Hearthstone Residential Fund 2


Hearthstone Residential Fund 2 (HRF2) was launched in October 2020. Like HRF1, it was designed for institutional investors looking to benefit from a well-diversified portfolio of high quality private rented residential assets.

Our strategy is to invest in targeted locations across the UK where we expect strong rental demand and undersupply to provide a robust income and support long-term capital growth.

HRF2 raised £152 million with the backing of five UK local government pension schemes. Its portfolio of assets is still growing, with ongoing phased deliveries of new homes from our investment programme.

Assets have been sourced mainly through forward purchase and forward funding deals with selected national and regional developers.

Investment Objective

The Fund’s objective is to provide a strong, stable income return for long-term institutional investors, supplemented by modest capital growth, over the life of the Fund.

Income will be distributed to investors, after deduction of operating costs and expenses.


The Fund achieved its final close in December 2021, so is no longer open to new investors.

Fund Structure and Governance

The Fund is structured as an English Limited Partnership, a widely used and tax transparent structure. It is closed-ended, with a life of 10 years from First Close.

Governance of the Fund is based on industry best practice principles. An independent Investment Committee is mandated to review and approve the Fund’s Investment Plan and all transactions. An investor-led Advisory Committee reviews operational matters and acts as a formal communication forum with the Fund’s management team.

Langham Hall Fund Management LLP operates as the Fund's external AIFM.

Investment Strategy

The Fund’s strategy is to acquire and actively manage good quality, market-rented residential stock in areas with strong rental demand across the UK, including a mix of low-rise apartment blocks and clusters of houses.

Acquisitions include bulk purchases of newly-built stock from housebuilders and standing investment assets. Stock selection focuses on efficient-to-manage, readily-lettable flats and houses, typically ranging from one to four bedrooms, particularly suitable for young professionals, families and key workers in areas of solid rental demand and good local infrastructure, but where there is a lack of suitable quality rented housing stock.

The appropriate level of diversification is achieved through a combination of the Fund’s scale and its strategy to ensure nationwide exposure.

The investment style is core: the Fund is unleveraged and does not take development risk. Investments are made for the long term to limit turnover costs. Nevertheless, it seeks to exploit opportunities to add value through active asset management and through strategic rebalancing.