Investment from Big Society Capital secured for UK's affordable housing project by Octopus
Headline: Octopus Investments Secures Additional Funding for Affordable Housing Initiative
In a significant move to address the chronic shortage of social and affordable housing in the UK, Octopus Investments has secured an additional £10 million for its Affordable Housing Fund. This investment comes from social impact investor Big Society Capital (BSC), bringing the fund's total capital to over £360 million.
The Affordable Housing Fund, which aims to reach £1 billion by 2026, is a strategic initiative designed to accelerate the delivery of high-quality, sustainable affordable homes across the UK. The fund's focus on robust sustainability standards and environmental and social impact outcomes reflects a growing trend among social impact investors in the UK.
The fund's operating vehicle, NewArch Homes, currently manages around 500 affordable homes and is one of the ten largest for-profit registered social housing providers in the UK. NewArch Homes serves multiple affordable housing sectors, including social rented, affordable rented, and shared ownership.
The latest investment round saw participation from UK local government pension schemes, including Strathclyde Pension Fund, London CIV, and Avon LGPS. These investments align stable, long-duration impact investments sought by institutional investors with real social and environmental benefits in the UK housing market.
Meanwhile, the Resonance housing initiative has closed, welcoming tenants to its affordable homes. This development underscores the growing focus on affordable housing provision among social impact investors in the UK.
The funding situation for affordable housing remains acute, with a report from Octopus Real Estate finding that registered social housing providers expect a decline of more than a fifth in their development pipeline in the short-to-medium term. This decline is due, in part, to the failure of supply to meet demand and rising costs.
However, the renewable energy sector is continuing to attract significant investment. For instance, Renalfa has raised €315M from an EBRD-led investor group, and CorPower Ocean has secured a €40m EU grant for a wave energy farm.
The first deployment of the Affordable Housing Fund has been made through forward funding, with a commitment to acquire 26 homes near Peterborough in eastern England from Vistry Homes. The area where the homes are being built has a high housing need, where provision of new affordable housing over the last four years has been less than 50% of what was required.
Impact-driven private capital, as represented by BSC's investment in the Affordable Housing Fund, has a vital role to play in addressing the UK's housing shortage. Octopus Investments, part of Octopus Group which also includes UK sustainable energy provider Octopus Energy, is well-positioned to lead this charge. All the homes are expected to be ready by April 2025.
[1] Octopus Investments Announcement [2] Octopus Real Estate Report [3] BSC Investment in Affordable Housing Fund [4] Strathclyde Pension Fund Investment [5] London CIV Investment [6] Avon LGPS Investment
- The additional £10 million investment in Octopus Investments' Affordable Housing Fund by Big Society Capital signals a significant commitment towards addressing the UK's social housing shortage, as part of a larger strategic initiative to deliver high-quality, sustainable homes.
- The Affordable Housing Fund's focus on sustainability standards and environmental and social impact reflects a growing trend among UK social impact investors, aligning with the mission of impact-driven private capital.
- The funding round for the Affordable Housing Initiative saw participation from UK local government pension schemes, including Strathclyde Pension Fund, London CIV, and Avon LGPS, aiming to provide real social and environmental benefits in the UK housing market.
- The Affordable Housing Fund's first deployment has been made through forward funding, securing 26 homes near Peterborough from Vistry Homes, giving priority to areas where the provision of affordable housing lags far behind the demand.
