OPINION: Ethical investment – not just a tick in a box

The benefits of impact investing: why now’s the perfect time to invest in social housing

For many of us, simply turning a profit is no longer the only goal when making an investment. Using that investment to make a positive difference in the world has become just as important – by Christopher Philippou

 
That has led to the rise of social impact investing, a rapidly expanding sector that was valued at £9.4 billion in the UK at the end of 2022 according to the Big Society Capital’s market data report. And in the UK, the same report shows more than half (55%) is currently funnelled into social and affordable housing.  

The rise of social impact investing has continued at pace despite the financial turmoil that has followed in the wake of Brexit and the pandemic. Against a backdrop of rising interest rates and a cost-of-living crisis, ethical investment has proven itself to be far more than just a trend. In fact, it is become a promising growth area for investors and a tangible way of changing communities and the world for the better. 

As the COO of a company that is helping to build a world without homelessness, I’m going to focus mainly on social and affordable housing in this article. Because it’s here we’re seeing a real uplift in investments that are offering both strong returns and helping make a positive difference in people’s lives.  
 

The rise in investment in social and affordable housing

 
At Stef & Philips, we’ve seen firsthand how private investment has increased significantly in social and affordable housing over the past five years.  

This rise can be chalked up to three key drivers. Firstly, investing in social and affordable housing provides diversification, offering an investor a buffer against wider financial fluctuations. Secondly, the sector itself demonstrates robust long-term demand. And finally, the social housing sector is bolstered by statutory government funding, again making it more resistant to broader economic changes. 

This trajectory continues to go the same way. Recent research by JLL predicts that by 2025, the affordable housing sector will constitute up to 23% of rental homes owned by institutions.

That’s a significant figure when you consider that an estimated 8.5 million people in England today are living in an unaffordable, insecure or unsuitable homes, according to the National Housing Federation. The housing crisis is impacting all ages across every part of the country, says the Federation. 

The main issue is of course one of funding. Addressing this shortage of affordable housing in the UK requires an estimated £250 billion. Although the government has made financial investments in infrastructure, it’s becoming more and more dependent on private home builders and housing associations to help overcome the housing crisis. 

This is where public-private partnerships can be of such value. Private investment can bring in extra resources to supplement public funds, which in turn can improve services to attract further private investment. 

All of which makes now the perfect time to invest. This isn’t just about potential profits, but about delivering tangible outcomes for individuals and communities in need, with the promise of consistent, long-term returns. 
 

How social impact investing can help build a better society and economic system

 
Traditionally, social housing might not have been an appealing investment for many – but recent years have revealed many opportunities and benefits.  

Investing in housing for rental in the social housing market, especially with an experienced partner like Stef & Philips, offers high demand and guaranteed, year-round rentals under long leases. Importantly, all property management, including lettings, tenant management, and repairs and maintenance, is taken care of, providing a hassle-free experience for investors. 

The growing demand for high-quality, affordable rental units and the need for refurbishment of existing units has opened a steady stream of investment opportunities for the foreseeable future. By investing privately, you can help drive a sector which has the ability to be agile and innovative when it comes to accommodation solutions.  

On a grander scale, by investing in this area you can help to genuinely improve society. As an example, recent analysis by the Building Research Establishment confirmed that investing in poor-quality housing could yield more than £135 billion in societal benefits, leading to improved wellbeing and reduced public-services pressure. 

At Stef & Philips, we manage more than 4,000 units ranging from individual houses, flats, and HMOs to bespoke solutions for specific community needs, including mothers and babies, care leavers, domestic abuse victims, rough sleepers and LGBTQ+ residents and their families. Our partnership with private investors enables us to reach wider and aim higher in our contribution to society.  

Through private investment in the social and affordable housing sector, you can help to do the same, while earning sustainable returns at the same time. 
 

Why social impact investing is only going to get bigger

 
Investing in social housing, then, presents a unique opportunity for investors to enter a dynamic market, while helping address the UK’s current housing crisis and having a tangible effect on people’s lives and wider society.  

Through supplementing public funds with private investment, we can find solutions for a sector that needs crucial support. Ultimately, social impact investing in housing carries the potential to revolutionise the current economic system, drive societal change, and pave the way towards building a more sustainable and inclusive future.
 
Christopher Philippou is Chief Operating Officer, Stef & Philips