Octopus’ Affordable Housing Fund raises £10m investment and makes its first acquisition

Octopus said the fund was set up to accelerate the UK’s “much-needed delivery of good-quality, affordable homes”, and will ensure that new homes are built with “robust sustainability standards”.

This aligns with Big Society Capital’s goal to increase the supply of social and affordable housing in the UK, particularly for the most vulnerable people. The impact investor says its investments to date in this area have helped to fund almost 7,000 homes which will house “over 17,000 of the hardest-pressed people” in the UK.

In addition, Octopus’ Affordable Housing Fund has now made its first deployment through forward funding, committing to acquire 26 homes in Great Haddon, Peterborough, from Vistry Homes.

The scheme comprises eight houses and 18 flats, and it will offer a mix of both affordable rent and shared ownership tenures. The homes will have an Energy Performance Certificate of Band B.

Octopus said the scheme will serve an area of high housing need, where the provision of new affordable housing over the past four years has been less than 50 per cent of the required amount.

The homes will be owned by NewArch, the fund’s registered provider of social housing. All units are expected to be delivered by April 2025.

Jack Burnham, head of affordable housing at Octopus, said: “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 [Big Society Capital] 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 as 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 fund close is something we are really proud of. We look forward to working with Vistry on building affordable homes at Great Haddon.”

Drew Ritchie, investment director at Big Society Capital, said: “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 Fund, 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 fund’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 fund.”

Fraser Hopes, managing director of Vistry Homes, said: “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.”

At the end of August last year, Octopus released a report entitled Closing the gap: Unlocking investment to address the UK’s affordable housing challenge. It said in the report that equity partnerships represent the “next wave of innovation” for affordable housing after its research suggested a 22 per cent decrease in providers’ development pipelines.

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