UK affordable housing fund secured additional £150 million through octopus investment
The UK's Local Government Pension Schemes (LGPS) have collectively invested £168 million into Octopus Investments' Affordable Housing Fund. This investment aims to address the growing shortage of affordable housing in the country.
The investment includes £50 million from London CIV, the investment pool representing 32 London LGPS, £50 million from Strathclyde Pension Fund, and £10 million from Avon LGPS. These commitments are part of a broader £118 million recent fundraising round, which also includes re-investments and other institutional investors.
Octopus Investments' Affordable Housing Fund, managed by the Octopus Group - a B Corp that owns Octopus Energy - plans to scale up to a £1 billion target by 2026. The fund is geographically agnostic, investing anywhere in the UK where there is stretched housing affordability.
In the southwest of England, at least 20% of the new homes to be built with this investment will be in the Avon region. The new investors, which also include the pension funds of Gloucestershire, Devon, and Clwyd, are expected to help deliver 250 new homes for up to 1,000 people.
The ties between Octopus Investments and Octopus Energy are expected to allow more energy-efficient homes to be built. This aligns with the UK's goal of achieving net zero carbon emissions by 2045 and contributes to meeting future pension promises.
The investment is part of a broader strategy to deliver high-quality, affordable homes in the UK. Recently, Octopus Investments' Affordable Housing Fund allocated capital raised last year to affordable housing projects in partnership with NewArch Homes. NewArch Homes, in a separate deal, recently acquired 180 affordable homes from housing association Golding Homes.
The UK faces an increasingly acute shortage of affordable housing. According to government data, affordable housing accounts for around 16% of total housing stock in England compared to 20% in 2000. The affordable housing strategy aims to deliver high-quality, affordable homes in the UK, either by funding the construction of new housing or acquiring existing stock.
This investment is not the only initiative aimed at addressing the affordable housing crisis. In January, social impact investor Big Society Capital announced a further £10m investment in the fund. The International Court of Justice has also ruled that countries must prevent climate damage, further emphasising the need for energy-efficient housing solutions.
- The investment of £168 million by the UK's Local Government Pension Schemes (LGPS) into Octopus Investments' Affordable Housing Fund aims to have a significant social impact by addressing the growing shortage of affordable housing in the country.
- Octopus Investments' Affordable Housing Fund, a part of the business Octopus Group, is hoping to raise £1 billion by 2026, using private equity financing to invest in affordable housing projects across the UK, especially in areas where there is stretched housing affordability.
- The Affordable Housing Fund's investments also extend to the real-estate sector, with plans to deliver high-quality, energy-efficient homes, aligning with the UK's goal of reaching net zero carbon emissions by 2045.
- Addressing the affordable housing crisis in the UK is not just an investment opportunity for businesses like Octopus Investments, but also a crucial financial concern, as the percentage of affordable housing in England's total housing stock has decreased from 20% in 2000 to around 16% today.
