Investment Deep Dive
Social and Affordable Housing in the UK Understanding the market and enabling community-centred housing investment
Report by The Good Economy and OURI Labs
July 2026
Social and Affordable Housing in the UK 2
Foreword from Esmée Fairbairn Foundation
Esmée Fairbairn Foundation aims to improve our natural world, secure a fairer future and strengthen the bonds in communities in the UK. One of the largest independent funders in the UK, we provide £50m in grants each year towards a wide range of work in support of our aims. We also have a £60m allocation towards social investment (also referred to as impact-first investing) for organisations with the aim of creating social and environmental impact.
We commissioned The Good Economy and OURI for this deep dive, which focuses on the UK’s social and affordable housing crisis and the role that impact-aligned capital and community-led approaches can play in increasing the supply of homes in places with the highest need. It highlights the importance of the how as well as the how much. And that to create homes and places where people can truly thrive, communities must have a meaningful voice in shaping what is built and how it is managed.
In 2021, we established a £10m allocation for impact investing to test the potential for achieving financial returns through impact funds that align to our goals and which generate a measurable impact. We are building out our thematic-led investment strategy to explore how we might integrate Esmée’s strategy across our spectrum of capital. To help us do this, we are commissioning a series of ‘deep dive’ reports to explore investment opportunities for impact investing to address some of the most pressing challenges facing people and places today.
The report translates lessons from community-led models into practical principles for institutional investors, providing a roadmap for raising standards across the sector. It challenges all of us – funders, developers, policymakers, and investors – to shift from compliance-driven engagement toward genuine partnership with communities.
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State of the affordable housing crisis
Whilst the deep dive goes some way to plotting a way through for investment to contribute to these goals, we know a whole system approach is needed. We hope this work supports greater collaboration across the housing ecosystem and inspires more investors to embed community centred practice as a core part of their strategy. By doing so, we can help ensure that the growth of impact investment in affordable housing delivers not only more homes, but better homes – designed with and for the people and places they serve.
What is thematic investing Thematic investing intentionally directs capital towards defined objectives through a top-down, forward-looking approach. It engages with systems-level dynamics – such as emerging trends, structural shifts, and macroeconomic and political contexts – to support targeted sectoral or societal outcomes.
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 3
About this report
Written by The Good Economy and OUR I Labs, this report has a dual purpose. First, it sets out the systemic case for investment in social and affordable housing, alongside a map of the current landscape and opportunities. Secondly, it provides guidance and practical tools for investors to help make social and affordable housing more community-centred. These include: • A Spectrum of community involvement. • Principles for community-centred practice in social and affordable housing investment.
Disclaimer This report serves as a practical and educational resource. It should not be construed as promoting any specific investment products or opportunities and does not constitute investment advice or any other kind of advice. The contents of this report have been prepared in collaboration with a number of contributors (as listed in the Acknowledgements). Whilst the report was compiled with reasonable care, Esmée Fairbairn Foundation and the authors make no representation or warranty and assume no responsibility or liability for the accuracy or completeness of the information set out in it or for any use by any reader of the information set out in this report. Each reader of this report should take full responsibility for evaluating and acting on the basis of any information contained in it and should seek its own investment, financial, legal, tax or any other professional advice as may be necessary in relation to its specific circumstances.
The guidance and tools raise awareness of community-led housing models and their potential for greater investment.
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Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
About The Good Economy and Ouri Labs The Good Economy (TGE) is a leading independent impact advisory firm dedicated to building a fairer, more sustainable society. We have worked with over 150 clients and advised on more than £17bn AUM, helping organisations ensure finance and business play their part in addressing major social challenges by developing impact strategies and measuring, managing and reporting on real-world outcomes. We have a strong focus on housing – particularly affordable housing – and our clients span large institutional asset managers, private equity investors, specialist social impact investors, pension funds and developers across the UK and internationally. Our track record includes serving as Impact Advisor to several major social and affordable housing funds, acting as the technical secretariat for the Sustainability Reporting Standard for Social Housing (SRS), and jointly leading the Equity Impact Project with Better Society Capital. For this research, we partnered with OURI Labs, a startup urban health innovation lab committed to finding out how we can build our cities in a way to better serve communities and the planet. OURI Labs does this through participatory urban research and design which ensure that local voices are heard and integrated into the fabric of our cities. OURI Labs is committed to delivering work that helps to build an inclusive and resilient future for people and planet over the long-term by measuring and understanding impacts and outcomes – and then by facilitating reflective spaces to bring about aligned and strategic thinking.
Guidance for investors
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Social and Affordable Housing in the UK 4
Contents
Table of Contents
Foreword from Esmée Fairbairn Foundation
1
About this report
3
Executive summary
6
Section 1 Overview of social and affordable housing investment need and opportunity
Section 1: Overview of social and affordable housing investment need and opportunity 10 Section 2: Best practice principles for enhancing community engagement 35
State of the affordable housing crisis
Ma rket and investment landscape
Annex 1: The Spectrum of community involvement
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An overview, including its core challenges and systemic drivers
10
An overview mapping of social and affordable housing investing in the UK 24
Annex 2: Principles of communitycentred affordable housing investment
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Affordable housing need
11
Annex 3: Methods
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Challenges
Annex 4: Funds investing in social and affordable housing in the UK
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Structural drivers of the broken housing system
Annex 5: Esmée’s social and affordable housing portfolio 89 Acknowledgements
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Compatibility of social and affordable housing with institutional capital
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Mapping the UK social and affordable housing investment landscape
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Investment strategies
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Section 2 Best practice principles for enhancing community engagement in social and affordable housing investment
Embedding communitycentred appr oaches A deep dive into community-centred and community-led housing, including a Spectrum of community involvement ranging from conventional developer-led engagement to fully community-owned models 35 Strategic approach to prioritising community
36
Defining communitycentred approaches
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The Spectrum of community involvement
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Community-led housing context
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State of the affordable housing crisis
Guidance for Investors
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Practical principles and recommendations to help investors ensure funds or schemes align with best practice in social and affordable housing, while embedding a strong community-centred approach 45
Examples of good practice in communitycentred and community-led social and affordable housing investment 50 Legal & General Affordable Homes Fund (LGAH)
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Levers for community engagement
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Thakeham + Plunkett UK
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Principles for communitycentred practice
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Resonance Community Developers (RCD)
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WeCanMake
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Nudge Community Builders
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East Marsh United (EMU)
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Market and investment landscape
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Social and Affordable Housing in the UK 6
Executive summary
The UK faces a persistent social and affordable housing crisis. Millions cannot access homes they can afford, while many others live in housing that is expensive, insecure, or poor quality. Addressing this requires tens of billions in additional annual investment to deliver new homes and improve existing stock. Institutional capital is already playing a growing role in the sector and has the potential to accelerate delivery at scale. However, it is best understood as part of a wider system. Policy, public investment, and local partnerships shape whether private capital can scale and deliver lasting impact. How capital is deployed is therefore as important as how much. Different investment strategies shape levels of impact, additionality, risk, and return. Investment must be long-term, patient, and purpose-driven – grounded in local needs and shaped by meaningful partnership with residents and communities.
Purpose-driven institutional capital can play a critical role in addressing the housing crisis – but its effectiveness depends on investment strategy and deployment, with community-centred approaches key to managing risk and delivering lasting impact.
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State of the affordable housing crisis
Although awareness of the importance of community and resident engagement is growing, practice remains inconsistent – varying between actors and across the development and investment cycle. In many cases, engagement remains compliance-driven, while community-led housing models offer an opportunity to learn from and set best practice. No fund fully reflects best practice. However, leading funds are beginning to incorporate elements of resident-centred approaches, showing that stronger engagement can improve both social outcomes and long-term performance. This report bridges that gap. It identifies the key levers available to investors and sets out three themes, supported by practical tools, to help investors strengthen communitycentred approaches in social and affordable housing.
Tools in this report Market map
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Investment parameters
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Spectrum of community involvement
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Principles for communitycentred practice
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Theme 1: Improve access to high quality, sustainable, well-managed, affordable homes, informed by community engagement. Theme 2: Enable and empower community-led/owned housing models that provide quality, affordable, sustainable, safe homes. Theme 3: Advocate for and prioritise community-led approaches.
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Social and Affordable Housing in the UK 7
Key findings
Systemic change is needed • The UK social and affordable housing system is characterised by a structural mismatch between supply and need, driven by chronic undersupply and worsening affordability. These dynamics shape both the scale of investment required and the conditions under which capital can be deployed. State of the affordable housing crisis
Market mapping and investment strategy analysis • Purpose-driven institutional capital is playing an increasingly significant role in the sector. We identify: - 38 funds, managed by 29 fund managers1 - £6- 6.8bn deployed or committed2 • Investment strategies vary across the market. Choices around tenure, strategy, financing structure and route to affordable housing all influence the balance between impact, additionality, risk, and return. Market and investment landscape
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1 Capital basis varies by fund disclosure: 29 funds report capital deployed, 15 report capital committed, and capital figures are not available for 8 funds.
Community-ce nt red and community- led housing: current practice
2 Better Society Capital 2024 Market Sizing of the social impact investing market estimates the Social and affordable housing market to be £6bn, we estimate it to be £6.8bn based on capital deployed and committed. Where possible, we have used figures for capital deployed (£m) to best reflect the actual level of activity and delivery by funds. Where deployed figures were not publicly available, we have used capital committed as a proxy. For four funds, we were unable to identify a reliable deployed or committed figure.
• Approaches to resident and community engagement remain inconsistent. Funds have a range of levers to engage residents and communities and forge genuine partnerships, but few adopt a consistent, portfolio-wide approach to maximising these through what they invest in, how they invest, who they partner with, and how homes are developed and managed. • At the same time, elements of stronger practice are emerging within some funds, while community-led housing models demonstrate more comprehensive bestpractice approaches – embedding community influence across development, governance, and long-term stewardship. • The Spectrum of Community Involvement provides a framework for investors to assess their current approach, identifying ‘meaningful community partnership’ (Level 3 on the Spectrum) as an achievable and scalable standard for institutional investment. Embedding community-centred approaches
Market and investment landscape
Embedding communitycentred approaches
Practical tools to support decisio n- making • Levers investors can use across the investment cycle to enable institutional capital to flow toward housing that genuinely serves community needs. • Six Principles for Community-centred Investment provide a practical framework to support a shared understanding of what ‘good’ looks like in community-centred social and affordable housing investment. Guidance for investors
Guidance for investors
Case studies
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Social and Affordable Housing in the UK 8
Recommendations
1. Scale investment and embed a community lens
5. Further this research, including:
Increase allocation to social and affordable housing to help tackle the UK’s affordable housing crisis. Prioritise investments that integrate community-centred approaches across the investment cycle – from development through exit – ensuring housing aligns with local priorities and strengthens neighbourhoods.
• Explore funding options for community-led models: Where appropriate, investors such as Esmée should consider exploring blended finance approaches – combining grants, concessionary debt, and impact-aligned equity – to support community-led or owned housing.
3. Partner with community-led projects Where funds are limited in their ability to develop a community-led approach, seek to partner with community organisations to engage with and provide support to community-led projects.
2.Portfolio strategy Social and affordable housing funds should set a clear strategy for maximising impact for residents and communities – either through direct development and management of homes to best-practice standards, or by carefully selecting and working with developers and operators who prioritise strong approaches.
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4. Promote sector-wide best practice Advocate for a community-centred focus across the sector, leveraging influence to encourage high-quality, socially impactful delivery.
Market and investment landscape
• Develop best-practice guidance for investor-developer partnerships: Strengthen approaches to developer-led or partnered schemes (e.g. Section 106), ensuring investors set clear expectations that development partners embed best-practice community engagement across the development cycle. This should cover both risk management and how investors can use their levers to maximise impact. This area remains the least evolved within funds and has significant potential.
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Conclusion
The UK’s social and affordable housing crisis requires not only more capital, but better deployment of capital – aligned with local needs and embedded within a wider system of policy, public investment, and partnerships.
The frameworks and tools set out in this report are intended to support that shift – helping investors better recognise and act on the influence they hold, use their levers more effectively, and embed stronger approaches in practice.
This research highlights a clear opportunity for investors to strengthen how they invest: moving beyond compliance-led approaches towards more consistent, community-centred practice across the investment cycle.
We hope this report serves as a practical resource for Esmée and the wider investment community, supporting efforts to maximise the positive impact of social and affordable housing investment for residents, communities, and places.
How we define social and affordable housing The UK government defines affordable housing as: ‘housing for sale or rent, for those whose needs are not met by the market (including housing that provides a subsidised route to home ownership and/ or is for essential local workers).’ 3 This includes Social Rent, which is set well below market rents using a governmentbacked formula and is accessible to the lowest-income households; Affordable Contents
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Rent, which may be charged at up to 80% of the local open market rent; Shared Ownership; and other affordable routes to home ownership and discounted rents. Esmée considers it best practice to define affordability in relation to local incomes. Some community-led housing models may not deliver tenures as defined by the government, but often set affordability policies in the context of local incomes.
State of the affordable housing crisis
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The challenge is not only mobilising more capital, but ensuring it is deployed in ways that deliver lasting value for residents and communities. 3 MHCLG. National Planning Policy Framework. December 2024; amended February 7, 2025.
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Section 1
State of the affordable housing crisis
The UK faces a deep and enduring housing crisis, disproportionately affecting the most vulnerable in society. Good homes – goodquality, secure, affordable – are critical to our quality of life and overall wellbeing. This section reviews the scale of housing need and the structural drivers perpetuating housing insecurity, drawing on published research, government statistics, and sector reports. The overview focuses on England, where most social and affordable housing funds operate.
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Affordable housing need
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Challenges
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Structural drivers of the broken housing system
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State of the affordable housing crisis
Affordable housing need
Housing need in the UK is extensive and growing. Approximately 8.5 million people in England live in housing that is unaffordable, insecure, or overcrowded, including around 2 million children.4 The most vulnerable are most impacted, with 1.34 million households on Local Authority waiting lists – the highest number since 2014.5
Key pressures include:
8.5 million
126,000 households forced into temporary accommodation (TA) – increasing public spending while delivering negative outcomes for residents. Local authority spend on TA reached £2.8bn in 2024–25, more than doubling over five years.6
people in England live in housing that is unaffordable, insecure, or overcrowded Contents
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4 National Housing Federation. Let’s fix the housing crisis: Delivering a long-term plan for housing. 2024. 5 MHCLG, Social Housing Lettings in England, April 2024–March 2025 6 Shelter. Bill for homeless accommodation soars by 25%, hitting £2.8 bn. 2025. 7 OECD, Overview of Affordable Housing Indicators, 2021. 8 This is in line with the Affordable Housing Commission, which states homes are ‘affordable’ if housing costs represent no more than 33% net household income. Defining and measuring housing affordability- an alternative approach. Affordable Housing Commission, 2019. 9 ONS. Housing affordability in England and Wales: 2025. 10 JLL. JLL Residential Forecast 2025-2029. 2024. 11 Zoopla. Can rent; can’t buy – The affordability of renting and buying for workers across Great Britain. 2024. 12 MHCLG English Housing Survey 2023-24: Experiences of the ‘housing crisis’
Housing affordability: 20% of households spend over 40% of their income on housing, rising to 40% among low-income private tenants.7 These households risk being overburdened by housing costs, which we view as households spending more than 33% of their net income on housing costs.8 Since May 2022, rents have risen 25%, outpacing earnings which grew by 19% – creating an ‘affordability wedge’. House price to earnings ratios have almost doubled over 25 years, from 4.19 in 2000 to 7.6 in 2025.9 House prices are expected to further increase by up to 20% in the next five years.10
Market and investment landscape
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Working households affected: 40% of full-time workers cannot afford to buy a 2–3-bedroom home, while 27% cannot afford rental costs.11 These figures illustrate that housing insecurity and affordability issues extend beyond the lowestincome households, highlighting the systemic scale of the crisis.12
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Affordable housing need
Map 1 Geographical distribution of affordable housing need
Significant regional disparities of need exist: there are relatively more households on the social housing waiting list in the North West, South West, and South East, with particular concentrations in urban areas (see Map 1). Existing social and affordable rented stock does not align with these patterns of need, with many high-demand areas having a smaller share of such homes in the overall housing stock (see Map 2 on page 15).
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Social and Affordable Housing in the UK 13
Challenges
The UK’s housing system is failing to meet people’s needs, evidenced by three persistent challenges: 1. People lack access to homes they can afford 2. People live in poor quality, unsafe and unsustainable homes 3. Communities lack meaningful avenue to influence the places they live
13 Centre for Cities. The housebuilding crisis: The UK’s 4 million missing homes. 2023. 14 Ministry of Housing, Communities and Local Government. (2024, November 21). Affordable housing supply in England: 2023 to 2024. 15 Crisis, National Housing Federation and Professor Glen Bramley. Housing supply requirements across Great Britain: For low-income households and homeless people. 2018. 16 MHCLG. Affordable housing supply in England: 2024 to 2025. 2025. 17 ONS. Subnational estimates of dwellings and households by tenure, England: 2023. 2023. 18 Department for Levelling Up, Housing and Communities. (2024). Dwelling stock estimates: England, 31 March 2024. GOV.UK.
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Challenge 1: There are not enough homes people can afford Housing affordability: There is a chronic undersupply of genuinely affordable homes: 4.3 million homes (across all tenures) are estimated to be ‘missing’ from the national housing market, due to decades of under-investment and policies such as Right to Buy.13 Out of approximately 200,000 total new build completions in England in 2023–24 financial year, 4.9% (9,866 homes) were social rent.14
Long term erosion of social rent stock: Of the 25.4 million homes in England in 2023, 16.7% (4.2 million) are socially rented.17 This is a reduction from about 20% in 2000. Meanwhile, Affordable housing accounted for roughly 27% of all new homes delivered in 2022/23.18 This change is demonstrated in Figure 1.
Annual delivery falls short of need: Around 340,000 new homes are needed in England each year, including 145,000 affordable homes, 90,000 of which should be social rent.15 Last year, just 64,762 affordable homes completed.16
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Social and Affordable Housing in the UK 14
Challenges
Figure 1 England social/affordable home net additions, by tenure19 80,000
50,000
19 Based on data from: MHCLG, Ministry of Housing, Communities & Local Government (2018 to 2021) and Department for Levelling Up, Housing and Communities. Live tables on affordable housing supply: Table 1000: additional affordable homes provided by type of scheme, England. 2025.
40,000
Notes about the tenure type
70,000 60,000
• Intermediate Rent includes London Living Rent from 2017–18
30,000
• Prior to 2014–15, all shared ownership units are counted as affordable home ownership.
20,000 10,000
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Social Rent
London Affordable Rent
Affordable Rent
Intermediate Rent
Shared Ownership
Affordable Home Ownership
First Homes
Unknown Tenure
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2024–25
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• From 2020–21, it is not possible to break down units between Social Rent and London Affordable Rent funded through some Greater London Authority schemes. When this happens they will be counted against Social Rent. • London Affordable Rent was introduced as a tenure by the Greater London Authority in 2017–18 and is set according to details provided in the Greater London Authority funding guidance document.
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Challenges
Map 2 shows that the geography of existing social and affordable rented stock does not match with where need is the highest. In many areas with a higher relative number of households on the social housing waiting list (Map 1), the share of social and affordable rented homes makes up a smaller proportion of total housing stock.
Map 2 Geographical distribution of social and affordable rented households by local authority
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State of the affordable housing crisis
Challenges
Challenge 2: People live in poor quality, unsafe and unsustainable homes 20 Rolfe, S., Garnham, L., Godwin, J. et al. Housing as a social determinant of health and wellbeing: developing an empirically informed realist theoretical framework, BMC; Public Health 20, 1138 (2020). UKGBC, Health and Wellbeing in Homes (2016); WHO. WHO Housing and Health Guidelines. 2018. Faye Greaves and Laura Webb. Housing insecurity: impacts and solutions. 2025; Bukky Balogun, Felicia Rankl, Wendy Wilson. Health inequalities: Cold or damp homes. 2023; National Institute for Heath and Care Research, Exploring the impact of housing insecurity on the health and wellbeing of children and young people:a systematic review, 2023.
Many of England’s homes remain energy inefficient, unsafe, or below minimum living standards. Poor housing conditions increase health risks, including respiratory, cardiovascular and mental health impacts20 – as well as perpetuating societal inequality 21 and having ripple effects on people’s ability to work, be educated and live healthily, happily and productively. People are living in poor conditions. 15% homes in England fail to meet the Decent Homes Standard, while overcrowding affects 3% of households in England, or 9% in socially rented homes.22
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21 Shelter. Chance of a lifetime: The impact of bad housing on children’s lives. 2006.
Energy inefficiency drives fuel poverty: 28% socially rented homes are EPC D or below.23 This drives increased fuel costs, contributing to fuel poverty which affects 11% households.24
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22 MHCLG. Chapter 1: Housing quality. 2025. 23 MHCLG, Consultation on Minimum Energy Efficiency Standards in the Social Rented Sector in England, 2025.
15%
of homes in England fail to meet the Decent Homes Standard.22
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24 Rightmove. (2026, March 2). What’s the average UK energy bill?; Department for Energy Security and Net Zero. (2025, March 27). Annual fuel poverty statistics report: 2025 (2023 and 2024 data).
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Challenges
Challenge 3: Communities and residents lack influence and pa rticipation Meaningful participation can drive development and property management that empowers local people, responds to local needs, advances equitable outcomes, and creates homes and places that improve residents’ health and wellbeing. However, quality local engagement remains absent from much mainstream development. Local plans prepared by local authorities require consultation with the communities they affect, with developers often required to execute consultation for new housing schemes as a planning requirement. This is often procedural – satisfying statutory requirements without genuinely sharing decision-making power – reducing residents to passive or sometimes retrospective consultees rather than active partners in shaping their neighbourhoods.
25 London School of Economics and Political Science, Planning with Purpose: A values based approach to planning reform, 2025.
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Meaningful community engagement requires sustained human resources which can be in tension with development timelines or financial return expectations. This can lead to engagement being treated as a compliance exercise rather than a core part of value creation, overlooking the protective value of quality engagement and local collaboration. Community-led models demonstrate that upfront investment in relationships generates long-term financial resilience alongside stronger resident outcomes. By contrast, procedural approaches can lead to negative results, including homes that do not reflect local needs, lack of or inappropriate social infrastructure, reduced community cohesion, and eroded community trust. It can also increase the likelihood of objections and friction in the planning process, creating delay and uncertainty. • Just 2% of the public trust developers, while 14% trust local authorities.25
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2%
of the public trust developers
14%
trust local authorities.25
Community-led models demonstrate that upfront investment in relationships generates long-term financial resilience alongside stronger resident outcomes. Case studies
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State of the affordable housing crisis
Challenges
Engagement through ongoing property management is often top-down, rather than creating an equitable partnership with residents – despite policy change to improve resident feedback through the integration and delivery of Tenant Satisfaction Measures (TSM) for social and affordable housing: • The Social Housing (Regulation) Act 2023 aims to rebalance the relationship between social landlords and residents through a proactive approach to regulating consumer issues.26 The strengthened regulatory environment, including Awaab’s Law and the requirement to report against TSMs, has increased
pressure on landlords to prioritise housing maintenance. However, although good progress has started, repair backlogs remain and tenant engagement and data assurance systems require further development.27 • The latest TSM data highlights areas for improvement, with complaint handling satisfaction at 36% (median), indicating opportunities for landlords to strengthen their tenant engagement systems.28
The latest TSM data highlights areas for improvement, with complaint handling satisfaction at
26 National Housing Federation. (n.d.). Social Housing Regulation Act. 27 National Housing Federation. (2024, February 21). Knowing our homes: Housing associations’ current data collection practices. 28 Regulator of Social Housing. (2025, November 4). Tenant Satisfaction Measures 2024/25: Headline report.
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Alternative community-led and owned models – defined and explored in Section 2 of this research – have begun to emerge as a result of the failings mentioned, but remain a nascent area within the wider housing market. They face significant financial and operational challenges. Limited access to upfront capital makes predevelopment costs particularly difficult to fund, while reliance on volunteer or small-scale management constrains operational effectiveness. Regulatory and planning frameworks remain oriented toward conventional delivery models, creating structural barriers that inhibit scaling of more community-led models even as demand for affordable, community-centred housing grows.
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Structural drivers of the broken housing system
Affordable housing need – and the challenges behind it – stem from interconnected structural drivers that require systemic solutions. Investor interviewees described their portfolio-building challenges as the result of compounding pressures: tight macroeconomic conditions, increasingly strained viability, and a policy environment that is supportive but uncertain and fiscally constrained. In this context, delivering good quality, affordable and sustainable homes – while also meeting social value and biodiversity expectations – is increasingly difficult, with each requirement adding cost and forcing trade-offs.
Societal drivers Demographic pressures are intensifying demand for housing. • The UK population has grown by over 4.5 million over the last decade, driven by natural change and net international migration. This is equivalent to around a 7% growth in the total population.29 • Demographic changes, such as an ageing population, create demand for a wide variety of housing types. Around 33% more supported homes will be needed by 2040.30
Around
33% more supported homes will be needed by 2040.28 Contents
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See page 23 for footnote references
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State of the affordable housing crisis
Structural drivers of the broken housing system
Market and econom ic drivers Housing delivery faces acute viability challenges, driven by rising land, construction, and labour costs. • Housebuilding is only currently financially viable across half of England, and often in the least affordable areas for buyers.31 • Build costs rose 17% from 2022 to 2025, while sale prices increased by just 1%.32 Costs are expected to rise an additional 15% over the next 5 years.33 • Labour shortages drive increased costs and risk development delay – over 250,000 new construction jobs are estimated to be needed by 2028.34 • There is a declining market for Section 106 homes, leading to 17,000 stalled homes. Housing associations are unable to achieve viability, lack financial capacity, or are otherwise focused on bringing existing stock up to regulatory standard.35
• The viability shortfall for social rent is particularly profound: £18.83bn annual subsidy is estimated to be required to achieve 90,000 social rent homes delivered per year.36
These drivers are exacerbated by wider economic and financial pressures which have impacted the private sector and individuals alike, ultimately widening the gap between housing costs and household affordability.
• The UK mortgage market structure is a partial driver of house price inflation: recent analysis finds that since the mid1990s housing stock has grown faster than the number of households, yet real house prices and price-to-income ratios have roughly doubled, indicating that expanded, cheaper mortgage credit, and looser lending conditions have been capitalised into higher land and house values rather than improved affordability.37
• Housing has become financialised, with speculative investments driving extractive models, leading to poor outcomes and worse affordability for residents.38 • The financial capacity of housing associations has eroded over the last decade – driven by rising costs, higher borrowing costs, and real-time rent cuts which reduced revenues by approximately 15% between 2015 and 2024.39 • For individuals, high borrowing costs and mortgage rates – compounded by low wage growth – have squeezed buyers and renters.40
See page 23 for footnote references
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
State of the affordable housing crisis
Social and Affordable Housing in the UK 21
Structural drivers of the broken housing system
Policy drivers The current government has made housingled growth a strategic priority, targeting 1.5 million homes over the course of the parliament period. Key commitments include the Social and Affordable Housing Strategy41, wider housing reforms such as the National Planning Policy Framework, commitment to devolution and a new local plan system and £39bn Spending Review settlement.42 However, policy-driven challenges remain, adding uncertainty, cost and risk, and slowing development pipelines. • Capital grant has reduced over time, with government funding as a % investment falling to around 20%, from between 50–80% in the 1990s and 2000s.43 • Planning and regulation – including building safety requirements – are viewed as among the main challenges delaying development.44 On average, Section 106 planning permission took 515 days in 2024/25, up 20% over the last two years.45
• Decarbonising housing association homes is forecast to cost at least £36 billion.46 For new builds, building to Future Homes Standard is estimated to cost an additional 4–8%, while building to operationally net zero standard adds 10–14%.47 • Compliance costs associated with moving to a new Decent Homes Standard are estimated at over £800 million.48
• The Ministry of Housing, Communities and Local Government (MHCLG) is researching how best to establish permanent, secure government funding for the community-led housing sector. This builds on lessons from the now-closed Community Housing Fund, which was instrumental in providing finance for the community-led housing sector.
• Such costs have driven pressure to lower developer obligations for affordable homes – including London, where the requirement reduced from 35% to 20% in 2025.49 • Social Value is prioritised through the Public Services (Social Value) Act 2012 and HMT’s Green Book – however, in practice, its local implementation often reduces community consultation to a tick-box exercise. See page 23 for footnote references
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State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
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Social and Affordable Housing in the UK 22
State of the affordable housing crisis
Structural drivers of the broken housing system
Place- based dr ivers Places need holistic, local housing strategies, grounded in a data-driven understanding of what communities need and ensuring an appropriate tenure and affordability mix. As elected bodies responsible for preparing Local Plans and delivering key statutory housing functions including managing housing waiting lists, local authorities play a critical role in turning those strategies into reality. However, there is a place-based disconnect between affordable housing need (where demand is most acute), provision (where homes exist and are being built), and viability (where development is financially feasible). Planning for affordable housing should also consider integration with other tenures and affordability levels to promote social mobility, while aligning with local priorities, including growth and regeneration plans.
• The 20 biggest cities in England account for 43% of housing need and 90% of shortfall in England. London makes up 66% of this deficit. 50 Here, waitlists for family homes can exceed 100 years. 51 • Place-based drivers influence the viability shortfall of building Affordable homes and therefore the level of subsidy required52 – with build costs in many locations ultimately exceeding home values. • High land costs, particularly in the South East, and the speculative nature of land values are key contributors to the housing crisis.53 • Deliverable land is often restricted e.g. Flood Risk, Natural Landscapes, Sites of Specific Scientific Interest, Heritage Land and National Parks. 54
• Reduced funding and capacity have weakened local authorities’ ability to shape housing development and exercise strategic leadership over place. This has limited their capacity to ensure the right homes are built in the right places, alongside the infrastructure and services communities rely on, including schools, healthcare, transport, parks, libraries, arts and culture, and utilities. These interconnected drivers have produced a housing system where need continues to outstrip the capacity of existing delivery and funding routes, leaving a structural financing gap for social and affordable homes. Bridging this gap requires substantial new capital capable of underwriting affordable, decent, and safe homes at scale.
• The lack of coordination in housebuilding between neighbouring authorities is one reason for the national shortfall. 55 See page 23 for footnote references
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Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
State of the affordable housing crisis
Social and Affordable Housing in the UK 23
Structural drivers of the broken housing system
Foot not es Societal drivers 29 Based on data from: ONS. Population estimates for the UK, England, Wales, Scotland and Northern Ireland: mid-2024. 2025. 30 National Housing Federation, Supported housing in England: Estimating need and cost to 2040, 2024.
35 Home Builders Federation. (2024, December 17). 17,000 affordable homes stalled by lack of bids from housing associations.; Savills. (2025). Residential research update (October 2025). 36 Homes for People we Need: Making Social Rent Homes Viable, 2025. 37 Joseph Rowntree Foundation. (2023, February 23). Reboot: Building a housing market that works for all.; Positive Money. (2022, March). Banking on property: What is driving the housing affordability crisis and how to solve it.; Social Market Foundation. (2024, March). Home economics.
Market and economic drivers 31 Zoopla. Research: The viability of homebuilding and how we’re taking action. 2025. 32 Zoopla. Research: The viability of homebuilding and how we’re taking action. 2025.
38 UCL, The Demand for Housing as an Investment, 2024.
33 BCIS, Building forecast, 2025
34 Royal Institution of Chartered Surveyors. (2025, August 7). UK construction outlook stable with infrastructure leading growth amidst ongoing challenges.; Construction
Industry Training Board. (2024, May 15). Construction Skills Network industry outlook 2024–2028.
39 UK Parliament, Housing, Communities and Local Government Committee. (2025, March 7). The finances and sustainability of the social housing sector: Government response (HC 762).; National Housing Federation. (2024, September). Rent policy briefing. 40 Joseph Rowntree Foundation. (2024, March 4). Placing households at the centre of the economy.
Policy drivers
Place-based drivers
41 MHCLG, Delivering a Decade of Renewal for Social Housing, 2025.
51 National Housing Federation. Over a hundred years’ wait for a family-sized social home. 2025.
42 UK Parliament. (2023). Levelling-up and Regeneration Act 2023 (c. 55).; HM Treasury, Policy Paper: Spending Review, 2025.
52 Homes for People We Need. (n.d.). Interactive map showing social rent viability and subsidy requirements across England.
43 L&G and BPF. Delivering a Step Change in Affordable Housing Supply. 2022.
53 Centre for Cities. The housebuilding crisis: The UK’s 4 million missing homes. 2023.; Maya Singer Hobbs (Institute for Public Policy Research). Strategic planning for green prosperity. 2025.; Consortium of Associations in the South East. The Housing Challenge for the Next Government: Meeting the housing supply delivery gap. 2024.
44 Royal Institution of Chartered Surveyors. (2025, August 7). UK construction outlook stable with infrastructure leading growth amidst ongoing challenges.; Watling, S., & Breach, A. (2023, February). The housebuilding crisis: The UK’s 4 million missing homes. Centre for Cities. 45 National Housebuilding Federation. What is the timeframe for local authorities to agree community investment? 2025
54 Savills. Land Supply and Housing Need. 2024. 55 Savills. Land Supply and Housing Need. 2024.
46 National Housing Federation. (n.d.). Decarbonising the housing association sector: Funding options report. 47 Savills. (n.d.). The cost and premium for new eco-homes. 48 Ministry of Housing, Communities and Local Government. (2025, July 2). EHS briefing: Modelling a revised Decent Homes Standard for consultation. 49 Support for housebuilding in London: package of support – GOV.UK. 50 Savills. Land Supply and Housing Need. 2024.
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State of the affordable housing crisis
Market and investment landscape
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Case studies
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Market and investment landscape
Social and Affordable Housing in the UK 24
Market and investment landscape
An additional £34bn is needed each year to meet society’s long-term need for affordable homes, with institutional capital wellpositioned to play a key role. While debt is readily available and has historically been the main source of financing, non-profit registered providers56 (RPs) are near borrowing limits meaning there is a need for £10 billion new equity and £9–14bn of additional subsidy per year.57
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State of the affordable housing crisis
56 A registered provider (RP) is an entity providing social housing in England that is registered with the Regulator for Social Housing (RSH). 57 British Property Federation. (2022, February 28). Delivering a step change in affordable housing supply.
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Compatibility of social and affordable housing with institutional capital
25
Mapping the UK social and affordable housing investment landscape
27
Investment strategies
32
Case studies
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Social and Affordable Housing in the UK 25
Market and investment landscape
Compatibility of social and affordable housing with institutional capital Long-term, patient, purpose-driven investment is needed to stabilise housing supply and deliver homes that are affordable, decent, and safe. Investors we interviewed highlighted that the income profile of social and affordable housing is uniquely compatible with institutional capital. This opportunity must be understood as more than a conventional real estate or asset creation proposition: it is an investment in foundational social infrastructure – the base from which we live, work, and participate in our communities. Given the supply-demand imbalances in the affordable housing market, there is a growth opportunity for investment which is well-aligned with long-term institutional investment. Chronic undersupply, government policy support, and worsening affordability have created strong, long-term demand fundamentals. These conditions underpin stable, inflation-linked returns with measurable social impact. At the same time, they mean institutional capital can act as a critical lever in addressing the UK’s affordable housing gap. How these funds are
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State of the affordable housing crisis
structured, governed and held to account will therefore play a central role in determining whether new capital genuinely increases affordable housing supply, reaches areas with the greatest need, and improves outcomes for residents.
58 British Property Federation. Affordable housing partnerships: Catalysing investment in social housing. 2023. 59 Impact Investing Institute, Investment Case for Social and Affordable Housing in the UK, 2021 60 British Property Federation. Affordable housing partnerships: Catalysing investment in social housing. 2023.
Oppor tunity Affordable housing investment can deliver long-term, inflation-linked cash flow, and strong social impact performance (including improved wellbeing, greater sense of community, regeneration, and localised economic development).58 Investor interviewees consistently framed the investment case as a ‘both/and’ – responding to the social imperative of addressing the affordable housing and cost-ofliving crisis, while securing stable, index-linked income returns. This echoes evidence from the wider sector.59 Social and affordable housing is broadly comparable to other housing-backed real asset strategies, particularly build-to-rent, given its long-term income-producing characteristics. However, its risk-return profile is distinct: it may offer a return discount to higher-risk, market Market and investment landscape
Embedding communitycentred approaches
facing residential strategies, but is generally viewed as more stable due to regulated rents, high occupancy, and, in some cases, governmentbacked income streams. Partnerships between equity investors and housing associations can improve capacity (constrained by economic conditions as discussed above) to enable growth and support the development of new social homes in line with their charitable objectives.60 Investor interviewees consistently framed the investment case as a ‘both/and’ – responding to the social imperative of addressing the affordable housing and cost-of-living crisis, while securing stable, index-linked income returns.
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Compatibility of social and affordable housing with institutional capital
Risks Investment in social and affordable housing is generally viewed as low-risk due to continuing market demand as a result of persistent undersupply. Moreover, social and affordable housing funds can diversify investor portfolios as they have a low correlation to economic growth and broader real estate, and provide long-term index-linked income.61 The primary risks are economic (linked to long-term viability of schemes), regulation, reputation, financial, and partner of choice.62 In terms of impact risk63 – the likelihood that resident, community, or sustainability outcomes are not achieved as intended – we view the following as most material: • Community participation/inequity risk: Without embedded mechanisms to listen to and act on resident and community feedback, funds risk failing to meet local needs and reinforcing inequities.
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• Alignment/evidence risk: funds require robust impact measurement aligned with best practice to ensure impacts and risks are assessed alongside financial performance throughout the investment cycle, with strategies aligned to long-term, patient capital.64 • Unexpected/external risk: Given the wider dysfunction in the housing system and persistent viability pressures, funds may face impact trade-offs at scheme or portfolio level to achieve viability. Further benefits and risks of different investment strategies within social and affordable housing strategies are examined on page 33.
Given the supply-demand imbalances in the affordable housing market, there is a growth opportunity for investment which is well-aligned with long-term institutional investment.
61 Better Society Capital. Mapping the Market: UK Social and Affordable Housing Funds. 2021. 62 British Property Federation. Affordable housing partnerships: Catalysing investment in social housing. 2023. 63 Impact Frontiers, Ten Categories of Impact Risk 64 British Property Federation. Code of governance for for-profit registered providers of social housing. 2024
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Social and Affordable Housing in the UK 27
Mapping the UK social and affordable housing investment landscape Over the past decade, the role of institutional investment in social and affordable housing has increased substantially. Our research identified 38 specialist affordable housing funds managed by 29 fund managers.
Funds investing in Affordable Housing
38
Managers range from large-scale asset managers (e.g. Legal and General, CBRE Investment Management), to smaller specialist and impact-led fund managers (e.g. Thriving Investments, Gresham House, Resonance). Whilst social and affordable housing is already recognised by many mainstream investors as an investible proposition, significantly more capital will be needed to meet the scale of housing need. Crowding in this capital will require a supportive policy and planning environment, increased public and catalytic funding to bridge viability gaps, and phased investment approaches that allow more cautious investors to build exposure over time.
funds, managed by
29
fund managers Estimated
£6- 6.8 billion 6-8%
Common characteristics:
capital deployed or committed65
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typical annual, net, unlevered return expectations
State of the affordable housing crisis
UK Mixed focused tenure (usually England)
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portfolios
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Guidance for investors
65 Better Society Capital 2024 Market Sizing of the social impact investing market estimates the Social and affordable housing market to be £6bn, we estimate it to be £6.8bn based on capital deployed and committed figures, based on publicly available sources including news articles and impact reports published between 2022 and 2026. Where possible, we have used figures for capital deployed (£m) to best reflect the actual level of activity and delivery by funds. Where deployed figures were not publicly available, we have used capital committed as a proxy. For four funds, we were unable to identify a reliable deployed or committed figure and these have therefore been excluded from the market mapping diagram.
Case studies
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Market and investment landscape
Social and Affordable Housing in the UK 28
Mapping the UK social and affordable housing investment landscape
Fund managers deploy capital through a range of strategies (see Figure 2 – Market map), typically via pooled fund structures. Investment is channelled through equity or structured debt into institutionally funded RPs (commonly referred to as For Profit RPs) or developers. For underlying investors, these funds are a way of meeting fiduciary responsibilities to deliver returns – ultimately for pensions or an endowment – by accessing stable, index-linked income streams such as those offered by investments in social and affordable housing.
Affordable housing in England has traditionally been delivered by non-profit RPs, which account for around 80% of affordable housing delivery.66 However, due to the challenges outlined previously, institutional investors are stepping in, with institutionally funded RPs as the vehicle for investment in affordable housing:
70%
• The private sector now delivers around 44% of affordable housing, funded through Section 106 agreements.
of capital to build social and affordable housing now comes from private funds, up from 30–40% in the 2000s.
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• 79 institutionally funded RPs were registered with the Regulator of Social Housing, delivering over 20% of sector growth in 2024–25 (October 2025).67 • 70% of capital to build social and affordable housing now comes from private funds, up from 30-40% in the 2000s.68
66 MHCLG. Delivering a decade of renewal for social and affordable housing. 2025. 67 Based on data from: RSH. Registered providers of social housing – updated monthly. Updated 20 October 2025. 68 Impact Investing Institute, Investment Case for Social and Affordable Housing in the UK, 2021 69 British Property Federation: Code of Governance for For Profit Registered Providers, 2024.
• Partnerships between institutional investors and non-profit RPs are expected to provide over 30,000 affordable homes over three years – almost 20% of all new delivery. 69
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Social and Affordable Housing in the UK 29
Mapping the UK social and affordable housing investment landscape
Evidence suggests that for typical social and affordable housing funds, schemes funded by equity investors are financed through: 70 • Section 106 – 51%
At the transaction level, funds primarily finance through two routes:
Forward fund new developme nts:
• Grant funding – 28% • Zero grant or Section 106 requirement – 21% This highlights how institutional investors are bringing new capital into the sector, which is particularly important at a time when the absence of a RP buyer is leaving many Section 106 homes unsold and uncontracted.71
Most significant contribution to increasing the supply of affordable housing, as funds take on the development risk.
Acquire and convert exist ing st ock: Drives additionality by converting non-affordable homes into affordable homes, increasing supply within existing stock. A significant portion of acquired stock consists of such conversions.
70 The Good Economy and Better Society Capital. The Impact of Equity Investment in Affordable Housing – Sector Insights Report. 2025. Note the sample used in the report covers only six fund managers. 71 Home Builders Federation, Uncontracted Section 106 Affordable Homes: October 2025
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State of the affordable housing crisis
Market and investment landscape
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Market and investment landscape
Social and Affordable Housing in the UK 30
Mapping the UK social and affordable housing investment landscape
Our mapping includes investment funds that invest exclusively in social and affordable housing, as well as those where it forms part of their wider housing or real estate portfolio. This spans a range of tenures, including community-led and supported housing, alongside more traditional tenures such as social rent, affordable rent and shared ownership. We exclude funds without a significant focus on social and/or affordable housing, as well as LGPS co-investment vehicles and funds focused on land acquisition. Figure 2 on the next page provides a snapshot of the market, with a full list of funds in Annex 3.
Recent trends point to growing regional and thematic specialisation, with more funds targeting particular geographies, tenures, or sub-sectors such as supported housing and key worker homes. At the same time, the market is consolidating, with a smaller group of managers running multiple, larger strategies on behalf of a broad range of institutional clients. These managers are increasingly using their scale and expertise to drive operational excellence and environmental efficiency across portfolios, underlining why institutional capital is particularly well suited to supporting the long-term performance and resilience of social and affordable housing.
All 38 funds mapped rely on institutional capital, with around two thirds funded solely by institutional investors. The remaining funds combine institutional capital with investment from family offices, high-net-worth individuals, and retail investors for publicly listed investors. Almost all investors manage capital for multiple institutional client types. Pension funds are the most common investors including Local Government Pension Scheme (LGPS) as well as Defined Contribution pension funds, present in around 70% of funds, typically invested alongside other institutional investors (e.g. insurers), and for a smaller subset, foundations and charitable investors.
Of the
38 funds mapped, all rely on institutional capital.
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Social and Affordable Housing in the UK 31
Market and investment landscape
Mapping the UK social and affordable housing investment landscape Figure 2 Market map of funds investing in affordable housing. A list of all the funds is in Annex 4. 650
Committed – open Committed – closed
600
CBRE Investment Management – Strategy A
Deployed – open Deployed – closed
550
Deployed – REIT 500
Legal & General – Strategy A
450 Patrizia Sustainable Communities Fund
AUM value (£m)
400
Man Group – Strategy A
350
300
PGIM Real Estate - Strategy A
Octopus Investments – Strategy A
M&G Investments – Strategy A
ReSI REIT
250
200 Gresham House, Thriving Investments –
150
100
50
AEW – Strategy A
Strategy A Real Lettings Property Fund II Social and Sustainable Housing I
Thriving Investments – Strategy A
Social and Sustainable Capital - Strategy A
Gresham House – Strategy A Big Issue Invest – Strategy A
0 Community-led
Supported
Affordable
Mixed social/ affordable/supported
Mixed housing including affordable
Mixed real estate including community-led
Mixed real estate including affordable
Tenure type
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State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
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Social and Affordable Housing in the UK 32
Market and investment landscape
Investment strategies
In social and affordable housing investments, decision-makers consider a range of investment parameters that shape a fund’s impact, additionality, return profile, and risk. While funds backed by Esmée will maintain a diversified portfolio, they should also actively apply the strategies outlined on the next page to ensure investment is directed where it can achieve the greatest impact while balancing return and risk requirements.
Investment parameters Tenure Supported Housing/Temporary Accommodation/Affordable/Social Rent, Discount Market, private rentals set at affordable levels, affordable community-owned models Strategy Core, core plus, value-add, opportunistic
Most social and affordable housing funds focus on equity investments. Debt strategies would typically be expected to generate lower returns than equity, reflecting their priority in the capital stack and lower risk position. However, this varies by strategy: higher-geared or development-focused debt can take on more equity-like risk, so leverage and the underlying exposure of debt funds should be assessed carefully.
Finance Equity, debt, blended finance, etc.
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Executive summary
State of the affordable housing crisis
Route to affordable Tenanted acquisitions/Land-led (grant) The table on the next page outlines key investment strategies in social and affordable housing, highlighting how different approaches shape impact, additionality, risk and return.
Embedding communitycentred approaches
Guidance for investors
Case studies
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Social and Affordable Housing in the UK 33
Market and investment landscape
Investment strategies
Consideration of investment parameters Impact
Additionality
Return
Risk
Affordable housing delivers positive societal impact when risks are managed. Vulnerable groups benefit most from specialist supported housing, temporary accommodation, and Social Rent. Other models (affordable PRS or communityowned housing) may not reach low- or middle-income households, depending on design.
Mixed portfolios are expected, but setting KPIs (e.g. % Social Rent) maximises additionality by supporting delivery of an under-supplied tenure.
Funds delivering Shared Ownership, Affordable Rent and (usually a small proportion of) Social Rent: Approx. 7–9% return
Mostly low risk, considered relatively resilient to economic externalities.
Strategy
Delivering or improving homes to a good quality, safe and sustainable standard while maintaining affordability has a positive impact.
Capex to achieve a standard above legal minimum (e.g. sustainability/quality) achieves good additionality.
More active strategies (e.g. value-add) typically generate higher returns.
Higher risk for more active strategies, due to greater exposure to economic, market, planning, cost, and operational uncertainties. Such strategies may put resident affordability at risk if extractive and high costs are recouped through unaffordable rents.
Finance
Different financing structures enable different impacts. Debt can be recycled so development finance reinvested may compound impact and get more homes built; equity can give levers to push for quality and long-term stewardship.
Blended structures that enabling otherwise unviable investment is highly additional. Equity typically offers stronger levers than debt.
Strategy dependent.
Equity generally carries more risk than debt, but the level of risk depends heavily on the investment strategy and context. E.g. equity in tenanted schemes may be lower risk than development debt on a speculative site.
All routes to delivering affordable homes are positively impactful to residents and communities.
Low – Tenanted acquisitions.
Forward-funding developments can offer higher returns; however, mixed portfolios with tenanted acquisitions help manage the Fund’s risk, return profile, and cash flow.
Tenure
Route to affordable homes
Funds delivering specialist supported housing may have a higher return profile (low double digits).
Medium – Policy-mandated affordable (S106) with competitive bidders for sites. High – New non-mandated Affordable/ market homes converted to Affordable/ S106 at risk of stalling.
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Market and investment landscape
Blended finance may enable finance at more concessionary rates, e.g. for community-led models.
Embedding communitycentred approaches
Specialist supported housing/temporary accommodation carry more risk due to more operational complexity (care), regulatory scrutiny, reputational risk, and void risk.
New development carries significant risk, particularly in the current development market (See pages 20 to 21). Less risk when investing in later stages – e.g. S106 where planning is improved/wider development. Tenanted acquisitions are usually lower risk – assuming adequate safety and quality standards.
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Social and Affordable Housing in the UK 34
Market and investment landscape
Mapping the UK social and affordable housing investment landscape
Money flows in the social and affordable housing system Asset Owners
Invest/Joint venture Invest
Invest
Asset Managers
Invest
Developers
Section 106 contribution (cash / in-kind)
Registered Providers
Invest/Joint venture Housing Benefit payment (historic)
Partner
Regulator of Social Housing
Oversight Grant/guarantees/ Strategic Partnerships
Manage homes
Homes England
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Universal credit
Department of Work & Pensions
Residents
Grant/concessionary finance
State of the affordable housing crisis
Local Authorities
Community-led housing organisations
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Guidance for investors
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Social and Affordable Housing in the UK 35
Embedding community-centred approaches
Section 2
Embedding communitycentred approaches There is good awareness of the need to engage residents and communities through social and affordable housing funding and delivery – and emerging understanding of the value this can bring. However, moving from aspiration to action requires investors to understand the practical pathways for and financial viability of supporting communitycentred approaches across a Spectrum of community involvement. This section sets out three investable themes, which should be supported by the Spectrum of community involvement and the examples and experience of community-led housing.
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State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Strategic approach to prioritising community
36
Defining communitycentred approaches
37
The Spectrum of community involvement
39
Community-led housing context
41
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Social and Affordable Housing in the UK 36
Embedding community-centred approaches
Strategic approach to prioritising community
Asset owners like Esmée can play a meaningful role in tackling the shortage of social and affordable housing whilst prioritising community-centred approaches by employing a strategy across three themes.
People lack access to homes they can afford People live in poor quality, unsafe and unsustainable homes Communities and residents lack influence and participation
Note: Most social and affordable housing strategies include mixed portfolios which focus on increasing supply, improving stock and acquiring existing stock in order to achieve their impact and returns/risk objectives.
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State of the affordable housing crisis
Investible Themes
Approach
Demand and supplyside market drivers
Challenges
We see varying roles for different investors – for example, Esmée has more flexibility/impact-led funding so should focus on more transformative models (both in terms of community engagement and housing provision types), whereas investors with less flexibility should at minimum prioritise funds with meaningful community engagement strategies. We recognise supporting more transformative models may be challenging.
Structural Drivers
Market and investment landscape
Theme 1:
Theme 2:
Theme 3:
Invest in social and affordable housing funds that prioritise community-centred investment
Explore investment in community-led models
Advocate for and prioritise community-led approaches
Tools: • Market map • Spectrum of community involvement
Tools: • Principles for community-centred practice
Tools: • Community-led housing context
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Social and Affordable Housing in the UK 37
Embedding community-centred approaches
Defining community-centred approaches
We distinguish between two related but distinct con cepts:
Community-centred housing investment engages residents and the community in an intentional, meaningful way through development and operations.
Community-led housing For the purposes of this research, we align with the NPPF definition of community-led housing, in which housing is initiated and delivered by a democratically controlled, member-run not-for-profit to meet local housing needs (not maximise profit), with open membership and long-term ownership, management or stewardship of the homes. Common models include Community Land Trusts, housing co-operatives, and community benefit societies.72 Contents
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State of the affordable housing crisis
Community-centred approaches in social and affordable housing sit along a Spectrum of community involvement across development, operations and governance, defined by the extent to which communities shape and steward their homes and neighbourhoods. At one end, mainstream provision has typically involved limited engagement, with resident input largely confined to statutory consultation during planning. While some purpose-led developers and registered providers have long embedded stronger engagement, there is growing momentum to integrate meaningful participation across the investment cycle – from development through to long-term management and exit.
This shift is driven by increasing ESG expectations and policy initiatives requiring greater focus on social value and community outcomes. At the other end of the Spectrum, communityled housing models represent the most intensive form of involvement, with communities holding decision-making power throughout the development lifecycle and beyond. Practical approaches for supporting communityled models – including blended finance, specialist intermediaries and partnership pathways – are explored later in this section.”
72 Department for Levelling Up, Housing and Communities. (2024, December 12). National Planning Policy Framework: Annex 2: Glossary.
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Social and Affordable Housing in the UK 38
Embedding community-centred approaches
Defining community-centred approaches
This shift is driven by converging pressures: ESG requirements demanding greater demonstration of social value from investors and developers; and government initiatives, such as New Towns, requiring deeper understanding of community needs and ensuring higher standards for housing and community infrastructure.73
Practical approaches for investors seeking to support community-led models are explored later in this section, including blended finance structures, specialist intermediaries, and partnership pathways that enable institutional capital to align with community control.
Meanwhile in community-led housing, communities hold decision-making power at some or all points in the development lifecycle and beyond, representing the most intensive form of community involvement.74 73 The Good Economy. (n.d.). ESG reporting standard launched to unlock new wave of investment for social housing. 74 Delahunty, S. (2025, September 29). Sector responds to New Towns Taskforce recommendations. Inside Housing.
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State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Mainstream social and affordable housing investment can be strengthened by adopting best practices in community participation pioneered by community-led models. Likewise, some funds may have opportunity to support community-led housing through blended finance approaches and other emerging opportunities. We recommend additional research to explore what this could look like.
Guidance for investors
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Social and Affordable Housing in the UK 39
Embedding community-centred approaches
The Spectrum of community involvement
The Spectrum of community involvement is intended as a helpful tool for investors, developers and housing managers/RPs seeking to move beyond compliance-driven community engagement. Through interviews and workshops, we have developed a framework that presents five levels of community involvement, using the International Association for Public Participation (IAP2) framework as the basis. It ranges from conventional development (Level 5), where communities receive information only after key decisions are made, to fully community-led models (Level 1), where residents hold democratic control in perpetuity. In applying the framework, the definition of ‘community’ should be made clear at the outset and revisited across project stages (pre-development, development, operations, etc.) to ensure engagement reflects the wider local population, rather than a self-selecting group. The framework is designed as an aspirational tool to help institutional investors understand where their investments currently sit and how they might progressively strengthen community engagement. Contents
Executive summary
State of the affordable housing crisis
Our ambition: Level 3, meaningful pa rtnership, as the ‘new normal’ for social and affor dable hou sing investment We recognise the value and necessity of all levels and note that a fund’s ability to meet every criterion may be dependent on several factors (see Levers for community engagement); however, funds should strive to meet this ambition. Establishing Level 3 as the baseline creates a foundation for more transformative community-centred approaches to flourish, representing a necessary step change for the sector.
importantly, supporting the creation of places people want to live in. By establishing Level 3 as the baseline expectation, we create space for more transformative Levels 1-2 models to scale alongside mainstream investment. Level 4 is seen as the minimum fundable standard while Level 5 is viewed as not fundable. An overview of the Spectrum is on the next page, and a more detailed version is in Annex 1.
At Level 3, meaningful community engagement is both financially viable and delivers improved outcomes for residents, communities, and investors. A more hands-on approach may impact the return to investors in the short term, but will likely improve outcomes for residents and the local community. In the long term, it will likely protect investments by keeping homes lettable and minimising voids, and more
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 40
Embedding community-centred approaches
The Spectrum of community involvement
Inform Level 5
Consult Level 4
Involve Level 3
Collaborate Level 2
Empower Level 1
Most commonly seen in…
Standard commercial debt/ equity investors prioritising returns, traditional developers/ property managers with no or minimal social value strategy.
Institutional debt and equity/ developers/RPs/schemes with basic compliance-focused social value approach.
Community-centred impact funds/forward- thinking institutional investors, developers, RPs with embedded social impact strategies.
Split equity models/patient debt approaches with community-centred partnerships. Community benefit core to strategy.
Fully community-led -E.g. Community Land Trusts. May be supported by long term patient debt/alternative equity, social investors, grant.
Governance and decisions
Full control with developer/ investor/property manager. Community informed but unable to influence.
Full control with developer/ investor/property manager.
Established mechanisms to meaningfully engage community (e.g. consultation panels, stewardship bodies) in line with levers. Feedback loops embedded in decisionmaking structures.
Community holds Board seats (minority/equal representation). Formal partnership agreements in place.
Community designs, owns, manages or stewards homes. Democratic member-based structure. Community has final decision-making power over key decisions.
Approach
Focus only on tick-box requirements, which are poorly implemented. No feedback loops.
Mechanistic (some limited consultation in design, tenant satisfaction measures).
Strong partnership approach, including co-design, and involvement in management decisions and stewardship.
Structured shared decisionmaking embedded through development and operations.
Community initiates and controls process from development to stewardship.
Impact/Risk/ Return profile
Minimal positive impact, high impact risk for community. Typical target returns of ~6–8%. High development and returns risk due to lack of local buy-in (reputational risk).
Low positive impact, some impact risk. Typical target returns of ~6–8%. Limited meaningful community engagement so some development/returns risk stemming from lack of local buy-in.
Moderate positive impact, low impact risk. Typical target returns of 6–8%. Some costs to cover policies that ensure genuine affordability and quality engagement. Low development/return risk.
High impact, low impact risk. Sub-market returns (3–8%, structure-dependent). Moderate development and return risk due to partner tensions and limited track record.
Transformative impact, low impact risk. Moderate/high development and returns risk (delivery model dependent). Grant/concessionary debt at 0–3% but blended/other innovative models vary.
Contents
Executive summary
State of the affordable housing crisis
Engagement through mandatory mechanisms only.
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 41
Embedding community-centred approaches
Community-led housing context
Community-led housing has emerged as a grassroots response to the failures of the conventional housing system– notably the inability of many households to access local, secure, good quality, safe housing. These models restore resident agency in housing delivery and long-term stewardship – while offering practical mechanisms to deliver additionality and promote permanent affordability, community control, and place-based benefits. Community-led housing models represent Levels 1 and 2 on the Spectrum of community involvement.
Community- led ho us ing models provide:
Models and legal structures Community-led housing includes a range of models that give residents greater control and secure long-term affordability, including Community Land Trusts (CLTs), housing co-operatives, cohousing communities, and emerging organisations delivering mixed-use, neighbourhood-scale development. These models are typically established through legal structures such as Community Benefit Societies, Community Interest Companies, co-operatives, and charities, with governance, community control, and financial mechanisms varying across these structures.
1. Best-practice approaches to community partnership, placemaking and affordability that social and affordable housing investors can learn from (as demonstrated in the Spectrum and Principles).
2. A potential investable proposition for some impact-driven funders to explore through additional research. Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 42
Embedding community-centred approaches
Community-led housing context
Scale and trends Despite deep historical roots75 and distinct phases of growth in the last fifty years through policy support, institutional investment and legal recognition,76 community-led models remain a relatively small segment of the UK housing market.
There are approximately
However, there is strong potential to scale. The CLT Network has identified a pipeline of 278,000 potential homes based on market opportunity if specific scalable models and partnerships are implemented.78 Recent policy developments, including National Planning Policy Framework reforms introducing exception sites and council support for rural community-led development, have improved the environment for these models.79 However, structural barriers continue to constrain growth.
172,000
community-led homes in the UK, representing under
1%
of the total housing stock.77
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Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
75 The sector has developed through distinct phases of policy support and legal recognition. The roots of UK community-led housing trace back to the 19th century co-operative movement. [Birchall, 1991 DB Wiki, 2022] 76 The modern movement gained momentum in the 1970s–80s as an alternative to both private ownership and council-led social housing [Local Trust, 2021]. Institutionalised support- from the 1974–1988 cooperative grant programme (15,000 homes;~10% of the social housing capital budget at its peak) through to the 2017–2021 Community Housing Fund (over 4,000 homes delivered and a pipeline of over 23,000, mostly CLTs) demonstrates that when supported, community-led approaches can deliver at scale. 77 Smith Institute, 2015. 78 The Good Economy, & Community Land Trust Network. (2023). State of the community land trust sector 2023. 79 Community Land Trust Network. (n.d.). Groundbreaking NPPF update backs communityled housing.
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Embedding community-centred approaches
Community-led housing context
Why scale up community- led housing: positive impacts Community-led housing delivers both additionality and significant place-based social value. This includes empty homes, land that would not otherwise be developed for housing, stalled Section 106 affordable homes, and sites considered too small or complex for conventional development.
Community-led models have been associated with positive social impact across a range of areas, including permanently affordable housing, community wealth building, community cohesion and empowerment, and health and wellbeing in particular.81 The Spectrum of community involvement and Principles present community-led models as a highly developed form of community partnership, demonstrating practices that social and affordable housing investors can explore funding, or draw on to strengthen community outcomes within mainstream delivery models.
Approximately
80% of CLT homes deliver additionality where they would not have been built or brought back into use without CLT involvement.80
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Executive summary
State of the affordable housing crisis
80 The Good Economy, & Community Land Trust Network. (2023). State of the community land trust sector 2023. 81 The Good Economy. (2025, December). State of the sector: Community land trusts in Europe 2025.
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Embedding community-centred approaches
Community-led housing context
Scaling up community- led ho us ing Three interconnected changes would support scale-up: policy reform extending institutional funding access to accredited community-led organisations; land release mechanisms enabling systematic below-market acquisition by community organisations; and finance innovation to release patient capital. Community-led projects tend to require substantial upfront investment and support before generating returns, creating a viability gap that conventional finance struggles to address. Moreover, where ownership remains with the community for the long-term, alternative approaches are required from typical social and affordable housing funds.
Aggregation mechanisms offer a promising path to scale – such as the Mycelial Network which aims to enable pension funds to invest £20m or more into portfolios of community asset developers.82 Blended finance offers a structured solution to de-risking projects for both communities and investors while preserving community control. Capital types are layered to match project stages and risk profiles including pre-development grants to cover high-risk, early stage costs, concessionary land acquisition and development capital, and impact investment structures that enable community ownership to be maintained or regained over time, whether through community share offers, revenue-sharing arrangements or buyback provisions.
We recommend further research to explore financial innovations in this area, alongside continued advocacy to support the structural, cultural, and policy changes needed to create a more conducive environment for scaling.
82 Mycelial Network.
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 45
Guidance for investors
Guidance for investors This section outlines the levers that investors have at their disposal that can enable institutional capital to flow toward housing that genuinely serves community needs. Drawing on interviews with fund managers, developers, and community-led organisations, we present an initial set of Principles that could drive more community-centred practice.
Community-led development comes out of market failure. If the market was doing this well, there would be less need for other models. Workshop participant
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Levers for community engagement
46
Principles for communitycentred practice
48
Case studies
Annex
Social and Affordable Housing in the UK 46
Guidance for investors
Levers for community engagement
The development and delivery of housing – in particular social and affordable housing – brings the opportunity to engage and empower communities and residents at different stages. Funds have more/less levers or influence over this, depending on the point at which they invest. Most social and affordable housing funds have mixed portfolios, including: 1. ‘Land-led’ schemes they have developed on their own land (where they have most levers to push for quality community engagement) 2. Schemes they have forward funded developers to deliver (which may/may not have already gone through planning)
In addition, funds can use exit and long-term stewardship as a lever to deepen community benefit over time. Even where schemes are institutionally owned initially, investors can embed pathways for homes to transition toward community stewardship or ownership in the future – for example through community buyback options, staged transfers to CLTs or co-operatives, or blended finance structures that enable gradual local equity acquisition. Designing for this from the outset helps ensure community influence can grow beyond the fund’s hold period.
3. Acquisitions of existing stock – where they can only influence how residents and wider communities are engaged through ongoing asset management
Funds have mor e/ less levers or influence over engaging and empowering communities, depending on the point at which they invest.
Contents
Market and investment landscape
Executive summary
State of the affordable housing crisis
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 47
Guidance for investors
Levers for community engagement
Recommendation Land-led forward fund/purchase/commit
We consider best practice as Funds having an overarching strategy for engaging communities and residents across their portfolio, taking into account the levers they have through their investment decisions.
Developer-led forward fund/purchase/commit Acquisition
Stage
Planning/Design
Development
Ownership
Occupation
Exit
Opportunity
Community engagement shapes placemaking and housing design
Communities inform and benefit from the development process
Residents/ communities able to own, or benefit from ownership structure
Residents/ communities inform how homes and wider area are managed. Clear accountability for quality management
Impact protected in the case of an exit -e.g. ownership model, affordability for residents
Description
Land-led schemes: Fund can lever best practice directly
We have noted that funds typically have limited requirements when partnering with or acquiring schemes from developers, and recommend a best-practice guide to support with this.
Developer-led schemes: Fund can partner with quality developers and operators that prioritise best practice/try to lever best practice through partnership agreements (e.g. KPls) Acquisitions/schemes held after development: Fund can implement best practice for resident/ community engagement either directly (e.g. if its own RP manages schemes), or indirectly (through expectations of partner operators)
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 48
Guidance for investors
Principles for community-centred practice
The Principles for community-centred impact offer a framework for investors seeking to strengthen authentic community participation across their portfolios.
Our research found that while investors recognise the value of community participation, operationalising this commitment across diverse investment routes and partnership models presents practical challenges.
1. Understanding place-based needs
4. Affordability and anti-speculation
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
An overview of the Principles is on the next page, with more detail in Annex 2.
2. Meaningful community governance
3. Authentic participation across the investment lifecycle
5. Local wealth building and economic justice
Embedding communitycentred approaches
Guidance for investors
6. Long-term stewardship and community resilience
Case studies
Annex
Social and Affordable Housing in the UK 49
Guidance for investors
Principles for community-centred practice
Principle
Contents
Benchmark for Funds
Leadership
Questions
1. Understand place-based needs Investment is driven by where need is greatest, getting the right homes in the right places, not just market opportunity.
• Investment decisions and portfolio composition informed by local needs data (Waiting lists, deprivation, affordability ratios, local authority housing strategies) • Performance assessment maps investments against need and gaps • Development creates thriving, well-connected places with social infrastructure access and green spaces informed by meaningful community engagement
Portfolio, local needs assessments and developments co-designed
How does our investment strategy respond to place-based needs and aspirations?
2. Meaningful community governance Communities influence decisions across the investment lifecycle, with input reaching fund governance.
• Portfolio-wide engagement strategy and KPIs • Feedback loops embedded in Fund governance – including board oversight and consultation mechanisms in place for residents/community to inform decisions • Partner selection considers evidence of community engagement/resident satisfaction • Resident committees on larger schemes; satisfaction tracked and reported
Formalise community roles with influence over fund/scheme decisions
How does our fund ensure community voice influences investment decisions?
3. Authentic participation across the investment lifecycle Participation is embedded at all stages, tailored to investment route.
• Fund level community strategy in place articulating participation and partnership standards in line with investment levers (land-led, developer-led, acquisition) • Whole investment cycle (development, operations) embeds community participation • Inclusion strategy identifies, engages and supports under-represented groups • Participation performance monitored and reported, including feedback loops
Co-design as default for land-led schemes. Stewardship bodies across schemes
How does our fund strategy ensure meaningful community participation at all stages of the investment cycle?
4. Affordability and anti-speculation Affordability is genuine, targeted, and protected long-term.
• Clear tenure mix and rent-setting policies, including social rent prioritisation • Affordability tracking and targets to ensure genuinely affordable homes • Long-term affordability protections (25+ years) in place • Exit strategies safeguard affordability
Deeper affordability responding to local needs
What is our fund-level affordability strategy?
5. Local wealth building and economic justice Investment builds local economic opportunity and retains value locally.
• Procurement and local labour targets • Living Wage commitments • Social value embedded in partnerships • Partners engage local groups including SMEs, VCSOs, charities, etc.
Commit to ambitious local targets across portfolio
How does our portfolio strategy create local economic opportunity?
6. Long-term stewardship and community resilience Investment supports long-term community capacity, wellbeing, and climate resilience.
• Long hold periods (15+ years) • Asset management plans including social and green infrastructure • Dedicated budgets for community development • Resident participation in stewardship and improvement decisions
Ring-fence participatory budgets
How does our portfolio strategy build lasting community resilience through long-term stewardship and place-making?
Executive summary
State of the affordable housing crisis
Market and investment landscape
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Guidance for investors
Case studies
Annex
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Case studies
Case studies
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Legal & General Affordable Homes Fund (LGAH)
51
Thakeham + Plunkett UK
53
Resonance Community Developers (RCD)
55
WeCanMake
57
Nudge Community Builders
59
East Marsh United (EMU)
61
Case studies
Annex
Social and Affordable Housing in the UK 51
Case studies
Case Study
Legal & General Affordable Homes Fund (LGAH) LGAH is a mainstream institutional fund seeking to deliver affordable housing through a customer-centred approach that prioritises resident and community wellbeing. While it does not have a single overarching community strategy, many best-practice principles are embedded across its investment cycle and portfolio.
Spectrum position: Level 4: Consult, with elements of Level 3: Involve
~£1bn AUM, > 5,000 operational Affordable homes nationwide
Principles met: 1. Understand place-based needs 2. Meaningful community governance 3. Authentic participation across investment lifecycle 6. Long-term stewardship and community resilience
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
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Guidance for investors
Case studies
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Social and Affordable Housing in the UK 52
Case studies
Case Study Legal & General Affordable Homes Fund (LGAH)
Planning and developme nt
Allocat ion
LGAH’s land-led developments – currently around 2% of the portfolio – set a good benchmark for both process and product. LGAH engages with local authorities and is directed by their Local Plans to deliver developments that meet local needs. Its design guidelines require high-quality, tenure-blind homes, and include placemaking considerations that aim to drive positive wellbeing impacts and liveability. Developer-led acquisitions – such as forwardfunded section 106 schemes – make up the majority of the portfolio, which limits LGAH’s direct levers to shape community-centred approaches through development. LGAH aims to strengthen how it partners with developers, maximising local value through supply chains and exploring where its influence can embed stronger community practice. It acknowledges this strategy is emerging.
Residents are usually allocated to LGAH’s homes from Local Authority waiting lists after completion, meaning engagement to that point – through development – remains limited to the wider community rather than those who will live in the homes. LGAH’s allocation process is guided by the local authority but prioritises the creation of balanced communities by bringing together a diverse mix of resident profiles.
Contents
Executive summary
State of the affordable housing crisis
Operat ions Operational feedback loops are well established. The Fund tracks Tenant Satisfaction Measures as well as broader outcomes and satisfaction on move-in and after a year. It engages a Resident Panel, representative of the portfolio, whose insights on issues ranging from cost-of-living pressures to design preferences feed into Executive and Board decision-making. In addition, the Fund has expanded on-the-ground community engagement through inclusive resident events on larger schemes and by supporting resident-led wellbeing and social activities (e.g. talks, clubs), aimed at strengthening local connections and reducing isolation. Managing partners are Market and investment landscape
Embedding communitycentred approaches
monitored against KPIs including regulatory ratings and delivery of key landlord services. Outcomes are strong: resident satisfaction is above sector benchmarks, alongside a Net Promoter Score of +55.
Affordability is a clear strength LGAH applies a person-centred approach, testing rents against household-level affordability assessments, local market benchmarks and affordability for more vulnerable households, including comparisons to Local Housing Allowance. Portfolio tracking considers relative local need – such as deprivation and affordability – although scheme sourcing remains largely opportunistic. LGAH considers relative local need to support intelligence on future investment, understanding existing resident demographic and housing need to influence decisions on future affordable housing opportunities in the locality. Taken together, LGAH illustrates how a large institutional fund can begin to align a commercial model with community-centred practice and affordability safeguards, even where it does not control the full development process.
Guidance for investors
Case studies
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Social and Affordable Housing in the UK 53
Case studies
Case Study
Thakeham + Plunkett UK
Conventional developer partnering to shape community-owned infrastructure Spectrum position: Level 4: Consult, with elements of Level 3: Involve
Thakeham, a South East England housebuilder, has developed a partnership model with the Plunkett Foundation to embed community-owned businesses at the heart of new developments. While Thakeham operates as a conventional commercial developer, this collaboration demonstrates how mainstream developers can incorporate community ownership principles into market-rate and mixedtenure schemes.
Contents
Executive summary
State of the affordable housing crisis
Principles met: 1. Understand place-based needs 2. Meaningful community governance 3. Authentic participation across investment lifecycle 4. Affordability and anti-speculation 5. Local wealth building and economic justice 6. Long-term stewardship and community resilience
Market and investment landscape
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Guidance for investors
Case studies
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Social and Affordable Housing in the UK 54
Case studies
Case Study Thakeham + Plunkett UK
Structure and governance Thakeham leads on the design and delivery of market-rate and affordable homes, and national charity Plunkett UK provides expertise in community business and supports the establishment of community trusts and enterprises within new developments. The partnership aims to place community-owned facilities at the centre of schemes, with support for residents to develop democratic ownership and governance structures.
Finance and delivery model Sites are developed as standard commercial schemes, combining market-rate and affordable homes, often in partnership with housing associations for long-term management of affordable tenures. Community facilities, such as hubs or shared spaces, are designed, built, and fitted out by Thakeham, then gifted to the community, with development costs absorbed within the overall scheme. This is treated as an investment in placemaking and long-term value rather than a separate profit centre.
Contents
Executive summary
State of the affordable housing crisis
Community engagement and impact Woodgate at Pease Pottage is a flagship site in West Sussex, which exemplifies an ambitious approach to placemaking, with community at its heart. Framing a large village green, the development has a £1.5m Community Hub alongside a charity-run café and a communityowned shop that runs primarily for community benefit – with any profit being re-invested into the community. These facilities are centrally located, adjacent to a £4m primary school, also delivered by Thakeham. Unlike typical developments where amenities come later, Thakeham prioritised early delivery of key facilities – opening the primary school in 2021 and the community shop in May 2024.
This gives them the security and flexibility to decide what products to offer, with a high proportion of goods sourced locally. Thakeham gifted the Hub to St Catherine’s Hospice for a £1 peppercorn rent and all profits go towards supporting the charity. By engaging the rural community throughout all delivery stages of the community hub and shop, the scheme is making a real difference.
Early and ongoing engagement with residents informs the design and use of community facilities. Co-design processes help shape how spaces will be used and how community businesses can become viable, with continued support beyond initial house sales. An ‘infrastructure-first’ approach ensures community assets are delivered early, so residents experience tangible benefits upfront. The model illustrates how commercial To support the community-first approach, developers can seed community ownership and Thakeham worked with Plunkett UK to lead social infrastructure, even without retaining longengagement activities, exploring interest in a community business and offering practical guidance term ownership of the assets. to help launch it. Operated under a community benefit society model, the shop runs rent-free allowing residents to take on a long-term lease.
Market and investment landscape
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Case studies
Case Study
Resonance Community Developers (RCD) Enabling fully community-led housing at scale Spectrum position: Level 1 enabler (supporting community-led and owned projects) Resonance Community Developers (RCD) provides patient, flexible finance and wraparound support to enable fully community-led housing developments across England. RCD invests in a range of community assets, including sports and leisure facilities, renewable energy generation, and affordable community housing. Unlike institutional funds that own and manage affordable housing portfolios, RCD acts as a Level 1 enabler: it invests in Community Land Trusts, housing co-operatives and other community-led organisations where communities retain 100% ownership, democratic control and governance.
Contents
Executive summary
State of the affordable housing crisis
Principles met: Enables application of all principles within partner projects 1. Understand place-based needs 2. Meaningful community governance 3. Authentic participation across investment lifecycle 4. Affordability and anti-speculation 5. Local wealth building and economic justice 6. Long-term stewardship and community resilience
Market and investment landscape
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Guidance for investors
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Case studies
Case Study Resonance Community Developers (RCD)
Structure and role
Finance and delivery model
Impact and learning
RCD operates as a specialist investment fund within Resonance’s range of impact investing funds, with a predominant focus on community-led housing. It partners with community organisations that have strong local roots and governance but need support to access and structure appropriate finance.
RCD offers flexible, patient capital tailored to community-led projects, often blending repayable finance with grants and community shares. It provides hands-on support with project development, financial modelling, and governance, helping organisations reach investment readiness and move from concept to delivery.
RCD plays a catalytic role, bridging between community organisations and impact investors, and helping Level 1 projects access finance that would otherwise be out of reach. By backing models where communities retain full ownership and control, it supports the long-term stewardship of homes and places, fully aligned with the Principles of community-led and owned housing.
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Executive summary
State of the affordable housing crisis
Market and investment landscape
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Guidance for investors
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Case studies
Case Study
WeCanMake – Bristol
‘Urban acupuncture’ through community-led urban infill development Spectrum position: Level 1 Empower (Community-led and owned) WeCanMake is a Community Land Trust in Knowle West, Bristol, pioneering ‘gentle densification’ by unlocking urban infill sites – such as former garage sites, under-used carparks, gaps between buildings, and neglected land – to create permanently affordable social rent homes precisely where communities need them. It treats “homes as social infrastructure that are there to support life, not just make a profit”. It currently has a pipeline of secured land across four sites in Bristol, delivering 34 homes and 3 new community spaces.
Contents
Executive summary
State of the affordable housing crisis
Principles met: 1. Understand place-based needs 2. Meaningful community governance 3. Authentic participation across investment lifecycle 4. Affordability and anti-speculation 5. Local wealth building and economic justice 6. Long-term stewardship and community resilience
Market and investment landscape
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Guidance for investors
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Case studies
Case Study WeCanMake – Bristol
Structure and governance
Finance and delivery model
Community impact and learning
The model has a three-part structure, comprising a charitable community benefit society for land stewardship, a community interest company for development, and a construction company for delivery. It operates a democratic membership model that includes residents, place-based members, stakeholders, and investors. The organisation is in the process of becoming a Registered Provider to deliver social rent homes at greater scale. It is also developing a devolved co-operative model in which residents selfmanage their homes while the Community Land Trust retains ownership of the land to borrow against for further investment into community-led affordable homes.
The organisation uses a mix of 125-year, 999-year leases and freehold transfer on public land transferred at zero cost, where social value exceeds land value. It employs the MultiMax construction system, an open-source, homegrown timber kit-of-parts for low-rise housing, developed with Forestry Commission R&D funding and designed to meet the UK Net Zero Carbon Building Standard. The MultiMax system supports a ‘neighbourhood housing factory’ model, enabling local fabrication and skills development.
The Good Home Social Value Framework uses community-defined metrics at three levels – ‘Good for me’, ‘Good for neighbourhood’, ‘Good for planet’ – rather than relying on external indicators. It evidences social value of around £3,600 per square metre, approximately two-thirds higher than that achieved by commercial developers and exceeding build costs. Bristol’s land disposal policy is a critical enabler, using General Consents A&AE (2010) under the Local Government Act 2010 to value land for public policy outcomes rather than capital receipts, demonstrating that a clear legal route exists for below-market disposals when social value is prioritised.
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Executive summary
State of the affordable housing crisis
Market and investment landscape
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Guidance for investors
Case studies
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Case studies
Case Study
Nudge Community Builders – Plymouth
Community asset regeneration and permanent ownership Spectrum position: Level 1 Empower (Community-led and owned)
Principles met: Nudge Community Builders is a community benefit society regenerating Plymouth’s Union Street by acquiring derelict buildings and creating community-owned spaces. Founded by residents after over a decade of community organising, Nudge shows how permanent community ownership can transform neighbourhoods experiencing deep market failure and absentee ownership.
1. Understand place-based needs
Contents
Market and investment landscape
Executive summary
State of the affordable housing crisis
2. Meaningful community governance 3. Authentic participation across investment lifecycle 4. Affordability and anti-speculation 5. Local wealth building and economic justice 6. Long-term stewardship and community resilience
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Guidance for investors
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Case studies
Case Study Nudge Community Builders – Plymouth
Structure and governance
Finance and delivery model
Community impact and learning
The organisation recently changed to a charitable community benefit society (CBS) to reduce business rates, be eligible for gift aid on donations and manage their finances in ways that prioritise making a difference. It has 595 shareholder members, many brought in through accessible community share offers such as The Clipper, which attracted 185 investors with amounts from £50 to £100,000. Entry-level membership (at £5/month over 10 months) is deliberately accessible, with gifted shares awarded to volunteers – including people with experience of homelessness, prison, or recovery – to ensure inclusive ownership. The board, drawn from these members, meets monthly, and decision‑making is informal and values‑led, grounded in local community knowledge and relationships rather than rigid formal processes.
The organisation acquires long-derelict or underused buildings on Union Street and brings them back into community use. Flagship projects include Union Corner, a ‘community house-share’ hosting over 40 organisations annually and more than 1,000 soup kitchen sessions; The Clipper Inn, converted to two flats for separated parents; The Plot, a cluster of 17 small businesses including Jabulani, a food court for female entrepreneurs from minoritised communities; and the Millennium Building and C103, with plans for social housing and an urban farm. Buildings are purchased with short-term finance and refinanced through longerterm community shares or social finance. The organisation also received a £550,000 loan from a local businessman at 3%. Several are fully occupied but not yet contributing to core costs, highlighting the tension between asset-building and operational revenue.
The organisation provides mixed-use, communityowned spaces offering affordable premises for local enterprises, social activities, and services, while anchoring wealth locally. It has unlocked 25% of Union Street’s empty buildings (4,000+m2). Nudge participates in the Mycelial network, exploring how community organisations can ‘use their balance sheets smarter’ and create shared risk profiles attractive to lenders. This demonstrates both the potential of networked, community-led regeneration and the challenges of accessing larger-scale finance, with lenders such as Triodos typically interested only in deals above £3 million – a threshold many individual organisations struggle to reach.
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 61
Case studies
Case Study
East Marsh United (EMU) – Grimsby
‘Healthy forever homes’ that break cycles of poverty Spectrum position: Level 1 Empower (Community-led and owned)
Principles met: East Marsh United began in 2017 when 16 residents started meeting weekly, rejecting a top-down council approach. Through local conversations and street cleaning, they identified housing instability as a key barrier and developed a community-led housing model providing ‘healthy forever homes’ to break cycles of poverty.
1. Understand place-based needs
Contents
Market and investment landscape
Executive summary
State of the affordable housing crisis
2. Meaningful community governance 3. Authentic participation across investment lifecycle 4. Affordability and anti-speculation 5. Local wealth building and economic justice 6. Long-term stewardship and community resilience
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 62
Case studies
Case Study East Marsh United (EMU) – Grimsby
Structure and governance
Finance and housing delivery
Community impact and learning
EMU operates through two linked entities: East Marsh United, a company limited by guarantee (becoming a Charitable Incorporated Organisation/registered charity), and East Marsh Community, a community benefit society for housing. East Marsh Community has six board members, chaired by the CEO of EMU, with the community-led housing manager as the sole employee. East Marsh United has ten board members; all across both entities are local residents or organisations active in East Marsh. In 2022 they ran a community share offer which raised about £500,000, originally intended to buy and refurbish 10 houses (though rising prices meant they ultimately bought fewer). The organisations are also reviewing board representation to strengthen governance.
In its first phase (2019–20), Homes England funding was drawn down by the council to purchase and refurbish three long-term empty homes on Rutland Street, with refurbishment delivered by local organisations to retain local economic value. A subsequent community share offer raised £500,000, originally intended for ten homes but used to purchase seven due to COVID-related cost increases. A low-interest £500,000 loan from Esmée Fairbairn Foundation supported further acquisitions. The current portfolio comprises 16 homes (14 on Rutland Street), all purchased outright, contributing to a 100-year vision of owning 100 homes without remortgaging. The biggest funding gap remains refurbishment costs as EMU cannot access ECO4 or Homes England grants due to not being a Registered Provider.
Early evidence indicates improvements in residents’ health, education, and employment, with families experiencing better health and more stable school attendance once rehoused. Monthly tenant-led meetings foster mutual support, while community events, such as Christmas workshops, build social infrastructure around the homes. EMU demonstrates how permanently affordable, community-owned housing can anchor wider regeneration, providing a foundation for broader social outcomes.
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 63
Annex
Annex 1: The Spectrum of community involvement
64
Annex 2: Principles of communitycentred affordable housing investment 69 Annex 3: Methods
83
Annex 4: Funds investing in social and affordable housing in the UK 84
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Annex 5: Esmée’s social and affordable housing portfolio
89
Acknowledgements
91
Case studies
Annex
Social and Affordable Housing in the UK 64
Annex 1: The Spectrum of community involvement
Description/ decisionmaking
Inform Level 5
Consult Level 4
Involve Level 3
Collaborate Level 2
Empower Level 1
Market housing
Standard social and affordable
Meaningful partnership
Community centred partnership
Fully community-led
Developer/investor retains full control. Community receives information only after key decisions are made.
Developer/operator aligns with obligatory feedback mechanisms (e.g. TSMs). Community input gathered but limited influence.
Developer works with community throughout the process to ensure their priorities are understood and reflected in key decisions. Strategic and fiduciary decisionmaking remains with the investor/ operator, while ensuring structured opportunities for early and ongoing influence.
Shared between community organisation and institutional partner. The developer actively involves the community in each stage of development, with the community bringing forward solutions and innovations.
Communities have final decisionmaking power over key decisions (constrained by viability, policy, etc.). Partners implement what community decides.
Community holds board seats (minority or equal representation) with significant influence. Formal partnership agreements define decision-making.
Community organisation takes lasting role in ownership, management or stewardship of homes. Democratic memberbased structure. Asset lock mechanisms ensure perpetual affordability.
Where need is governed by local authority plans and planning priorities, build strong partnerships with local authorities to influence level of community engagement.
Governance structure
Contents
No community governance or feedback loop- developer/ investors retain full control.
Executive summary
No formal community governance role. Regulatory compliance drives engagement (TSMs, complaints procedures).
State of the affordable housing crisis
Market and investment landscape
Community/resident advisory board with formal input but no veto power. Regular structured engagement with decision-makers.
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 65
Annex 1: The Spectrum of community involvement
Community engagement and involvement
Inform Level 5
Consult Level 4
Involve Level 3
Collaborate Level 2
Empower Level 1
Market housing
Standard social and affordable
Meaningful partnership
Community centred partnership
Fully community-led
Planning phase consultation after site acquired
Engagement from early design stage, co-design principles applied
Joint site selection and feasibility
Community-initiated, communityled site acquisition and feasibility
Limited resident engagement during construction
Community input on design, materials, communal spaces
Shared decision-making throughout, community voice equal to institutional partner
Community control over key decisions, professional support procured by community
No ongoing engagement mechanisms
TSMs, complaints tracking, resident surveys (compliance-focused)
Resident involvement in management decisions, regular feedback loops genuinely inform operations. Ongoing property management should include a suitably local approach, including in-person contact.
Joint management structures, long-term partnership for stewardship
Fully community-managed in perpetuity, democratic decision-making structures
Minimal beyond housing provision. No community wealth building or long-term community stake.
Low – Participation often performative with limited community influence over design, management or long-term outcomes. No community wealth building.
Moderate – Input shapes project design and management approach, but community doesn’t benefit from asset ownership or longterm wealth building. Enhanced resident satisfaction and community cohesion.
High – Community builds capacity, shares in long-term benefits, has formal governance role. Local wealth retention through employment, supply chain. Asset benefits may have time limits or other legal protections.
Transformative – Builds community wealth and capacity in perpetuity. Asset locks ensure homes never become market-rate. Local democratic control, skills development, community-wide benefits. Profound health and wellbeing impacts.
Pre-development Mandatory requirements poorly implemented Development No community involvement
Operations
Impact level
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 66
Annex 1: The Spectrum of community involvement
Financial characteristics
Inform Level 5
Consult Level 4
Involve Level 3
Collaborate Level 2
Empower Level 1
Market housing
Standard social and affordable
Meaningful partnership
Community centred partnership
Fully community-led
Market-rate returns expected
Social/affordable rent levels per local guidance
Affordable tenure mix and measures to ensure genuine affordability
Genuine affordability mechanisms (often pegged to local incomes)
Rents typically 40–80% market rate or pegged to local incomes
Blended capital structures common (grants + affordable debt + impact equity)
Blended capital structures common (grants + affordable debt + impact equity)
Returns typically 3–8% depending on structure
May require 0–3% patient debt for viability if not partnered with housing association or developer
Standard commercial debt and equity Exit maximizes returns
Mix of affordable tenures common (Social Rent, Affordable Rent, Shared Ownership) Standard social housing returns (typically 6–8%) Institutional debt and equity structures
Returns typically 6–8% Additional engagement costs budgeted (~1% of development costs for social value action plan) May include community benefit agreements Institutional capital structures remain viable
Patient capital required (10–15+ year holds) Community benefit agreements embedded May include split equity models
Concessionary loans from social investors Longer-term capital (20–30+ year patient debt) Alternative equity models (e.g. Mutual Home Ownership) Asset locks and affordability mechanisms in perpetuity
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 67
Annex 1: The Spectrum of community involvement
Risk profile
Inform Level 5
Consult Level 4
Involve Level 3
Collaborate Level 2
Empower Level 1
Market housing
Standard social and affordable
Meaningful partnership
Community centred partnership
Fully community-led
Low-moderate. Standard affordable housing risks viewed primarily through developer/ operator lens. Regulatory compliance focus.
Low-moderate Authentic engagement can reveal issues early (risk reduction) but adds process complexity and timeline. Slightly longer development periods. Reputational benefits.
Moderate-high. Partnership tensions possible, capacity constraints in community organisations, longer development timelines (typically 1.5–2x standard). Policy/regulatory risks significant. However, 70% of delivered CLH schemes use this model demonstrating viability.
(from funder perspective): Moderate-high depending on model of delivery (moderate if partnered with developer or housing association, high if new market entrant delivering solo).
Development risk Moderate, linked to reputational risk.
Volunteer/community capacity constraints; More complex governance structures; Land acquisition often primary barrier; Multiple stakeholder/funder requirements; May be a limited track record for community organisation.
Impact Risk
Examples
Contents
High. Scheme unlikely to maximise benefits for community/residents including most vulnerable.
Moderate – low likelihood of schemes maximising benefit to marginalised groups
Low – Issues raised and addressed early.
Traditional volume housebuilders, PRS developments, standard market-rate schemes
Many institutional affordable housing funds; Standard housing association developments; S106 schemes with minimum consultation; Many existing FPRP models
Purpose-led developers with genuine Community Benefit Society co-design; Housing associations partnering with a housing with strong resident participation; association and institutional funder; Community Development Trusts Parish council working closely with partnering with developers; housing association to develop Enlightened institutional funds with affordable homes community engagement strategies
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Low if successful
Guidance for investors
Community Land Trusts, cohousing, housing co-operatives; Specialist developers e.g. igloo or TOWN; CLTs partnering with housing associations, facilitated by specialist enablers
Case studies
Annex
Social and Affordable Housing in the UK 68
Annex 1: The Spectrum of community involvement
Critical distinction
Inform Level 5
Consult Level 4
Involve Level 3
Collaborate Level 2
Empower Level 1
Market housing
Standard social and affordable
Meaningful partnership
Community centred partnership
Fully community-led
The majority of institutional affordable housing investment operates at Level 4-5 – particularly for developer-led investments. This represents current standard practice in the sector. However, this should not remain the norm. While Level 4 meets regulatory requirements, it fails to capture the benefits of authentic community engagement: improved design outcomes, stronger resident satisfaction, reduced management costs, and enhanced community wellbeing. The sector must evolve beyond compliance-driven engagement toward the meaningful partnership of Level 3.
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Enhanced engagement is embedded Community is an active participant in strategy, budgeted for – not just with formal governance rights, regulatory compliance. Processes for not just meaningful input. evaluation are established, focusing on Partnership is structural, not consultative. changes in outcomes. The fund acts as the steward from development Financing Approaches through operations – ensuring clear responsibilities for engagement at This level typically requires every step. The fund/developer specialised funds or actively seeks community input to partnerships: improve outcomes over the long-term. • Local authority partnerships • Foundation/endowment Pathway from Level 4 investment with patient capital Institutional funds can reach • Blended finance vehicles Level 3 through: • RP approaches where • Developing portfolio-wide community actively participates community engagement strategies • Partnering with community development organisations • Selecting partner RPs with a local presence or connection • Budgeting for authentic engagement processes • Including community engagement metrics in impact reporting • Training development partners on co-design principles
Embedding communitycentred approaches
Guidance for investors
Community has ownership and control, and has veto over key decisions. No institutional partner holds decision-making power. Asset locked in perpetuity. Financing Approaches Requires specialised vehicles: • Community-led housing pre-development funds • Blended finance with grant-toloan conversion • Local authority land disposals • Community shares and alternative equity • Foundations with patient capital mandates • Specialised social investors (e.g. BII CLT Fund) • Partnership models with RPs with shared governance, leaseholds, etc.
Case studies
Annex
Social and Affordable Housing in the UK 69
Annex 2: Principles of community-centred affordable housing investment Principle 1: Understanding place- based needs Portfolio-level definition: Fund investment strategy is informed by rigorous analysis of where need is greatest and what communities need, with portfolio allocation shaped by place-based priorities not just market opportunity. Benchmark for funds
Best practice for community-led models
Core
Enhanced
PORTFOLIO NEEDS ANALYSIS STRATEGY • Data-driven strategy: Portfolio strategy explicitly references: - Local Authority Strategic Housing Market Assessments - Waiting list data by ward/borough - House price to income ratios - Index of Multiple Deprivation • Annual portfolio review: Regular assessment of whether portfolio allocation aligns with greatest need • Investment decisions justified: Each significant investment accompanied by needs analysis explaining why this location, tenure mix, housing type. Where possible, draw on existing local authority evidence bases to ensure alignment with statutory planning and avoid duplication.
Contents
Executive summary
State of the affordable housing crisis
• Systematic need targeting: Portfolio explicitly targets highest-need areas with transparent methodology • Granular analysis: Mapping portfolio against Index of Multiple Deprivation, waiting lists, affordability ratios at local authority level • Local authority partnerships: Develop strategic partnerships with Local authorities in key areas informing investment pipeline • Community co-design: Investment strategy informed by consultation with community stakeholders
• Community co-designs needs assessment • Portfolio explicitly targets highest-need areas identified by communities • Investment driven by community vision not developer/funder opportunity • Developments create community hubs benefiting wider area • Deep ongoing partnerships with communities in all locations
• Aspiration alongside need: Investment considers what creates thriving communities not just responding to quantitative need
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 70
Annex 2: Principles of community-centred affordable housing investment
Principle 1: Understanding place-based needs Benchmark for funds Core
Enhanced
PORTFOLIO DESIGN STANDARDS • Tenure-blind design: Standard across portfolio (affordable housing not distinguishable from market) • Integration: Affordable housing distributed throughout sites, not concentrated in least desirable areas • Connection to community: Developments designed to connect to existing community infrastructure (pedestrian routes, public realm, local character)
Development strategy considers wider place-making: • Investment in social/green infrastructure between developments • Connections to local services, transport, community facilities • Contribution to neighbourhood improvement not just individual sites • Community facilities: Larger developments (100+ homes) include community facilities with local access
INVESTOR REPORTING Annual portfolio review analyses: • Portfolio location mapped against need indicators • Tenure mix vs. local needs • How investment responds to need gaps
Portfolio impact report shows: • Need targeting methodology and achievement • Place-making outcomes beyond housing units • Community facility provision and usage • Integration and social mixing outcomes • Independent assessment of place-making quality
Contents
Market and investment landscape
Executive summary
State of the affordable housing crisis
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 71
Annex 2: Principles of community-centred affordable housing investment
Principle 2: Meaningful community governance Portfolio-level definition: Funds have clear strategies ensuring communities and residents influence decisions across the investment lifecycle – from acquisition through to exit. Community feedback reaches fund governance level and demonstrably shapes strategy. Benchmark for funds
Best practice for community-led models
Core
Enhanced
FUND GOVERNANCE STRATEGY • Portfolio-wide policy: Community and resident engagement strategy exists applying to all investments, with clear minimum standards • Board oversight: Fund board receives annual reporting on community and resident engagement quality across portfolio (minimum: resident satisfaction, engagement metrics on land-led schemes, improvement plans) • Investment decisions: Community/resident engagement and satisfaction track record factored into acquisition criteria and partner selection. • KPI framework: Portfolio-level KPIs track engagement and satisfaction (e.g. % schemes with resident committees, average satisfaction scores, complaints response times)
Contents
Executive summary
State of the affordable housing crisis
• Community representation: Community representatives or lived experience experts participate in fund-level governance (e.g., advisory committee with formal input to board, community observer seats, lived experience panel). If not possible due to fund structure, ensure community representation through advisory groups or structured feedback mechanisms. • Investment strategy co-design: Major strategy decisions (e.g., geographic focus, tenure mix, partnership models) informed by consultation with community representatives
• Community representatives hold voting seats on fund board or Limited Partner Advisory Committee. • Democratic governance structures (one member, one vote) for community-controlled funds • Investment decisions ultimately controlled by community members • Fund strategy set by community priorities,
not purely financial optimisation
• Impact-driven decisions: Fund willing to proceed with marginal financial returns where community impact case is exceptional.
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 72
Annex 2: Principles of community-centred affordable housing investment
Principle 2: Meaningful community governance Benchmark for funds
Best practice for community-led models
Core
Enhanced
PORTFOLIO COMPANY REQUIREMENTS • All holdings must meet regulatory minimum: social value consultation commitments, Tenant Satisfaction Measures (TSM) compliance (housing associations), functioning complaints mechanisms • Track record of avoiding deeds of variation that reduce affordable housing on schemes unless critical to delivery • Target: 50%+ of schemes greater than 60 homes have active resident engagement structures (committees, panels, forums) within three years
• Enhanced standard: 80% of schemes have community advisory structures with documented influence on major decisions (capital works, service changes, rent policies) • Participatory budgeting: At least 25% of schemes use participatory approaches for design improvements • Resident satisfaction target: Portfolio average exceeds benchmark by +10% across key TSM/resident survey measures
• All holdings meet community-led criteria: community initiation, community governance, legally protected community benefit
• Annual report includes dedicated section on community and resident engagement: • Portfolio-wide satisfaction scores and trends • Evidence of community feedback influencing fund decisions • Community engagement challenges and remediation plans • Community governance metrics alongside financial performance
• Quarterly reporting to investment/ESG or Impact committee on community engagement alongside financial performance • Annual impact report includes: - Case studies of community influence on fund decisions - Independent community satisfaction verification - Resident voice (quotes, stories, testimonials from across portfolio)
• Regular reporting to community members (who are also fund governors) • Impact reporting prioritises communitydefined outcomes • Democratic accountability to residents, not just investors
Contents
Market and investment landscape
• Perpetual affordability and community stewardship models
INVESTOR REPORTING
Executive summary
State of the affordable housing crisis
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 73
Annex 2: Principles of community-centred affordable housing investment
Principle 2: Meaningful community governance Benchmark for funds Core
Enhanced
STRATEGIC IMPLEMENTATION • Fund team includes designated responsibility for community engagement oversight (could be within asset management, impact, or investment team) • Due diligence checklist including community engagement assessment • Partnership agreements specify engagement requirements and monitoring
• Community engagement budget as line item (0.5-1% of operational costs) • Regular (annual) community listening exercises across portfolio informing strategy
Contents
Market and investment landscape
Executive summary
State of the affordable housing crisis
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 74
Annex 2: Principles of community-centred affordable housing investment
Principle 3: Authentic pa rticipation across the investment lifecycle Portfolio-level definition: Funds require and enable authentic participation across all development stages in their portfolio, with investment route-specific strategies recognising different levers at different stages. Benchmark for funds
Best practice for community-led models
Core
Enhanced
PORTFOLIO PARTICIPATION STRATEGY • Route-specific strategies: Fund has clear participation standards for each investment route: 1) Land-led: Consultation before planning submission, multiple engagement rounds 2) Developer-led: Ensure developers have met social value/planning requirement to consult and incorporated feedback 3) Acquisitions: Engagement strategy and communication approach implemented on acquisition
Contents
Executive summary
State of the affordable housing crisis
• Co-design as standard: Land-led developments use co-design methodologies with independent facilitation • Community partnerships: Fund has ongoing relationships with community development organisations who support participation across multiple developments
Embedding communitycentred approaches
• Fund provides patient capital supporting community-led processes • Participation is inherent in democratic governance structure
• Participation innovation: Fund tests and shares innovative participation methods (digital tools, participatory budgeting, community design workshops)
Market and investment landscape
• Community initiates and leads all developments
• No pressure to compress timelines for financial reasons
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 75
Annex 2: Principles of community-centred affordable housing investment
Principle 3: Authentic participation across the investment lifecycle Benchmark for funds Core
Enhanced
• Minimum standards: All new developments include:
• Impact measurement: Post-occupancy evaluation standard (eg. Building Use Studies (BUS) methodology, Soft Landings, Design Quality Indicator, Quality of Life Foundation), across portfolio but also ensuring the measurement of wellbeing outcomes
- Pre-planning community engagement (where fund controls timing) - Minimum two rounds of design consultation with documented iterations for land-led and forward-funded schemes. For Section 106 and acquisition only routes, focus on enhancing operational engagement and post-occupancy feedback. - Construction phase community liaison - Post-occupancy evaluation (within 12 months) • Inclusion commitment: Portfolio-wide commitment to reaching underrepresented groups (with specific strategies varying by location)
• Partner selection: - Preference for developers with strong participation practice - Fund may co-fund community engagement specialists to support those with less participatory practice within their developments
• Partner selection: - Due diligence assesses developers/operators on participation track record and local presence in the area of the scheme - Partnership agreements include participation requirements with performance monitoring - Poor participation performance triggers remediation or partner review
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 76
Annex 2: Principles of community-centred affordable housing investment
Principle 3: Authentic participation across the investment lifecycle Benchmark for funds Core
Enhanced
PORTFOLIO MONITORING • Track participation metrics: - developments with pre-planning engagement - % developments with post-occupancy evaluation • Community satisfaction with participation processes • Demographic reach of engagement (are underrepresented groups participating?)
• Enhanced metrics: % developments with independently verified meaningful participation • Community satisfaction scores specifically on participation quality • Documented examples of participation changing design/outcomes • Tracking of participation/engagement budget as % of development costs
INVESTOR REPORTING • Annual report includes participation case studies showing community influence on design/outcomes
• Impact reporting includes participation quality as key outcome indicator
• Report on participation challenges (e.g., engaging in areas with no existing community organisation)
• Independent verification of participation processes
Contents
Market and investment landscape
Executive summary
State of the affordable housing crisis
• Case studies of participation improving outcomes (financial and social)
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 77
Annex 2: Principles of community-centred affordable housing investment
Principle 4: Affordability and anti- speculation Portfolio-level definition: Funds have clear portfolio-wide affordability strategies ensuring holdings serve households in genuine need, with structural protections preventing speculation that undermines affordability. Benchmark for funds
Best practice for community-led models
Core
Enhanced
PORTFOLIO AFFORDABILITY STRATEGY Tenure mix policy: • Clear fund-level policy on target tenure mix when within fund control, which considers a proportion of social rent or documents rationale if not. • Transparent approach to affordable rent levels (ideally below 80% market rent where viable) • Clear criteria for intermediate products – ensuring affordability to low-to-middle income local households
Ambitious affordability: Target 30%+ social rent across portfolio
• Perpetual affordability through CLT/co-op structures
Fund-level affordability test: Before acquisitions, assess tenant income levels to ensure portfolio serves most vulnerable
• Significant portfolio (50%+) at deepest affordability (social rent)
Affordability tracking: Portfolio-level monitoring of:
Transparent methodology: Published rent-setting policy using local income benchmarks (e.g., target housing costs ≤33% median local income, comparing to local open market, aiming for a % at or below LHA)
• Tenure mix (social rent, affordable rent, intermediate, market, shared ownership) • Average rents as set by fund as % of local median income by Local Authority, average reduction to local open market rents (with target under 80%) • % portfolio affordable to households at/below median local income • Protection standards: Minimum 25-year affordability protection on all new investments where nowt policy mandated as affordable in perpetuity Contents
Executive summary
State of the affordable housing crisis
Affordability protection: 80+ years affordability protection standard/affordable in perpetuity
Market and investment landscape
Embedding communitycentred approaches
• Community democratic control of rent-setting • Asset locks preventing speculation • Rents explicitly pegged to local incomes not market rates
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 78
Annex 2: Principles of community-centred affordable housing investment
Principle 4: Affordability and anti-speculation Benchmark for funds Core
Enhanced
INVESTMENT STRATEGY • Acquisition decisions consider affordability contribution: “Does this investment increase affordability for households in need?”
• Willing to accept lower returns on highestimpact affordability investments
• Portfolio reviews assess whether tenure mix aligns with need in operating areas
• Portfolio explicitly targets areas of greatest affordability need
• Exit strategy protects affordability (sale only to RPs with affordability protection)
• Innovative affordability models tested (e.g., rent-to-income models, communitycontrolled rent-setting)
INVESTOR REPORTING Annual reporting on:
• Detailed affordability impact reporting:
• Portfolio tenure mix and trends
• Tenant income levels vs. local median
• Average affordability (rents as % local median income)
• Affordability gaps addressed (compared to market alternatives)
• How portfolio serves local housing need
• Longitudinal tracking of affordability protection
•Lettings to households in priority need
• Independent verification of affordability claims
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 79
Annex 2: Principles of community-centred affordable housing investment
Principle 5: Local wealth building and economic justice Portfolio-level definition: Funds have strategies ensuring development and operations create economic opportunity for local residents, particularly those facing employment barriers, building community wealth not extracting it. Benchmark for funds
Best practice for community-led models
Core
Enhanced
PORTFOLIO EMPLOYMENT STRATEGY • Local labour policy: Clear fund-wide policy on local employment: • Ambitious targets: 50%+ local labour across portfolio (target aligned with locally defined ambitions) - Target 30%+ local labour across portfolio land-led developments, calibrated to local market conditions. Align with local authority • Targeted inclusion: Specific strategies targeting ambitions for the area. employment barriers: - Definition of ‘local’ to be transparent and appropriate to context - Pre-employment training programmes - Living Wage minimum across all directly - Partnerships with specialist employment employed roles support organisations • Partnership approach: Developers fulfil social value - Ring-fenced entry-level positions for long-term requirements for local procurement and employment. Land-led unemployed, care leavers, ex-offenders developments have structured approaches to ensure good - Tracking demographic data showing reach to practice, including partnering with local employment marginalised groups organisations (job centres, training providers, community - Proactive support to local charities/other partners to organisations) as needed. help engage with and support hard to reach groups • Apprenticeships: Target 2+ apprenticeships per significant • Real Living Wage: Commitment across all roles development (100+ homes – increasing with larger schemes) including subcontractors • Accountability: Reporting on local employment and • Independent verification: Employment impacts procurement commitments vs. actuals for land-led schemes independently verified and publicly reported Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
• Community-owned development vehicles capturing profits locally • Local supply chains prioritised systematically • Community facilities providing ongoing local employment • Democratic governance of economic benefit distribution • Profits reinvested in community perpetually
Guidance for investors
Case studies
Annex
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Annex 2: Principles of community-centred affordable housing investment
Principle 5: Local wealth building and economic justice Benchmark for funds Core
Enhanced
INVESTMENT STRATEGY • Partnership agreements with developers include local employment and procurement requirements
• Fund has strategy to improve approach of developer partners/portfolio companies
• Portfolio companies required to report employment impacts
• Fund-level partnerships with regional employment organisations
• Fund tracks employment KPIs across portfolio
• Employment impact considered in partner selection • Willingness to invest in employment infrastructure (e.g., training facilities, pre-employment programs)
INVESTOR REPORTING Annual report includes: • Portfolio-wide local employment stats reported for land-led schemes (jobs created, % local, apprenticeships) as well as local procurement • Employment barrier support (entry-level roles, supported employment)
• Detailed employment impact reporting, based on Fund exercising its levers (rather than calculated job figures) • Sustained employment outcomes • Demographic reach data • Case studies of progression pathways • Community benefit quantified (local spend, skills developed) • Impact verification by independent third party
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 81
Annex 2: Principles of community-centred affordable housing investment
Principle 6: Long- term stewardship and community resilience Portfolio-level definition: Funds invest in long-term stewardship building community capacity and resilience through strategic engagement, as well as continued investment in social and green infrastructure that supports resident health, wellbeing, and climate adaptation. Benchmark for funds
Best practice for community-led models
Core
Enhanced
PORTFOLIO STEWARDSHIP STRATEGY • Long-term commitment: Minimum 10-year hold periods • Comprehensive 30-year asset management plans covering buildings, social spaces, and green infrastructure • Resident capacity building: 0.5%+ operational costs (or otherwise locally defined as appropriate) for organising, training, community development • Place-making investment: Social infrastructure (community rooms, play areas, cycle storage) and green infrastructure (trees, rain gardens, growing spaces, biodiverse planting) in all schemes • Exit protection: Sale only to buyers protecting affordability
Contents
Executive summary
State of the affordable housing crisis
• Extended commitment: 15+ year hold periods, preference for perpetual where possible
• Perpetual community ownership with democratic decision-making on all stewardship and place-making
• Participatory asset management: 25%+ of portfolio uses participatory budgeting; residents co-design major works
• Community asset funds supporting ongoing capacity building
• Community development investment: 1%+ operational costs; community development workers employed • Exit to community ownership: Priority consideration for discounted sale to community organisations • Place-making excellence • Social infrastructure: Community rooms, maker spaces, shared kitchens, community health facilities (eg. including GPs), health/wellbeing spaces with professional activation and resident governance
Market and investment landscape
Embedding communitycentred approaches
• Community hub model serving wider neighbourhood with residents employed in stewardship roles
• Radical sustainability (net positive biodiversity, carbon neutral/negative, community energy)
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 82
Annex 2: Principles of community-centred affordable housing investment
Principle 6: Long-term stewardship and community resilience Benchmark for funds Core
Enhanced
PLACE-MAKING INCENTIVES
• Green infrastructure: Therapeutic landscapes (mental health gardens, forest schools, outdoor gyms), food growing infrastructure (allotments, orchards), climate adaptation leadership (urban forestry, blue-green infrastructure, biodiverse habitats)
• Annual resident improvement budget (£50–100 per unit) for resident-proposed communal improvements. Operators may need to lead delivery, with investors monitoring and supporting through appropriate KPIs. • Participatory decision-making on communal area priorities and green space management • Invest in green and social infrastructure that delivers health and wellbeing benefits while strengthening climate resilience. LIFECYCLE FUNDING • Adequate reserves for building maintenance, energy efficiency, and social/green infrastructure renewal • Climate adaptation allocation for resilience measures (cooling, flood prevention, biodiversity)
• Enhanced incentives: £100–200+ per unit annual participatory budget; partnerships with health services, environmental organisations • Health and Wellbeing impact: - Systematic evaluation: baseline/follow-up wellbeing surveys, facility usage tracking, environmental monitoring (air quality, biodiversity) - Impact reporting: wellbeing outcomes, environmental benefits quantified, social return on investment, independent verification
INVESTOR REPORTING • Annual report: resident satisfaction on communal areas, major works delivery, social/green infrastructure investment, community capacity building activities • Case studies showing place-making impact on community resilience
Contents
Executive summary
State of the affordable housing crisis
• Impact-focused reporting with longitudinal wellbeing data, environmental benefits quantified (carbon, flood prevention, health cost savings), community voice, independent verification
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 83
Annex 3: Methods Our research used a mixed methods approach, using both qualitative and quantitative methods, including:
3. Data analysis and sector mapping 2. 22 semi-structured stakeholder interviews
1. Desk research and literature review
including investors (asset owners and asset managers invested in affordable housing), Communityled housing sector leaders, academics, public sector leads, developers and others.
4. Geographic mapping of social housing and affordable housing needs
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
including assessing typologies and aggregating high level data from across known social and affordable housing funds
Embedding communitycentred approaches
5. Workshop with sector leaders to test research products
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 84
Annex 4: Funds investing in social and affordable housing in the UK Fund name
Fund manager
Year established
Housing tenure focus
Fund type
Capital committed or deployed (£)67
AEW – Strategy A
AEW
2023
Mixed real estate including affordable
Open-end fund
£144.4m Deployed
Alpha Real Capital – Strategy A
Alpha Real Capital
2015
Mixed real estate including affordable
Open-end fund
Not available
Big Issue Invest – Strategy A
Big Issue Invest
2024
Mixed real estate including community-led
Closed-end fund
£20m Committed
Bridges Property Alternatives Fund V (BPAF V)
Bridges Fund Management Limited
2020
Affordable
Closed-end LP
£224.3m Deployed
Bridges Property Alternatives Fund VI (BPAF VI)
Bridges Fund Management Limited
2023
Affordable
Closed-end LP
Not available
CBRE Investment Management – Strategy A
CBRE Investment Management
2018
Affordable
Open-end fund
£600m Deployed
Cheyne Capital – Strategy A
Cheyne Capital
2020
Mixed housing including affordable
Open-end fund
Not available
Civitas Social Housing
Civitas Investment Management
2016
Supported
REIT
£969m Deployed
Columbia Threadneedle – Strategy A
Columbia Threadneedle
2023
Mixed housing including affordable
Open-end fund
Not available
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 85
Annex 4: Funds investing in social and affordable housing in the UK
Fund name
Fund manager
Year established
Housing tenure focus
Fund type
Capital committed or deployed (£)67
Community Investment Fund
Social and Sustainable Capital
2014
Community-led
Closed-end fund
£21.1m Deployed
Edmond de Rothschild – Strategy A
Edmond de Rothschild
2015
Mixed social / affordable / supported
Open-end fund
Not available
Fundamentum Group – Strategy A
Fundamentum Group
2019
Supported
REIT
£25.7m Deployed
Gresham House – Strategy A
Gresham House
2021
Mixed social / affordable / supported
Closed-end LP
£120m Committed
Gresham House, Thriving Investments – Strategy A
Gresham House, Thriving Investments
2021
Affordable
Closed-end LP
£190m Deployed
Henley IM – Strategy A
Henley IM
2022
Supported
Open-end fund
£76m Deployed
Legal & General – Strategy A
Legal & General
2024
Affordable
Open-end fund
£510m Committed
Living REIT
Atrato
2017
Supported
REIT
£612m Deployed
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 86
Annex 4: Funds investing in social and affordable housing in the UK
Fund name
Fund manager
Year established
Housing tenure focus
Fund type
Capital committed or deployed (£)67
M&G Investments – Strategy A
M&G Investments
2021
Affordable
Closed-end fund
£253.7m Deployed
Man Group – Strategy A
Man Group
2021
Mixed housing including affordable
Closed-end LP
£400m Committed
National Homelessness Property Fund 1
Resonance Impact Investment
2015
Supported
Closed-end fund
£43.6m Deployed
National Homelessness Property Fund 2
Resonance Impact Investment
2020
Supported
Closed-end fund
£76m Committed
Octopus Investments – Strategy A
Octopus Investments
2023
Mixed social / affordable / supported
Open-end fund
£360m Committed
Patrizia Sustainable Communities Fund
Patrizia
2022
Mixed social / affordable / supported
Closed-end fund
£437.66m Committed
PGIM Real Estate – Strategy A
PGIM Real Estate
2020
Affordable
Open-end fund
£310m Committed
Real Lettings Property Fund I
Resonance Impact Investment
2013
Supported
Closed-end fund
£56.8m Deployed
Real Lettings Property Fund II
Resonance Impact Investment
2017
Supported
Closed-end fund
£98.5m Deployed
Market and investment landscape
Embedding communitycentred approaches
Contents
Executive summary
State of the affordable housing crisis
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 87
Annex 4: Funds investing in social and affordable housing in the UK
Fund name
Fund manager
Year established
Housing tenure focus
Fund type
Capital committed or deployed (£)67
Residential Secure Income plc (ReSI REIT)
Gresham House
2017
Mixed social / affordable / supported
REIT
£295m Deployed
Resonance Everyone In Fund
Resonance Impact Investment
2021
Supported
Closed-end fund
£16.5m Committed
Resonance Impact Investment – Strategy A
Resonance Impact Investment
2022
Mixed real estate including community-led housing
Closed-end fund
£9.35m Deployed
Resonance Supported Homes Fund
Resonance Impact Investment
2020
Supported
Closed-end fund
£15.25m Deployed
Savills Investment Management – Strategy A
Savills Investment Management
2024
Affordable
Open-end fund
£40.5m Deployed
Schroders Capital – Strategy A
Schroders Capital
2022
Mixed real estate including affordable
Open-end fund
Not available
Social and Sustainable Capital – Strategy A
Social and Sustainable Capital
2022
Community-led
Closed-end LP
£22.3m Deployed
Social and Sustainable Housing I
Social and Sustainable Capital
2019
Community-led
Closed-end LP
£64.5m Deployed
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 88
Annex 4: Funds investing in social and affordable housing in the UK
Fund name
Fund manager
Year established
Housing tenure focus
Fund type
Capital committed or deployed (£)67
Third Sector Investment Fund
Social and Sustainable Capital
2017
Community-led
Closed-end fund
£22.7m Deployed
Thriving Investments – Strategy A
Thriving Investments
2025
Affordable
Open-end fund
£40m Deployed
Thriving Investments – Strategy B
Thriving Investments
2019
Affordable
Closed-end fund
£222.5m Deployed
Women in Safe Homes (WISH) Fund
Resonance Impact Investment, Patron Capital
2020
Supported
Closed-end fund
£30m Committed
67 Where possible, we have used figures for capital deployed (£m) to best reflect the actual level of activity and delivery by funds. Where deployed figures were not publicly available, we have used capital committed as a proxy. Based on publicly available sources including news articles and impact reports published between 2022 and 2026. For four funds, we were unable to identify a reliable deployed or committed figure, and these have therefore been excluded from the market mapping diagram.
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 89
Annex 5: Esmée’s social and affordable housing portfolio Esmée Fairbairn Foundation has three strategic aims: to improve Our Natural World; secure A Fairer Future; and nurture Creative, Confident Communities. This work supports our impact goals in Creative, Confident Communities, which is focused on strengthening the bonds in
communities, helping local people to build vibrant, confident places where they can fulfil their creative, human, and economic potential. The following table shares information about Esmée’s social and affordable housing portfolio as of January 2026.
Organisation/Fund
Description
Type of Investment
Awarded Amount (£)
Portfolio
Year approved
Ecology Building Society
Investment in a long-term loan to the building society to support sustainable housing
Loan – unsecured
750,000
Social Investment – Closed
2008
CAF Venturesome Community Land Trust I, II and III
Investment in CAF Venturesome’s Community Land Funds, developing affordable community owned rural housing.
Fund
875,000
Social Investment – Active
2008
Bridges Sustainable Property Fund
Investment in a sustainable real estate fund
Fund
551,086
Social Investment – Closed
2010
Resonance Real Lettings Property Fund
Investment in a fund providing stable housing for people who are homeless or at risk of homelessness in London
Fund
500,000
Social Investment – Active
2012
Resonance Affordable Homes Rental Fund
Investment in the Affordable Homes Rental Fund to develop community land trust homes to let to people on low incomes and in need
Fund
500,000
Social Investment – Active
2012
Resonance
Project costs of underwriting the development costs of new social investment products
Grant – revolving
200,000
Grant
2014
Embedding communitycentred approaches
Guidance for investors
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Case studies
Annex
Social and Affordable Housing in the UK 90
Esmée’s social and affordable housing portfolio Organisation/Fund
Description
Type of Investment
Awarded Amount (£)
Portfolio
Year approved
Resonance National Property Homelessness Fund
Investment in a fund providing decent and affordable homes for people facing homelessness in Bristol, Oxford and Milton Keynes
Fund
500,000
Social Investment – Active
2016
Social and Sustainable Capital (SASC) Social and Sustainable Housing I
SASC’s Social and Sustainable Housing (SASH) Fund which enables charities and social enterprises to purchase property for social good
Fund
2,000,000
Social Investment – Active
2018
Coigach Community Development Company
Investment in a community wind turbine that uses the profits to grant-fund affordable community housing
Community Shares
400,000
Social Investment – Active
2018
Resonance
An investment in a Social Impact Fund Manager to help leverage significant mainstream capital into the UK social enterprise sector
Equity
500,000
Social Investment – Active
2024
East Marsh
Investment to support the CBS set up by East Marsh United to buy houses and become and ethical community landlord
Loan – unsecured
500,000
Social Investment – Active
2024
Schroders Capital Real Estate Impact Fund
Investment in a fund for impact real estate with a place-based approach, including supported living and affordable housing
Fund
1,000,000
Impact Investment – Active
2024
Octopus Affordable Housing Fund
Investment in a fund delivering affordable and energy-efficient homes
Fund
1,000,000
Impact Investment – Active
2026
Contents
Executive summary
State of the affordable housing crisis
Market and investment landscape
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 91
Acknowledgements
We would like to thank the following people and organisations who contributed valuable insights and discussion for this report:
Gareth Francis Kiran Singh Legal & General Affordable Housing
Glenn Arradon Big Issue Invest
Marleen Bekkers Bens Lonsdale Patrizia
Mark Hall Impact Investing Institute
Meena Manian Charities Aid Foundation
Hannah Sloggett Nudge Community Builders
Celina Penny Legal & General
Ann Xu CBRE IM Affordable Housing
Bex Trevalyan Platform Places
Claude Hendrickson Leeds Community Homes/ Frontline Selfbuild
Freya Field-Donovan Collective Ownership
Jack Burnham Octopus Capital Dr Tom Archer Centre for Regional Economic and Social Research
Contents
Executive summary
Debbie Lamb Locality Matthew Morgan Quality of Life Foundation Lev Kerimol Community Led Homes
State of the affordable housing crisis
Market and investment landscape
Shamez Alibhai MAN RI Group
Alex Jones Greater Manchester Pension Fund
Daniel Brewer Resonance
Tom Chance National CLT Network
Blasé Lambert The Confederation of Co-operative Housing
Melissa Mean WeCanMake
Bridget Wilkins Nigel Kersey Ministry of Housing, Communities and Local Government Krishna Chokshi Social and Sustainable Capital Paula Graves East Marsh United
John Long John Nordon Kym Shaen-Carter Igloo Investments Gary Hartin Nationwide Foundation Catherine Harrington Independent Consultant
Alison Ward Middlemarch Chris Santer Lydia Merry Yana Georgieva Schroders
Embedding communitycentred approaches
Guidance for investors
Case studies
Annex
Social and Affordable Housing in the UK 92
Esmée Fairbairn Foundation
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