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Unlocking the potential of private investment
How institutional investment in the UK’s for-profit social housing sector is helping to build much-needed affordable and sustainable homes
GROWTH, REGENERATION & DEVELOPMENT
Jack Burnham
Head of Affordable Housing, Octopus
Jack Burnham
Head of Affordable Housing, Octopus
Issue 72 | July 2024
As Head of Octopus Real Estate’s Affordable Housing Team, I have the privilege of helping channel investment into the UK’s social housing sector. My desire to work in this field is driven by its incredible potential to effect positive change.
Regular readers of the CT Brief won’t need reminding of the challenges our society faces in delivering the affordable housing we need. However, it’s still worth pointing out that a staggering one-in-seven people in the UK reside in unaffordable or insecure housing. With the prospect of secure housing feeling like a distant dream to so many, private investment presents a viable solution, offering greater financial capacity to boost the construction of much-needed affordable housing stock.
Funding balancing act
For institutional investors, the social housing sector provides a means to ensure their capital is deployed where it can maximise its social impact, while also providing a return on investment. Managing this balance is not without its hurdles: institutional investors face a range of challenges, from achieving satisfactory financial returns to grappling with the complexities of social housing regulation and operations.
The spectre of reputational risk also looms large, compounded by the inherent uncertainties of venturing into what is – at least for private investment – a relatively new asset class with a limited track record. There are also additional regulatory and policy barriers, for example rent inflation and the struggle for housing benefit to rise in lockstep.
The government also has a key role in helping foster a conducive environment for long-term investment. Grant subsidies are instrumental in reducing the cost of building affordable homes, while streamlined planning processes are essential for faster construction times and meeting demand. In addition, a stable policy and regulatory environment is crucial for instilling investor confidence.
Invested in affordable housing by Octopus Real Estate so far this year
Planned investment in affordable housing over the next five years
New affordable homes to be built
New energy-efficient homes at Haddon Peake in Cambridgeshire
Our goal
At Octopus Real Estate, our goal is to accelerate the delivery of high-quality, sustainable, affordable homes. In pursuit of this, we have invested £35 million in affordable housing so far in 2024. Longer-term we plan to raise £1 billion to invest in affordable housing over the next five years and hope to build over 3,000 new affordable homes.
We operate our own for-profit registered provider, and work closely with housing associations and local authorities. By embracing social housing regulation and forming lasting industry partnerships, we can deploy capital efficiently, while ensuring homes are managed in the interests of residents. This second point is vital: prioritising customer satisfaction and long-term sustainability – for example by focusing on delivering energy-efficient properties – is key to providing homes fit for the future.
Incredible opportunity
Looking ahead, I want to keep the conversation going with UK regions that have yet to embrace the for-profit housing provider model. There is an incredible opportunity for us to work together to unlock the full potential of private investment: expanding access to affordable housing, delivering quality, sustainable places to live, and ensuring a brighter future for generations to come.
“I want to keep the conversation going with UK regions that have yet to embrace the for-profit housing provider model.”
