Impact investors begin to build momentum in UK affordable housing
Institutional investment in affordable housing in the UK is expected to gain momentum this year. The private-rented sector (PRS) has seen a marked inflow of pension fund capital in recent years, and affordable residential could be next.
This week, Bridges Fund Management, which specialises in impact investment, announced it was investing in affordable housing in the north-east of England. Its “permanent capital vehicle”, Bridges Evergreen Holdings, has launched the Ethical Housing Company, which aims to create a portfolio of affordable homes in Teesside.
Meanwhile, Resonance, which runs affordable housing funds aimed at the homeless, announced that it had received £15m (€17.2m) from the Greater London Authority (GLA). It had already secured investment from three other London boroughs, and Resonance chair Karen Shackleton said the fund manager was “in conversation with more local authorities and local government pension schemes, both in London and around the UK”.
Cheyne Capital also runs an affordable housing fund, while private equity giant Blackstone is reported to be entering the market by helping fund housing association Sage.
IPE Real Assets understands that another global asset manager is looking to launch a European affordable housing fund.
The Ethical Housing Company will acquire one-three-bedroom properties in Teesside and will rent them to people in housing need, including those on benefits, through its partner, the Ethical Lettings Agency.
Scott Greenhalgh, chairman of Bridges Evergreen Holdings, said: “We hope the cooperation between the Ethical Housing Company and the Ethical Lettings Agency will demonstrate a model that can be used and replicated to address one of the most pressing challenges facing the UK: the lack of decent, affordable homes for rent.”
Bridges Fund Management has raised more than £500m across four property investment funds, two of which have invested in lower-cost housing in Greater London.
Resonance runs three property funds that look to provide affordable housing to homeless people: two Real Lettings Property Funds focused on London, and the National Homelessness Fund.
The funds invest in partnership with Real Lettings, a social lettings agency of charity St Mungo’s, and have grown to more than £155m and have provided over 600 homes nationwide.
Income is generated from rents and capital from appreciation when the properties are sold – most likely to a follow-on social impact investment fund, Resonance said.
Susan Fallis, director of Real Lettings, said: “Since the funds launched, we’ve been able to house hundreds of people who otherwise would have been in temporary accommodation or hostels.”