Institutional financiers endorse UK's budget-friendly housing investment scheme
In a bid to alleviate the significant affordable housing crisis in the United Kingdom, Savills Investment Management has launched the Simply Affordable Homes Fund. This for-profit affordable housing provider aims to expand the supply of quality affordable homes and contribute to solving the housing shortage through financially sustainable development.
Dominic Curtis, the current fund manager, is overseeing the growth strategy of the fund, which operates under a for-profit business model, distinguishing it from traditional social housing providers. The fund's objective is to scale affordable housing development while delivering returns to investors.
Amelie Montague, Investment Director at Big Society Capital, believes that partners like the Simply Affordable Homes Fund can help tackle the UK's affordable housing crisis at scale. The fund has already secured investments from notable entities such as Samsung Life Insurance, London CIV, Big Society Capital, Schroder BSC Social Impact Trust plc, and Savills Plc at its first close, totalling £123m (€ 144m).
The Simply Affordable Homes Fund will focus on areas with high local authority waiting lists and areas ranked within the lowest 40% in the Index of Multiple Deprivation. It will deliver properties that are affordable to rent with a 20% or higher discount to market rates. Over 76% of the homes delivered by these funds are newly built, contributing to addressing the nation's affordable housing crisis, with 74% of these homes in areas of 'constrained' affordability.
The fund will invest in a diversified portfolio of affordable housing, including affordable and social-rent homes, as well as shared-ownership homes. It will operate under enhanced governance frameworks and a sustainable investment strategy, targeting high environmental standards and progressing towards net zero by 2040.
The UK's social and affordable housing market has seen a significant increase in institutional investment due to the unprecedented demand for affordable homes and predictable long-term income streams. The shortfall in capital to address the UK's rental crisis is estimated to be £250bn by 2031, as recently estimated by Savills.
The launch of the Simply Affordable Homes Fund is part of a broader movement among developers and investors, with about a quarter considering investment in for-profit affordable housing providers as a means to contribute to solving the housing crisis.
Meanwhile, in a separate development, CorPower Ocean has received a €40m EU grant for a wave energy farm. Renalfa, a renewable energy firm, has raised €315M from an EBRD-led investor group. These initiatives underscore the growing emphasis on sustainable and renewable energy solutions in the UK and beyond.
Jamie Broderick, director of the Schroder BSC Social Impact Trust, has expressed satisfaction about participating in funding for affordable housing initiatives. Montague also believes that these partnerships are crucial in addressing the affordable housing crisis at scale.
In conclusion, the Simply Affordable Homes Fund represents an innovative impact-driven investment vehicle designed to expand affordable housing availability in the UK through a sustainable, for-profit model backed by private capital. The fund is poised to make a significant impact on the affordable housing landscape in the UK, addressing the urgent need for affordable homes while delivering returns to investors.
[1] Savills Investment Management. (2022). Simply Affordable Homes Fund. Retrieved from https://www.savills.com/en-gb/investment-management/products/simply-affordable-homes-fund [2] The Guardian. (2022). Co-founder of Simply Affordable Homes set to exit as fund manager takes over. Retrieved from https://www.theguardian.com/business/2022/mar/08/co-founder-of-simply-affordable-homes-set-to-exit-as-fund-manager-takes-over [3] Property Week. (2022). Simply Affordable Homes Fund secures £123m first close. Retrieved from https://www.propertyweek.com/news/simply-affordable-homes-fund-secures-123m-first-close/5113814.article
- The Simply Affordable Homes Fund, managed by Dominic Curtis, operates under a for-profit business model and aims to expand the supply of quality affordable homes in the UK, contributing to solving the housing shortage and delivering returns to investors.
- The fund, with investments from notable entities like Samsung Life Insurance, London CIV, Big Society Capital, and Savills Plc, will focus on areas with high local authority waiting lists and deliver properties that are affordable to rent with a 20% or higher discount to market rates.
- Amelie Montague, Investment Director at Big Society Capital, believes that partnerships with funds like Simply Affordable Homes are crucial in addressing the UK's affordable housing crisis at scale.
- The Simply Affordable Homes Fund will invest in a diversified portfolio of affordable housing, including affordable and social-rent homes, as well as shared-ownership homes, and operate under enhanced governance frameworks and a sustainable investment strategy, targeting high environmental standards and progressing towards net zero by 2040.
