Social Housing

Market Opportunity

What is Social Housing?

Social housing in the UK is housing that is more affordable than housing on the open market. It can either be low-cost rental accommodation or low-cost home ownership accommodation. The fund will invest in low cost rental accommodation. Low cost rental social housing exists to help people who can’t afford to rent or buy a home on the open market. Such accommodation can be rented at reduced rents from housing associations, registered providers of social housing or local councils.
The fund will invest in assets that are (or will be) leased to local councils, housing associations, registered providers of housing, charities and government/government-backed organisations. These organisations will rent the assets from the fund and provide housing to people on the housing waiting list who have been approved for social housing. These are generally people who are living in unsatisfactory/unsanitary living conditions, homeless, asylum seekers or people in need of care/support to be able to live an independent life. Rents for such accommodation are funded by the government (partially or fully) and paid through the individual’s housing benefits/universal credit.

MARKET LANDSCAPE

  1. GROWING DEMAND

As per the 2021 report by National Housing Federation, 8.5 million people in England have some form of unmet housing needs, 1.1 million households require social rented homes and 2 million children live in unsuitable overcrowded homes. A research by Heriot Watt University for Crisis and the National Housing Federation found that 90,000 social rented homes need to be built each year to meet demand.

  1. LONG, SECURED, GOVERNMENT BACK INCOME

The fund intends to invest in a balanced portfolio of Social Homes in which the rental income paid to the tenant will be directly paid by the Government or Local Authorities. Under the specialist supported housing, the cost for care and housing benefit is paid from the Department for Communities and Local Government and the Department of Work and Pensions to the relevant Local Authority then directly on to the Registered Provider and care provider.

  1. LOW CO-RELATION TO THE WIDER ECONOMY

As per the recent report by Impact Investing Institute, social housing cashflows have negligible co-relation to the wider economy as the rents are set by government’s rent setting regime (rather than market forces) hence providing the stability of income.

  1. ETHICAL INVESTMENT

The fund offers investors an ethical investment opportunity providing housing and support to some of the most vulnerable people in the UK and assisting in solving the housing crisis affecting the homeless, people with mental disabilities, children, elderly and young adults.

Target ASSET allocations

Category Lease length Rental Income source Target Gross Yield/Returns Allocation
Specialist Supported Housing
10+ Years
DWP
6%
25%-50%
Homelessness, Asylum Seekers, Temporary Accommodation
5+ Years
DWP/Home Office
5%
15%-25%
Government/Quasi Government Leased Assets
7+ Years
Govt/Quasi Govt Body
7%
0-15%
Forward funding of Social Housing
10+ Years
ΝΑ
10%
0-25%
Development of private real estate
NA
NA
20%
0-25%

INVESTMENT STRATEGY

  • Specialist Supported Housing (SSH) – Specialist supported housing is housing where support and/or care services are provided (in addition to housing) to help people live as independently as possible. SSH assets are generally specially designed, altered or refurbished to suit the requirements of its residents and is run and managed by a registered provider of social housing.
  • Homelessness, Asylum Seekers, Temporary Accommodation – Housing provided to people who are homeless, seeking asylum, require temporary or emergency housing.
  • Government/Quasi Government Leased Assets – Any assets where the tenant is a government or quasi government organisation, with a long lease in place.
  • Forward Funding of Social Housing – The fund will either forward fund the development of a social housing project with an intention of owning it on completion or invest as equity partner in development of social housing for a share of profit on exit.
  • Private Real Estate Development – The fund will invest as equity partner in private real estate sector developments for a share of profit on exit.