A social enterprise has successfully raised £1m in bond funding, including £250,000 from private individuals, for a project that employs ex-offenders and long-term unemployed people to repair homes to be sold at a profit.
The scheme, run by the community interest company Bristol Together, will employ up to 200 ex-offenders to repair 40 empty houses. It will be funded by bonds paying 3 per cent per annum over five years.
Investors’ capital will be repaid through the sale of the houses at the end of the five-year project.
A group of private individuals investing £250,000 in the scheme will be able to claim community investment tax relief, which will allow them to reclaim 5 per cent of the value of their investment in income tax each year, making the bond effectively worth 8 per cent a year to them.
Bristol Together had to qualify as a community development finance institution to offer community investment tax relief, a relief aimed at encouraging investment through social lenders.
The funding is the second tranche of money raised for the project. Bristol Together raised £600,000 last year for a 'proof-of-concept' phase.
Dan Hird, head of corporate finance at Triodos Bank, which advised on the bond issue, said it had been over-subscribed.
He said the deal attracted a number of private and charitable investors looking for a "blended social and financial return".
His organisation and Bristol Together will now look into whether the model could be replicated elsewhere in the UK, he said.