A shortage of safe, decent and secure social and affordable housing is a crisis that’s felt most sharply by low-to-moderate income households and those with the greatest needs. As an essential component of wider financial security and wellbeing, it’s an issue that could have lasting impacts from working life through into retirement.
As part of our work on Housing and Pensions, we’ve published research that explores: Could money from pension funds help to build more social and affordable homes, and provide greater housing security among those unable to buy their own home?
Read our report: Building social and affordable homes: Is there a role for pension funds? (PDF)
Two parallel crises in the UK housing system
Experts from the housing and pensions sectors told us that there are two parallel crises in the UK housing system:
- a crisis of home ownership for those who can’t afford to buy,
- a crisis of options for people living in poor quality, unsuitable, unaffordable or overcrowded homes that they rent, either privately or socially.
Our recent report, Using pension savings to support home ownership (PDF), explored whether people should be able to use some of their pension savings to overcome one of the biggest barriers to buying their own home: saving for a deposit.
This new, supplementary report focusses on the second crisis: the shortage of safe, decent and secure social and affordable housing.
There’s an emerging view that pension funds and institutional capital, while not a substitute for grant funding, could have an important role to play in tackling one of society’s most pressing challenges.
Key findings
Experts we spoke to told us that affordable housing can offer stable and secure long-term returns, alongside meaningful social impact and an opportunity for pension funds to align their investments with the values of their savers.
But we also heard that the main constraint to investment is not a lack of capital or willingness to invest, but a series of practical barriers, including:
- Complex and competing funding pressures for housing providers
- Competing demands on pension fund capital
- The need for new funding models and innovation
- Challenges around the suitability of homes and the availability of de-risked, viable and scalable supply
- Closer alignment of values and objectives between investors and housing providers
- Operational constraints, and uncertainty about the stability of future policy and regulation
Conclusions
Our conclusions are clear: creating the right conditions to unlock investment will depend on transparent, collaborative, long-term partnerships between investors, housing providers, local and central government bodies. It’s complex and important work is already underway. But were these partnerships to evolve, experts from both the housing and pension sectors felt there is considerable opportunity for long-term capital to provide stable returns for investors and savers, while also helping to provide safe, decent and secure homes for those with the greatest needs.
Find out more
You can read our short report here to find out more about why more investment in social and affordable housing is needed, how it might work, what the barriers are and how people feel about it.
We also ask what might happen if pensions were used to boost the supply of social and affordable housing on one hand, while also being used to boost demand for home ownership, on the other.
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