More transparency from investors needed to build trust in for-profit providers, report says

The report examined how six UK private investment funds have contributed to the delivery of affordable housing, and how a typical fund management portfolio differs from the wider affordable housing landscape.

It covered £1.56bn of gross assets across 14,739 homes, around a quarter of the impact investment market in affordable housing as of last year.

The report found that investment fund portfolios tilt towards more affordable homeownership, at 44% of homes funded, compared to 35% of wider national affordable housing supply.

It also found that fund manager delivery was concentrated in the three least affordable regions in the UK: the South East (23% of homes delivered), London (18%) and the East of England (16%).

Investment funds are more likely to buy homes through Section 106 (51% of delivery) than the wider national affordable housing supply (46%). They are less reliant on grant, suggesting that they can provide additionality at a time when public subsidy is constrained.

Investment fund portfolios are new-build led (60% of delivery), with the remainder made up of acquisitions. Two-thirds of acquired homes were converted to affordable tenures from prior uses.

Fund managers favour forward-funding contracts with developers (49% of transactions), matching the need for earlier capital into schemes.

On quality standards, 63% of investment fund-backed homes met the nationally described space standards, compared to the sector average of 43%, while 82% of fund-backed homes had an Energy Performance Certificate of Band B.

The analysis found that 59% of fund-backed rental homes are considered affordable to households earning at or above the bottom 30% of local incomes, while 75% of fund-backed affordable homeownership homes were affordable to the bottom half of earning households.

However, the researchers noted that the evidence base of institutionally backed investment models was still “limited in terms of reach and scope”, adding that a movement towards greater transparency should be in the interests of fund managers, registered providers, policymakers, regulators and investors.

Steve Partridge, director and head of housing consultancy at Savills, said: “The role for new sources of capital from equity investors will not only be central, it will be absolutely critical to ensure that the affordable homes the nation needs are able to be built.”

He estimated that in the 2024-25 financial year, institutionally backed registered providers contributed almost 20% of new affordable housing supply, through either buying Section 106 allocations or direct delivery via grant-funded developments.

He continued: “This research is timely in helping to further set out the rationale for investment into social and affordable housing and we hope will be the first of many as they continue to track the growth in this vital part of the affordable housing world.”

This week, Inside Housing Living published an exclusive survey of the Fastest-Growing For-Profits 2025, tracking their progress and pipelines.