A new ethical Isa has been launched to invest in projects that build individual homes for some of the UK’s most vulnerable.
Ethical peer-to-peer platform JustUs has launched an Innovative Finance Isa (IFIsa).
Funds in the Isa will be used to renovate and develop new houses for residents with learning disabilities or those who require care.
The IFIsa will pay interest of 6.5 per cent to investors, while providing a bridging loan to accredited developers for up to 70 per cent of the open market value or purchase price, whichever is lower.
Lee Birkett, founder and chief executive of JustUs, said: "We are excited to be able to offer UK consumers the chance to enjoy saving and investing in an Isa that will make a real difference to people’s lives.
"At JustUs we have always been passionate about delivering positive outcomes for people from all walks of life. In the UK, there is a housing crisis and this is even more critical for those in a vulnerable position – requiring round the clock care or specially adapted homes.
"Over the next 24 months we’re aiming to fund 100 properties on the platform. Local government institutions have already been contracted to lease these properties once they are developed in conjunction with occupational therapists and the families involved. This project will transform the lives of many and we’re incredibly proud to be involved."
The new IFIsa will pay monthly interest, with no fees. All earnings in the JustUs IFIsas are tax-free, up to the standard £20,000 annual Isa allowance.
Aj Somal, chartered financial planner for Birmingham-based Aurora Financial Planning, said: "This is an interesting concept, and can potentially prove popular with clients who would like some ethical exposure within their Isa portfolios. The IFIsa interest rate of 6.5 per cent would be attractive to potential investors."
However, Mel Kenny, chartered financial planner for London-based Radcliffe & Newlands, said: "It’s interesting to see how the range of Innovative Finance Isas have compelling stories and this is no different, with the supposed feel good factor of making a contribution to society.
"However, the fact remains that the Financial Services Compensation Scheme still do not exist for these types of investments should things go wrong."
The loans are covered by a first legal charge over the security of the properties. All JustUs cash is held within the new ring-fenced Barclays Bank.
