How can collaborative finance models to create more affordable housing?

Panel: Innovations in collaborative finance models

The UK private-rented sector has a shortage of high quality, secure and affordable homes. There is a growing need for innovative housing models in the UK. The panel discussed collaborative finance models that have successfully created more affordable housing.

Speakers

  • Emma Gullifer, Assistant Fund Manager, Columbia Threadneedle
  • Kitson Keen, Head of Development, Home Group
  • Drew Ritchie, Investment Director, Big Society Capital
  • Lisa Taylor, Director at Coherent Cities and Executive Director at FoL (chair)
  • Anurag Verma, Chair, Rural Urban Synthesis Society

 Viewing affordable housing as a viable investment

Columbia Threadneedle has developed a ‘flexible rent’ model with Home Group. They aim to deliver affordable rented homes for low and middle-income households, incorporating discounted market rent with blind tenure mix.

This partnership between the housing association and the global asset management group is unusual. But the model shows how the social good of housing can be delivered with a guaranteed return.

Residents can move between tenures as their circumstances change, and sales from fixed equity and shared ownership homes cross-subsidise the social and affordable rent homes.

“We felt that there was a real need to bring new skill sets and new ideas into the [affordable housing] space,” said Kitson from Home Group.

Bringing together skills is what makes this collaboration work. Columbia Threadneedle provide the capital and Home Group bring their expertise as a housing association to the table.

Emma of Columbia Threadneedle explained that the partners are committed to working together as a project team instead of partners from different organisations.

Growing the social investment market

In 2020, Big Society Capital (BSC) collaborated with DLUHC on the ‘Everyone In’ street homelessness  initiative. The government made its first social impact investment in homelessness accommodation alongside BSC, Greater Manchester Combined Authority and Greater London Authority.

Capital was channelled through investment fund managers to deliver accommodation with charities and housing associations. For the first time, local authorities could bid for central government funding to invest in housing stock and tackle the acute end of the housing crisis.

The pilot brought together existing structures and systems and provided an impetus to bring people together beyond the provision of capital. “Where you see this working most well is where you’ve got bringing together stakeholders and plugging them into existing infrastructure,” said Drew.

Investors need frameworks that allow them to make decisions on an impact basis, according to Kitson. Many of these frameworks already exist to bring the right people together and attractive investment models.

Debunking risk myths around community land trusts 

Community land trusts (CLTs) are a model for creating sustainable neighbourhoods of high-quality homes, managed by residents. They remain genuinely affordable for future generations.

CLTs are often regarded as a ‘risky’ investment. But Anurag of the Rural Urban Synthesis Society, a CLT in south London, said this is a common misconception.

The CLT takes on any development risks, and the model is completely embedded in the local community. However, it does require the constant commitment from the many stakeholders involved.

Residents are far more likely to remain in CLTs long-term as they have invested such much time and social capital into its formation. That’s why CLTs should be a lower risk investment.

Perception needs to change for effective collaboration with CLTs. Investors need to see land trusts and their residents as equal partners, not consultees. Residents are committed to managing and owning their homes, and partners need to share this vision.

 This session was supported by


Affordable Housing: Overcoming crisis through collaboration is a cross-sector research and events programme that aims to make practical recommendations.

Contact Anna Odedun, Head of Knowledge, to get involved. Thanks to project sponsors Countryside, Montagu Evans, Pollard Thomas Edwards, Potter Raper and Trowers and Hamlins, and our conference sponsors Altair, Inner Circle Consulting and Big Society Capital.