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New bond tackling social housing shortage pays 7%

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A new investment aimed at tackling the UK’s social housing problem has launched, offering 7 per cent interest.

The investment is via a debenture, which is a tradeable form of corporate bond, in Pax Apartments Ltd, and is available through peer-to-peer ethical investment platform, Abundance. It offers 7 per cent annual interest for a 19-month term.

While the headline rate may turn some heads, it’s worth remembering that these schemes are high risk. Investors may not get their capital back and these investments are not covered by the Financial Services Compensation Scheme, so there’s no compensation if something goes wrong.

Pax Apartments Ltd hopes to raise £3.1m to complete the redevelopment of a warehouse in Liverpool’s Ropewalks area. It plans to create 33 one and two bedroom apartments, which will be let as supported living accommodation and affordable housing to households on local waiting lists.

The apartments will be maintained and managed by a registered social landlord.

Liverpool has 16,500 people on the council waiting list looking for homes. Across England, more than a million households are waiting for social housing, according to 2018 data from housing charity Shelter.

The minimum investment is £5, and the debentures are eligible to be held in an Innovative Finance ISA so returns are tax-free.

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