The arrangement will see Barratt contributing a portfolio of show homes, which will then be licensed back to the company. This will provide the fund with immediate income, before the show homes are subsequently let to private tenants or sold once the development site completes.
The deal is the first in a series of property based seeding deals with house builders that are expected to total around £50m.
A spokesman for Hearthstone said new deals with house builders will be announced “in a matter of weeks”.
Hearthstone’s UK residential property fund is the UK’s first FSA authorised residential property fund.
Christopher Down, founder and chief executive of Hearthstone said Barratt’s involvement will provide the fund with immediate scale and income, giving investors and their advisers the ability to invest with confidence.
“The Hearthstone business was set up to fundamentally change the way the UK invests in residential property. We believe that investors should have the same choices in residential property as they do commercial property and other asset classes.
“While individual buy-to-let portfolios and owner-occupiers will remain important, the reality is that the country needs investment in housing on a scale which these methods cannot deliver. Professionally managed funds are a very important tool, long established in other countries, which will deliver this investment and offer advantages for both investors and the industry. Hearthstone is pleased to be at the forefront of these changes.”
Mark Clare, chief executive of Barratt Developments said: “Our strategy is to secure best value whilst unlocking cash from our balance sheet and driving down debt; selling some of our show homes and licensing them back achieves just that.
“At the same time, this new fund is an important strategic development in our marketplace – the creation of a professional private rental fund operating at scale, which is something that the UK really needs.”
