FACTS & FIGURES
INVESTING IN SOCIAL HOUSING
Key facts and figures
Social Housing Crisis: Approximately 1.3 million households in England are on waiting lists for social homes, with a net loss of 165,000 social homes in the decade to 2022. Currently, almost 300,000 people are in temporary accommodation.
In 2022/23, the government spent an estimated £11.4 billion on housing development, with the majority (£9.14 billion) going towards local authority housing.
In 2022/23, housing benefit expenditure was estimated at £15.4 billion.
Housing associations in England have reduced their planned spending on new affordable homes by 9%, or £1.5 billion, for 2024 compared to the previous year.
The largest problem, experts say is that housing providers - predominantly housing associations - no longer have as much money to spend on buying new properties as they did before.
Housing associations are mostly not-for-profit organisations that buy up affordable properties and rent them as social homes to low-income tenants at discounted rates, receiving a government subsidy to do so.
They’re having to spend more money on repairing the homes they already own, they say - meaning less to spend on buying new properties. This has created a vacuum which external investors have an opportunity to fill.
Some large institutional investors have recently identified this opportunity and are increasingly moving into the social housing sector, and there are several reasons why:
Demand: There is a large and growing demand for affordable housing, with around 1.3 million households on waiting lists in the UK.
Risk-adjusted returns: Affordable housing can offer high risk-adjusted returns.
Social impact: Affordable housing can have a positive social impact, and investors are under pressure to demonstrate sustainable investment approaches.
Diversification: Investors are diversifying away from core commercial property and looking for alternative property sectors.
Stable income streams: Social housing typically offers steady, inflation linked income streams, which are particularly attractive in volatile market conditions.
Some examples of institutional investors active in the UK social housing sector include: Samsung Life Insurance, London CIV, Big Society Capital, Schroder BSC Social Impact Trust plc, and Savills Plc.
With institutional investment currently standing at circa 1%, the scope of opportunity for institutional and private investment into UK Affordable housing is considerable.
Key Risks: As with any investment there are potential risks. In this case, changes in government policy could impact on the sector.
One of the most significant risks in social housing investment is the dependency on one social housing provider. These providers are responsible for tenant placement, rent collection, and property management. If a provider fails or backs out, it can create challenges. We look to mitigate that risk through diversification. Dealing with multiple providers rather than relying on just one. Ensuring that if one were to fail, others are ready to step in.