FALKIRK Council Pension Fund has handed fund manager Hearthstone Investments a £30 million mandate to invest in social and affordable housing in Scotland.

It is the first tranche of money to be awarded to a new Housing Fund for Scotland, managed by Hearthstone, which the firm hopes will raise £250m to invest in Scottish homes.

John Patrick, convenor of Falkirk Council's pensions Committee, said: "This is an investment that will deliver solid returns for our fund and social good for communities.

"Social benefit and financial returns are both important to funds like Falkirk and we feel confident this residential property solution will meet our objectives."

The initial funding by the Falkirk pension fund will finance 300 homes.

The housing fund will invest in social housing via fixed rate corporate bonds issued by social landlords.

They will purchase properties build by developers to meet the social housing they have to build as a condition of planning permission.

These properties will then be let to housing associations on 10-year leases.

To deliver returns within a pre-defined range, the fund will vary the balance between social and affordable housing in its portfolio.

Christopher Down, chief executive of Hearthstone, said: "With over £180 billion of capital in local government pension funds, there is now an opportunity to expand the supply of UK housing while providing a genuine alternative to commercial property holdings."