London CIV, Big Society Capital and Schroder BSC Social Impact Trust among investors behind the £123m first close of Savills’ Simply Affordable Homes fund which aims to help tackle the country’s rental crisis.
A group of five founding investors have stepped up to support the £123m (€ 144m) first close of Savills Investment Management’s Simply Affordable Homes fund.
The investors behind the first close are Samsung Life Insurance, London CIV, Big Society Capital, Schroder BSC Social Impact Trust plc and Savills Plc.
The fund will invest in and manage a diversified portfolio of affordable housing, comprising both affordable and social-rent homes as well as shared-ownership homes. It is designed for institutional investors seeking a low risk, inflation-linked income stream alongside a measurable social impact.
The fund aims to deliver a strong impact in line with the company’s impact thesis and ‘theory of change’, developed in conjunction with impact advisor The Good Economy.
That is that properties will be affordable to rent with a 20% or higher discount to market rates, including social-rent or shared ownership homes, with a focus on areas with high local authority waiting lists and areas ranked within the lowest 40% in the Index of Multiple Deprivation.
Furthermore, the fund will operate under enhanced governance frameworks and a sustainable investment strategy, targeting high environmental standards and progressing towards net zero by 2040.
Housing crisis
This comes at a time when the UK’s social and affordable housing market has seen a significant increase in institutional investment, due to the unprecedented demand for affordable homes and predictable long-term income streams which create a measurable impact.
Dominic Curtis, CEO at Simply Affordable Homes, said: “Whilst this sector remains a new area for many UK investors, we believe that our recent closing, from a wide variety of investors, shows that the characteristics of this sector merit consideration for a broad range of UK investors when constructing their portfolios.
“It demonstrates the aspiration to make an impact investment, which aims to make a real difference to people’s lives, whilst aiming to achieve a strong risk adjusted return for investors”
Currently, over £5bn is now actively invested in the UK’s social and affordable housing market, but the opportunity and need for affordable housing remains significant, according to Amelie Montague, investment director at Big Society Capital.
‘We have the opportunity to tackle the UK’s affordable housing crisis at scale through partners like the Simply Affordable Homes Fund,’ Montague said.
“Established investment managers with a differentiated product and strong impact objectives like Savills should play a key role in tackling the UK’s affordable housing shortage going forward,” she added.
Savills recently estimated that the shortfall in capital to address the country’s rental crisis is £250bn by 2031. Highlighting the breadth of opportunity available to investors.
Jamie Broderick, director of the Schroder BSC Social Impact Trust, an investment trust managed by Schroders and Big Society Capital, said: “As a shareholder myself in the Schroder BSC Social Impact Trust, I am really pleased to be able to participate in funding some of the most impressive and effective frontline social enterprises and charities delivering services to the people in the UK who need it most.”
Big Society Capital has invested in 14 high-impact UK housing funds over the last 10 years, which will deliver a combined 6,500 homes of which 76% are newly built and directly contributing to addressing the nation’s affordable housing crisis; 74% are in areas of ‘constrained’ affordability; and 87% are affordable tenure types.
