Affordable housing fund in the UK receives an additional £150 million, courtesy of the octopus.
In a significant move to address the growing shortage of affordable housing in the UK, Octopus Investments has successfully raised an additional £150m for its Affordable Housing Fund, bringing the total commitments to £210m. This investment comes from Local Government Pension Schemes (LGPS), with notable contributions from the pension funds of Avon, Gloucestershire, Devon, and Clwyd.
The Affordable Housing Fund, a geographically agnostic initiative, aims to invest in areas across the UK where housing affordability is stretched. The main goal is to deliver high-quality, affordable homes, either by funding the construction of new housing or acquiring existing stock.
Last year, Octopus Investments partnered with Octopus Energy's registered social housing provider, NewArch Homes, to allocate the capital raised entirely to affordable housing projects. This partnership allows for more energy-efficient homes to be built, reducing residents' outgoings.
Notably, in a deal announced in May, NewArch Homes acquired 180 affordable homes from housing association Golding Homes, based in Kent, south-east England. This acquisition is part of the fund's mission to deliver social and affordable housing across the UK.
The UK's affordable housing stock has seen a significant decline, with affordable housing accounting for around 16% of total housing stock in England compared to 20% in 2000, according to government data. This investment from LGPS will help Octopus Investments meet its net zero 2045 goal, while delivering attractive financial returns.
The ties between Octopus Investments and Octopus Energy, a growing force in green power development, further enhance the potential for energy-efficient homes. The fund's investments are backed by institutional investors and LGPS funds, signifying a collective effort to address the housing crisis in the UK.
In January, the fund also received a £10m investment from social impact investor Big Society Capital (BSC). The current total investment in the Octopus Investments Affordable Housing Fund is over £360m, including co-investment capital.
The fund aims to scale toward a £1 billion investment target by 2026 and currently owns 500 affordable homes, partly through its for-profit registered provider NewArch Homes. Areas such as Avon, Gloucestershire, and Devon have opted for a co-investment arrangement to deliver a share of affordable homes in their specific regions.
The Resonance housing initiative has welcomed tenants as the fund is closing, marking a positive impact on the lives of those in need of affordable housing. The need to generate both impact and adequate returns for LGPS investors justifies what might seem like a low threshold for building homes in the investor's local region.
Octopus Investments is part of the Octopus Group, a B Corp that owns Octopus Energy, which has expanded rapidly to become one of the UK's largest energy suppliers. The group's commitment to both financial returns and social impact is evident in its Affordable Housing Fund.
[1] Octopus Investments (2021). Press Release: Octopus Investments raises £118m for Affordable Housing Fund from Local Government Pension Schemes (LGPS)
[2] Octopus Investments (2021). Press Release: Octopus Investments announces new £10m investment from Big Society Capital in Affordable Housing Fund
[3] Octopus Investments (2021). Press Release: Octopus Investments announces £58m re-up from London CIV in Affordable Housing Fund
- The Affordable Housing Fund, backed by institutional investors and Local Government Pension Schemes (LGPS), is aiming to invest in various UK regions to deliver high-quality, affordable homes as part of its social impact strategy, helping address the housing crisis and the decline in affordable housing stock.
- By partnering with Octopus Energy's registered social housing provider, NewArch Homes, the Affordable Housing Fund is making strides in the energy transition, focusing on building energy-efficient homes, while also driving development finance for affordable housing projects, creating a positive social impact and attracting financial returns.
