Disused banks and flats above shops might not be as glamourous an investment prospect as a villa on the Cote-d’Azure but buying into the development of these types of buildings has attractive tax perks for wealthy investors.

The government’s commitment to increasing the amount of affordable housing means it is offering 40 per cent tax relief on the development costs involved in turning unused space into residential flats for people on low incomes.

This tax break has not been widely promoted and so far there are only a handful of schemes available. But new schemes are about to be launched. Braemar, a property management company in which Vincent Tchenguiz, the Iranian property investor holds a 29.9 per cent stake, already runs three schemes and is rounding up money from investors to finance the fourth. It expects to raise £5m by Christmas.

Since the Chancellor shut the door to putting your main property or holiday home into your pension, there has been a growing interest in more specialised tax-efficient property schemes. Many of these schemes - such as syndicates that invest in student halls of residence, prisons or commercial buildings - enjoy tax advantages only when they are wrapped within a pension.

But by going down the route of affordable housing, you can benefit from the tax savings without having to lock-up funds until you retire. The government has pledged to boost affordable housing to cater for groups such as students, foreign nationals and struggling first-time buyers.

Scheme managers, such as Braemar, source capital from investors - usually a minimum of £25,000 per person - and this, together with borrowed funds, is used to purchase and develop large unused buildings, typically in town centres outside London.

Suitable properties include old department stores, banks, empty offices and vacant space above shops. The bonus of these types of conversions rather than new builds is that no planning permission is required.

Once bought, the buildings are developed into one and two-bedroom flats, which can be let out to people on lower incomes. Braemar says a development will hold anything from 12-60 flats. The costs incurred in converting these qualify for tax relief at a rate of 40 per cent. Investors can expect to receive this three or four years after they paid the initial capital.

The tax relief is, however, only available if the property is held for at least seven years from the date the units become habitable. Given often lengthy periods to develop properties, investors therefore have to be willing to tie up their money for around ten years in total.

Investors receive a share of any increase in the value of the property as a result of the conversion to affordable housing. When the property is eventually sold any profits are shared out equally.

The scheme manager does charge an initial 2 per cent. After that, there is an annual management fee of 1.5 per cent, although this should be covered by the rental income.

Jason Butler, a financial adviser at Bloomsbury Financial Planning, has recommended these schemes to a number of wealthy clients. He says they could suit higher rate tax payers who already have diversified portfolios and are looking for an interesting property investment idea.

“These schemes mix investment in affordable housing with generous and above board tax relief,” he says.

Braemar says that signing up to a scheme, rather than trying to invest directly, means investors do not have to get involved in the management of the properties. But wealthy investors, or groups of individuals, could purchase properties for development themselves and claim the tax reliefs.

One of the advantages of a tailor-made scheme, however, is that the hassle of managing and developing the properties is handled by a third party.

“Some investors want exposure to buy-to-let assets but don’t want the headache of managing them. We approach residential property as if it was a commodity,” says Marc Duschenes, chief executive of Braemar.

Investors also have the security of knowing that these schemes are regulated and the mortgages used to finance them are arranged on a “non-recourse” basis, which means the lender cannot call on any individual partner in the event of any missed payment.

Also, because these schemes have access to high levels of capital they can afford to develop larger blocks of flats and can therefore bargain down prices for kitchens, bathrooms and other such fittings.

So far existing schemes have performed well. Braemar first launched a scheme four years ago. Already the investors in that scheme have had more than 60 per cent of their money back - from the tax rebate and an early repayment - and they still own their original stake in the property.

However, as the first schemes are yet to mature, there is no evidence of how easy they are to sell on. Investors are relying on the fact that a buyer will emerge at the end of the seven year rental term and offer the right price for the developed properties. There are no guaranteed returns.

“There is always the risk that the market will implode,” says Butler.

But Braemar estimates that even if there is zero growth in the capital value of the assets, investors would still receive an annual return of 5 per cent solely on the tax relief on development.