Investment of an additional £118 million by UK pension funds into Octopus's affordable housing fund
Octopus Capital's Affordable Housing Fund Aims to Address UK's Shortage
Octopus Capital's Affordable Housing Fund, an investment strategy focused on building and retrofitting good quality, genuinely affordable family and older persons' homes across the UK, is gaining momentum. The fund, which avoids investment in specialist supported housing, has attracted significant government-supported institutional investment.
The strategy targets delivering at least 5,000 affordable homes over the coming years, with an emphasis on local alignment and transparency in Environmental, Social, and Governance (ESG) reporting via the adoption of the Sustainability Reporting Standard for Social Housing.
Key investors include UK Local Government Pension Schemes (LGPS) such as London CIV, Strathclyde Pension Fund, and Avon LGPS. This backing provides stable, long-duration capital aligned with social and environmental impact goals. As of July 2025, the fund has raised over £360 million, with an ambition to reach £1 billion by 2026.
Octopus Capital runs NewArch Homes, a for-profit provider of housing in various sectors, including social rented, affordable rented, and shared ownership. NewArch Homes now owns 500 affordable homes and is one of the ten largest or-profit registered providers of social housing in the UK.
In April, NewArch bought 220 homes via a partnership with CHP, a housing association based in Essex, to help address shortages in the county. Ellie Vlavianou, previously at housing association and developer L&Q, has been appointed as executive director of Octopus Capital's affordable housing fund team.
The new investment comes from Strathclyde Pension Fund (£50m), London CIV (£58m), and Avon LGPS (£10m). Christopher Osborne, head of real estate at London CIV, stated that Octopus is on course to deliver the target net returns for LGPS Partner Funds and is focused on increasing the supply of good quality and energy-efficient affordable homes across the UK.
The UK government has committed £39 billion to the sector over the next decade through its new Social and Affordable Homes Programme. The government has set an ambition to deliver around 300,000 social and affordable homes through this programme. The government's roadmap for achieving these targets is outlined in a policy paper on "delivering a decade of renewal for social and affordable housing".
However, the need for affordable housing is significant. Over 1.3 million people are waiting on social housing registers, and over 165,000 children are living in temporary accommodation in the UK. Home ownership amongst young people in the UK has halved in the last 35 years.
The Octopus Capital Affordable Housing Fund aims to accelerate the delivery of good-quality, affordable homes built to robust sustainability standards. The fund remains open to new commitments and is poised to make a significant impact in addressing the UK's affordable housing shortage.
The Octopus Capital Affordable Housing Fund, with its focus on delivering affordable homes and adherence to social and environmental impact goals, is aiding in the development finance for energy-efficient housing in the UK. This fund, through its strategic partnerships and investments, including sports executive Ellie Vlavianou's leadership, aims to make a significant social impact by reducing the waiting list for social housing and increasing home ownership among young people.
