchester whilst securing a good return to fund the pensions of the workforce."

The scheme will initially be applied to five sites across the city.

Development land will be provided by the city council, including one site offered by the HCA, while the pension fund will finance the building of the homes, the council said.

The homes will be for sale or rent.

Deborah McLaughlin, North West executive director at the HCA, said: "In the current economic climate, innovative funding models will play a fundamental role in supporting the delivery of much needed affordable homes for local people."

She said the new home-building concept had the potential to attract major investment to the city.

The partnership will choose a contractor to build the homes and a property manager to manage the rented properties.

To reduce mortgage costs for buyers, the city council will take an equity share in the property.

The council said it hoped buyers would be able to buy homes for 20% less than the normal market level, helping people who were struggling to afford to buy at the full rate.

The partnership will generate a revenue return from their investment through rents and a capital return through house sales, the council said. 

If the housing investment fund scheme is successful, the council said it could set a precedent for much bigger projects with other major investors.