LONDON – The Impact Investing Institute, in partnership with Property Funds Research and supported by Homes England and Investment Property Forum, today publish a ground-breaking and comprehensive report detailing the investment case for UK social housing.

The UK continues to experience significant shortages of affordable housing and yet the role of private finance in contributing answers to this need has been under-examined. Currently around 70% of capital raised by Private Registered Providers to invest in social and affordable housing is from private (predominantly debt) financing sources, up from 30-40% in the 2000s, while there are increasing levels of equity investment from institutions in the sector. This authoritative report analyses this investment, and investigates the merits or otherwise of including social and affordable housing assets within institutional investment portfolios.

Key findings of the report include:

  • Social and affordable rents are not driven by market forces but are subject to government rent-setting regimes and, typically, linked with inflation, thus are less sensitive than commercial real estate to changes in the business cycle. These cashflows provide investors with diversification benefits in both multi-asset and real estate portfolios with attractive inflation hedging characteristics.
  • The social rented sector in particular shows low and stable vacancy levels and high rent collection rates when compared with retail, office and industrial property assets.
  • Debt and/or equity investment in social housing should increase the risk-adjusted return of both multi-asset and real estate portfolios along the efficient frontier, with the greatest impact evident for lower-risk portfolios.
  • Strong credit fundamentals and low correlation with other real estate sectors and the broader economy support an argument that social and affordable housing provides resilient, stable and diversified cashflows and should become an increasing proportion of institutional investment portfolios.
  • Social and affordable housing caters for housing need and has the potential to fulfil a key element of the ESG agenda for investors, notwithstanding the possibility of future reforms to regulation of the sector and benefits system. Active dialogue between stakeholders, including government, should help to mitigate the risk of adverse changes.
  • As direct equity investment into social and affordable housing grows, there is likely to be significant innovation in operating models, to ensure alignment of interests between operators, investors and tenants.

Jamie Broderick, Lead Expert of the Impact Investing Institute, commented:

Social housing is an important sector for impact investing, as it addresses a large and urgent social need, while also providing investment characteristics that can be additive to institutional portfolios, including pensions.  Our hope is that this report will expand investor interest in both debt and equity sectors of the market, providing housing associations with more diverse options in accessing capital for the vital work they do.” 

Harry Swales, Chief Investment Officer at Homes England, said:

“Institutional investment in new affordable housing has a critical role to play in addressing the undersupply of housing in the UK. Homes England is pleased to support this report from the Impact Investing Institute. It presents a compelling case for the positive influence that allocations to social and affordable housing can have on returns in a diversified portfolio. We see long-term institutional capital and affordable housing as a natural fit and are keen to support new entrants ready to commit to the delivery of high-quality affordable homes.”

Ben Denton, Managing Director of Legal & General Affordable Homes and member of the Investment Property Forum’s Residential Investment Group, said:

“To date, there has been little research into social and affordable housing and this study provides some welcome insights into its investment potential, as well as a comprehensive introduction to the workings of the market and its key participants. With significant and growing institutional interest in this sector, the study is a helpful and informative summary of the key areas driving risk and return.”

The report will be formally launched at an online event at 10:00 on Tuesday, 12 October, which you can sign up to here.


Notes to editors

Contact for media enquiries

For more information, contact:

  • Joe Dharampal-Hornby, Public Affairs and Media Relations Manager (maternity cover), Impact Investing Institute: [email protected], +44 77 49 74 17 93

About the Impact Investing Institute

The Impact Investing Institute is an independent, non-profit organisation which aims to accelerate the growth and improve the effectiveness of the impact investing market in the UK and internationally. It does this by raising awareness of, addressing barriers to and increasing confidence in investing with impact. Our vision is for lives to improve, as more people choose to use their savings and investments to help solve social and environmental challenges, as well as seeking a financial return. The Institute is supported by the UK Government, the City of London Corporation and several supporters from the financial service industry. For more information visit our website and follow the Institute on Twitter and LinkedIn.

About Homes England

Homes England is the Government’s housing accelerator. We have the appetite, influence, expertise and resources to drive positive market change. By working in partnership with investors, developers, new entrants and the wider housing market, we’re making possible the new homes England needs, helping to improve neighbourhoods and grow communities.

Securing new institutional capital to increase the delivery of new affordable homes is a priority for Homes England. Over the last year, we invested to support the growth and evolution of housing in pension fund investment portfolios. This provides institutional investors with greater confidence in affordable housing, encouraging sustainable long-term investment to meet the needs of communities across the country.

We welcome partners who share our ambition to challenge the traditional norms and build better homes faster. Find our more here.

About the Investment Property Forum

The Investment Property Forum has nearly 2,000 individual members, drawn from a wide range of different professional communities, including accountancy, banking, fund management and surveying. The Forum’s objective is to enhance the understanding and efficiency of property as an investment, for members and others in the wider business community, including government.

The IPF Research Programme is funded through sponsorship from leading organisations involved in the real estate industry and publishes regular papers and surveys on property investment topics. For further information, visit:

About Impact Investing

Impact investments are investments made with an explicit intention to generate positive, measurable social and environmental impact alongside a financial return. Impact investment optimises risk, return and impact to benefit people and the planet.