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Funding Affordable Homes Fund

Fund size | £
Big Society Capital investment | £

Investing in new affordable homes by working in partnership with local housing associations and charities

Social impact

The UK faces a chronic shortage of affordable rented housing and is not building enough each year. Poor social outcomes in health and education are strongly associated with a lack of good quality and stable homes. Some housing associations and charities providing homes are constrained in their ability to access capital to develop new homes due to borrowing limits.

The model works by buying and building affordable homes and entering into long term management agreements with housing associations, particularly mid-sized associations who have more constrained access to finance. These projects will deliver impact by providing affordable housing for people on low incomes and those who face particular challenges in finding suitable housing, such as young homeless people or older people.

The achievement of direct social benefit that is both measurable with a clear unambiguous impact is regarded as integral to the process of project evaluation both prior to and post investment. Funding Affordable Homes has appointed the Good Economy Partnership as Social Impact Adviser and designated a social impact representative on the Board. Good Economy Partnership has worked with Funding Affordable Homes to develop assessment tools and due diligence frameworks, and will assess each investment to ensure they meet the social impact criteria. Funding Affordable Homes will produce an annual social impact report and will also commission a social audit after three years.

Financial rationale

Funding Affordable Homes is seeking to deliver high single digit returns that are linked to inflation. It has built a strong pipeline of investment opportunities, and aims to invest in the order of £100 million in affordable and specialist housing projects prior to a further funding round in 2016.

Market development

The investment is supporting a new model for financing affordable homes as the current grant/debt available is insufficient to meet the projected need. Big Society Capital’s investment supported the launch of a fund that has the potential to attract institutional capital at scale to tackle the huge shortage in supply of affordable housing in the UK. The fund’s first close has attracted investors who have not previously participated in the UK social investment market.

Investment details

  • Total investment and type: £15 million equity
  • Total fund size: £50 million
  • Key partners: SHA Housing Limited is the exclusive property adviser to Funding Affordable Homes, sourcing affordable housing opportunities and managing the portfolio on behalf of Funding Affordable Homes. It is led by Andrew Dawber, Paul Munday and Tom Pridmore. Funding Affordable Homes’s board includes Richard McCarthy, CBE, the former Director General, Neighbourhoods at the Department for Communities and Local Government responsible for English housing and planning policy. Lord David Triesman, the former Chairman of the National Enquiry into Housing Benefit for the Cabinet Office is also a Director, as is Debbie Ounsted, CBE, the former chair of the Joseph Rowntree Foundation.
  • Co-investors: include family offices and high net worth individuals.
Last updated | 
27 January 2016