Institutional investors provide support for UK's affordable housing investment program
UK Pension Funds and Investors Bolster Affordable Housing Market
The UK's affordable housing market has received a significant boost with the launch of the £123m Simply Affordable Homes fund. This fund, supported by five investors including Samsung Life Insurance, London CIV, Big Society Capital, Schroder BSC Social Impact Trust plc, and Savills Plc, aims to deliver properties that are affordable to rent with a 20% or higher discount to market rates.
The fund invests in a diversified portfolio of affordable housing, including affordable and social-rent homes, as well as shared-ownership homes. Over 87% of the homes delivered by these funds are affordable tenure types, with 76% being newly built and directly contributing to addressing the nation's affordable housing crisis.
Investors such as the Schroder BSC Social Impact Trust, an investment trust managed by Schroders and Big Society Capital, have expressed satisfaction about participating in funding social enterprises and charities delivering services to those in need in the UK.
Amelie Montague, investment director at Big Society Capital, emphasizes the significant opportunity and need for affordable housing in the UK. Big Society Capital has invested in 14 high-impact UK housing funds over the last 10 years, which will deliver a combined 6,500 homes.
The UK's social and affordable housing market has seen a significant increase in institutional investment due to the demand for affordable homes and predictable long-term income streams. Currently, over £5bn is actively invested in the UK's social and affordable housing market.
The shortfall in capital to address the UK's rental crisis is estimated to be £250bn by 2031, as recently estimated by Savills. Montague also states that funds like the Simply Affordable Homes Fund have the potential to tackle the UK's affordable housing crisis at scale.
In addition to private investment efforts, the UK government has launched initiatives such as the £39 billion Affordable Homes Programme, planning 300,000 new affordable homes by 2035. While government funding is crucial, private funds like Simply Affordable Homes fill vital gaps by enabling more immediate and scalable delivery of affordable housing.
The fund operates under enhanced governance frameworks and a sustainable investment strategy, targeting high environmental standards and progressing towards net zero by 2040. This ensures that the development and management of affordable housing are not only immediate solutions but also long-term strategies for addressing the UK's rental crisis.
In conclusion, the Simply Affordable Homes fund, backed by UK pension funds and socially conscious institutional investors, plays a significant role in mitigating the UK rental crisis. It provides crucial capital that accelerates the development and management of affordable housing stock, improving rental affordability and availability in the short to medium term, within a broader national strategy that includes significant government investment.
- The new Simply Affordable Homes fund, supported by UK pension funds and investors, is aimed at delivering affordable housing with a goal to provide properties at a 20% or higher discount to market rates.
- Investing in the UK's affordable housing market is not only important for providing immediate rental solutions but also contributes to long-term strategies, as demonstrated by the enhancement of environmental standards towards net zero by 2040 in funds like Simply Affordable Homes.
- In line with the national strategy to address the UK's affordable housing crisis, the government's Affordable Homes Programme plans to build 300,000 new affordable homes by 2035, complementing private funds such as the Simply Affordable Homes Fund that fill vital gaps in delivering more immediate and scalable affordable housing.
- Development finance is integral to the energy transition, as real-estate projects like the Simply Affordable Homes fund operate under sustainable investment strategies, targeting high environmental standards and contributing to the UK's aim for net-zero emissions by 2050.
