Octopus Investments (Octopus), a division of Octopus Group dedicated to investing in transformative ventures, has announced a ÂŁ10 million boost to its Affordable Housing Strategy, courtesy of Big Society Capital (BSC), a prominent social impact investor in the UK.
This additional funding follows an initial £50 million raised from London CIV, an investment consortium representing 32 of London’s Local Government Pension Schemes.
The Affordable Housing Strategy aims to expedite the delivery of high-quality, affordable homes in the UK while prioritizing sustainability standards. The emphasis on energy efficiency not only contributes to reducing carbon emissions but also tackles fuel poverty, a pressing issue for many low-income households facing escalating living costs, including energy price hikes.
Aligned with BSC’s mission to enhance the supply of social and affordable housing, Octopus’s strategy has already facilitated the financing of nearly 7,000 homes, providing accommodation for over 17,000 individuals facing significant financial hardship.
Octopus’s Affordable Housing team has made its inaugural investment through forward funding, committing to acquire 26 properties in Great Haddon, Peterborough, from Vistry Homes. This development, consisting of eight houses and 18 flats, will offer affordable rent and shared ownership options, catering to both couples and families. Notably, all units will meet Energy Performance Certificate B standards. This initiative addresses a critical housing shortage in an area where new affordable housing supply has fallen short of demand by more than 50% over the past four years.
Vistry Homes, a leading UK housebuilder renowned for its commitment to developing affordable housing, will construct the properties. The homes will be managed by NewArch Homes Limited, the strategy’s Registered Provider of Social Housing, with completion expected by April 2025.
Jack Burnham, Head of Affordable Housing at Octopus, commented:
“While the affordable housing investment market is still relatively nascent, it is growing, and we continue to receive strong demand from investors. They are attracted by the potential to generate long-dated sustainable income, low correlation to other real estate sectors and the ability to have real tangible impact.
“We are thrilled that BSC have decided to trust us with their capital. It is a sign of their conviction in the funding model and our team’s ability to execute our strategy. We also see it is a stamp of approval in terms of the impact we are trying to achieve.
“And we’re not wasting any time. To be able to deploy the first capital just five weeks after our initial strategy close is something we are really proud of. We look forward to working with both Vistry and Pinnacle on building affordable homes at Great Haddon.”
Drew Ritchie, Investment Director at Big Society Capital, commented:
“We believe that impact-driven private capital has a vital role to play in addressing the country’s housing shortage and we seek to invest in best-in-class managers and investment models that we believe can unlock capital at scale. This is one of the reasons why we have invested into Octopus’ Affordable Housing strategy, as well as its strong focus on supporting low-income families and older households to access a quality, secure and affordable home.
“We were keen to back the strategy’s equity partnerships model that can work hand-in-hand with the Housing Association sector to maintain and increase new affordable supply. Working with Octopus has also been a welcome opportunity to explore and agree routes to strengthen Equality, Diversity and Inclusion (EDI) practice and increase representation across the strategy.”
Fraser Hopes, Managing Director of Vistry Homes, commented:
“Vistry Group has made a commitment to working with partners to deliver high-quality affordable homes across the country. The sale of 26 homes at Great Haddon Wood to Octopus will help people looking to rent a home, or to buy through shared ownership and become part of this thriving new community near Peterborough. We look forward to welcoming the first residents to their homes later this year.”
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By Ravi Kumar
