The investment will fund over 1,000 zero-bills homes across the UK, delivering new-build properties aimed at reducing fuel-poverty, guaranteeing residents no energy bills for at least five to ten years.
Octopus Capital has raised a further £100m (€113m) in new commitments for its Affordable Housing Fund, taking the fund’s total funds under management to around £460m. The investment will allow the fund to expand energy-efficient, socially focused housing across the UK.
Half of the new capital comes from the Scottish National Investment Bank (SNIB), Scotland’s development bank, which is backing the introduction of intermediate rent tenure in Scotland for the first time, according to Octopus Capital. The fund is also backed by a US public foundation.
SNIB’s £50m commitment will be deployed entirely in Scotland, unlocking at least an equal amount of co-investment, Octopus anticipates.
The intermediate rent homes will be let at around a 20% discount to market rates, with priority for key workers.
The model mirrors “mid-market rent” in Scotland and “intermediate rent” in England, targeting key workers rather than households on local authority waiting lists. Unlike traditional affordable or social housing, the discount is designed for workers who do not qualify for council lists but still face acute affordability pressures.
Earlier this year the fund raised £118m from three UK local government pension schemes (LGPS). Investments came from Avon LGPS, London CIV, with a new investment from the Glasgow-based pension fund, Strathclyde.
Speaking to Impact Investor, Jack Burnham, head of affordable housing at Octopus Capital, said: “We hope that by bringing patient, long-term sustainable capital into Scotland to deliver intermediate rent, we can demonstrate that people will invest sustainably in the long term for the right reasons.”
The fund, which launched in 2022, invests in new-build affordable homes with a strong emphasis on sustainability, reduced living costs and long-term community benefit. The latest raise will enable more than 1,000 zero-bills homes across England and Scotland, properties equipped with rooftop solar, heat pumps and batteries that allow residents to avoid home energy bills for at least five to ten years.
Burnham added that the raise brings the fund closer to its £500m milestone and highlights growing appetite for impact-aligned residential strategies.
Burnham stressed that the zero-bills guarantee is central to the model.
“The new homes come with a guarantee that customers will pay no energy bills for between five and ten years. The intention is that this will roll on in perpetuity, which is the best way we can do it with an absolute guarantee in terms of reducing fuel poverty,” said Burnham.
Burnham also emphasised the strategic significance of the move into Scotland. “In England, legislation was changed in 2008 to enable a for-profit registered provider to operate across all tenures; that’s not in place yet in Scotland,” he said.
Government support
In a study, reported by Impact Investor last September, Octopus found that almost two-thirds of LGPS in the UK regarded affordable housing as the most important area for social impact.
Furthermore, the UK government recently committed £39bn to the sector over the next decade through its new Social and Affordable Homes Programme.
The government said in early July it had set an ambition to deliver around 300,000 social and affordable homes through the programme, with at least 60% of that in the social rental sector.
