Funding for UK affordable housing boosted by an additional £150 million, courtesy of an octopus
The Octopus Investments' Affordable Housing Fund has announced that it has secured an additional £118 million in funds, with a significant portion coming from Local Government Pension Schemes (LGPS). This latest round of investment brings the total funds under management for the fund to over £360 million.
The LGPS investors in this round include the Strathclyde Pension Fund, London CIV, and Avon LGPS. The Strathclyde Pension Fund, a new investor, has committed £50 million, while London CIV, an existing investor, has reinvested £58 million. Avon LGPS, another existing investor, has also reinvested £10 million.
The Affordable Housing Fund aims to deliver high-quality, affordable homes in the UK. It does this by either funding the construction of new housing or acquiring existing stock. The fund is geographically agnostic, aiming to invest anywhere across the UK where there is stretched housing affordability.
The fund's focus on sustainability and social impact is evident in the projects it has already funded. For instance, the capital raised last year had already been fully allocated to affordable housing projects, in partnership with Octopus Investments' registered social housing provider NewArch Homes.
The investment by LGPS in the Affordable Housing Fund is part of a larger strategy to meet future pension promises. The need to generate both impact and adequate returns for LGPS investors influences the investment's local region focus.
In May, NewArch acquired 180 affordable homes from housing association Golding Homes, based in Kent, south-east England. This acquisition is a testament to the fund's commitment to delivering affordable housing across the UK.
The investment by Avon LGPS is estimated to build 250 new homes for up to 1,000 people, with at least 20% in the Avon region of southwest England. Similarly, the £50 million invested by Gloucestershire is estimated to build 250 new homes, while the investments by Devon and Clwyd will result in the construction of 200 and 100 new homes, respectively.
It's worth noting that affordable housing now accounts for around 16% of total housing stock in England compared to 20% in 2000, according to government data. This underscores the need for initiatives like the Octopus Investments' Affordable Housing Fund.
Octopus Investments is part of the Octopus Group, a B Corp that owns Octopus Energy, a growing force in green power development. The group's commitment to sustainability is evident in its investments, as is its focus on delivering social impact.
The Octopus Investments' Affordable Housing Fund targets £1 billion by 2026 and continues to seek new commitments as it works towards this goal.
[1] Octopus Investments (2021). Press Release: Octopus Investments Secures £118 Million from Local Government Pension Schemes for Affordable Housing Fund
[3] Octopus Investments (2021). Press Release: Octopus Investments Raises £150 Million for Affordable Housing Fund from Local Government Pension Schemes
[5] Octopus Investments (2021). Press Release: Octopus Investments' Affordable Housing Fund Secures Additional €10 Million from Social Impact Investor Big Society Capital
- The Octopus Investments' Affordable Housing Fund, targeting £1 billion by 2026, is committed to delivering high-quality, affordable homes in the UK, investing in both new construction and existing stock across the country.
- The recent £118 million investment, a significant portion of which comes from Local Government Pension Schemes (LGPS), brings the total funds under management for the Affordable Housing Fund to over £360 million.
- Contributions from LGPS investors, such as the Strathclyde Pension Fund, London CIV, Avon LGPS, Gloucestershire, Devon, and Clwyd, are helping to build thousands of new homes, demonstrating a clear alignment with the fund's mission to address stretched housing affordability.
- By focusing on sustainability and social impact, the Affordable Housing Fund not only aims to generate adequate returns for investors but also contributes to the environmental-science and climate-change initiatives by integrating energy-efficient solutions in its projects.
- The fund's business model is also part of a larger strategy for LGPS investors to meet future pension promises, as they seek both financial returns and a positive impact on the environment and society.
- As one of the key drivers of the development finance landscape, the Octopus Investments' Affordable Housing Fund is playing a crucial role in the energy transition, housing-market, and real-estate sectors, aligning with global efforts to address social impact issues and create a more sustainable future.
