Are our homes investments really supporting tenants? We analysed our portfolio


Written by

Drew Ritchie, Investment Director

When I tell people about the work we do, they often respond with scepticism.

“Do real estate investors really care about making a difference? Surely, they’re just in this for profit.”

While traditionally this may have been the case, our numbers show that investors into housing increasingly want to create a positive impact with their capital. This is reflected in the numbers. The social and affordable housing impact market is growing at pace, from being worth virtually nothing just ten years ago to £5 billion last year.

The challenge in this new landscape for investors and fund managers is being able to demonstrate this shift. And - most importantly – to avoid “impact washing”, where investment models fail to provide tenants with the high quality, safe and affordable homes they need.

That’s why we worked with fourteen leading fund managers and The Good Economy to create the Equity Impact Project (EIP) a sector standard framework for measuring and reporting their impact with the aim of increasing transparency and accountability and ensuring that investors have a positive role to play.

Are our investments reaching the people and places we want them to?

We used the EIP to assess Big Society Capital’s own portfolio of investments into 6,505 homes. We tested it against a set of criteria including whether our investments are increasing the supply of new, additional or affordable homes; and whether we are delivering in areas with high levels of homelessness or affordability constraints.

Excitingly, the first set of results are now in. And while this is just the beginning of our measurement efforts and learning – we were pleased with what we learned. Here are the highlights:

  1. Addressing the undersupply of affordable homes: 76% of our housing investments went towards addressing the nation’s shortage through building new homes – with over 4,900 built. 74% are in areas of constrained affordability, meaning areas where housing prices are over 8 times local incomes. And 43% are delivered independently of planning stipulations or Homes England grant.
  2. Quality social and affordable homes: All homes in BSC’s portfolio meet Decent Homes Standard, which was set by the Government and requires homes to be in a reasonable state of repair, have modern facilities and provide adequate heat. The majority of new-build homes in BSC’s portfolio (61%) are regulated as Social or Affordable Rent – meaning that these high-quality homes are being rented out at affordable rates to people who need them.
  3. Homes for those in greatest need: Three quarters of our investments tackling homelessness are in areas where the incidence of homelessness is above the national average. 65% of that delivery is also in areas with the highest homelessness pressures, helping tackle the nearly 100,000 households spending each night in temporary accommodation in the UK.

What’s next?

Pioneering managers such as Funding Affordable Homes and Gresham House have also adopted the framework and are leading the way in their impact reporting approach.

We want “impact washing” to become an issue of the past. This can only happen when the whole market follows suit.

We envision a future where all managers in social and affordable housing are assessing social impact with the same rigour as they would financial returns. The next step for the project is publish benchmarks that give fund managers and investors the information they need to compare impact performance. If interested to participate, please get in touch.

Drew new

Drew Ritchie

Investment Director
Talk to me about:
Social and affordable housing