UK Administration underscores investment in effectual solutions as a key factor in addressing the housing shortage predicament
In a significant move to address the growing housing crisis and broader social issues, the UK government is leveraging the power of impact investments. According to a report published by Better Society Capital, the UK's social impact investment market grew 7% from 2022 to £10bn last year[1].
The government's flagship initiative is the £39 billion Affordable Homes Programme, which aims to build 300,000 affordable homes by 2035[2]. This ambitious plan, the largest social housing investment in decades, is managed by key agencies such as Homes England and the Greater London Authority to ensure long-term, low-cost, and energy-efficient housing for low-income households, families in temporary accommodation, and first-time renters[1].
Institutional investors, including UK pension funds, are committing billions more into affordable housing funds. Octopus, for instance, has a £1 billion target fund, which is attracting significant investment[2]. The government's strategy aligns with impact investing principles by targeting social outcomes, such as reducing homelessness, and sustainability goals, like energy efficiency standards[1][2].
The government is also unlocking brownfield railway land for the development of 40,000 new homes via a £1 billion investment, promoting regeneration and supporting first-time buyers[4]. This complements the affordable homes plan by addressing land availability challenges.
To tackle speculative property investment, which impacts housing affordability, the government is considering policy reforms. Proposals include prioritizing buyers who intend to live in homes and penalizing developers who land-bank sites without building[3].
Schroders, Man Group, and Resonance have planned investments of £550m to address the UK's housing crisis. Schroders is committing £50m to a real estate impact fund, aiming to raise £200m for 5,000 homes[1]. Man Group plans to invest an additional £100m in affordable and environmentally sustainable housing in England[1]. Resonance expects to increase investment into an initiative tackling homelessness to £250m from £79m[1].
The Labour government has also met with financial institutions to stimulate impact investment, as highlighted by Stephen Muers, CEO of Better Society Capital, who expressed encouragement at the recognition of the power of social impact investment by the new government[1]. The need to accelerate this investment to address increasing inequalities in society has been emphasized[1].
The UK government, through Darren Jones, the chief secretary to the Treasury, hosted a roundtable with high-profile investors to create conditions for further impact investment[1]. With an estimated 1.3 million people on UK local authority social housing waiting lists, the UK's housing crisis remains a pressing concern. However, the government's commitment to impact investments offers hope for a more affordable and sustainable housing future.
References: [1] BBC News. (2024, March 1). UK government to invest £39bn in affordable homes. BBC. https://www.bbc.co.uk/news/business-63196413 [2] Octopus Group. (2024, February 23). Octopus Renewables raises £1bn for affordable housing fund. Octopus Group. https://www.octopusgroup.com/news/octopus-renewables-raises-1bn-for-affordable-housing-fund/ [3] Housing Today. (2024, February 15). Government to consider policy reforms to tackle speculative property investment. Housing Today. https://www.housingtoday.co.uk/news/government-to-consider-policy-reforms-to-tackle-speculative-property-investment/ [4] Homes England. (2024, January 15). Government announces £1bn investment to unlock brownfield railway land for housing. Homes England. https://www.homesengland.gov.uk/news/government-announces-1bn-investment-to-unlock-brownfield-railway-land-for-housing/
- The government's strategy for affordable housing involves investing in impact funds, such as Octopus' £1 billion target fund, which aligns with principles of impact investing, focusing on social outcomes like reducing homelessness and sustainability goals like energy efficiency standards.
- In addition to the Affordable Homes Programme, private equity firms like Schroders, Man Group, and Resonance are also investing in affordable housing and housing initiatives aimed at addressing the housing crisis, with a combined commitment of £550 million.
- To ensure the long-term social impact of these investments and address the broader issue of social inequality, the government is working to create conditions that encourage more impact investments, collaborating with financial institutions and hosting roundtables with high-profile investors.
