THE Church Commissioners have invested £4 million in a community housing fund that is aimed at building 1000 homes, of which 90 per cent will be “affordable”.
The money has been allocated by the Church of England’s Social Impact Investment Programme, which was set up in 2020, within the Archbishops’ Council, to “direct capital towards new solutions to deep-rooted social challenges”, backed by a £25-million grant from the Commissioners. The programme’s annual report refers to “accepting higher risk or lower returns in order to make investments that target specific areas of need aligned to the Church’s mission”.
For this investment, it has now partnered with London CIV, an investment-pooling company that exclusively manages local-government pension-scheme assets — totalling £32.9 billion — for the London Boroughs and the City of London. The two organisations have made a combined £104-million investment in a community housing fund run by the Man Group, an investment-management company.
The initial capital invested is expected to enable more than 350 “energy efficient, affordable family homes to be built in areas of constrained affordability across the UK”. The ultimate aim is for the fund to raise £300 million, to deliver 1000 homes. “Constrained affordability” is defined as a ratio of more than seven times median house price to median income, in a local authority area.
The housing will include a mix of tenures. Seventy per cent will be homes for social rent (typically rented at less than 60 per cent of the market rate) or affordable rent (typically 70 to 80 per cent of the market rent). The affordable housing will be leased to and managed by a not-for-profit housing association. Also available will be “intermediate or key-worker rent” homes (typically 85 to 90 per cent of market rate), and Shared Ownership properties.
The fund will aim for the rent level of each tenure to be less than 35 per cent of the median income of that population cohort in the area. When looking at the affordability of Shared Ownership, the fund will consider the tenant’s mortgage payments, rents, and service charge relative to their household income.
Announcing the new investment, Vanessa Morphet, head of social-impact investment at the Archbishops’ Council, said: “Too many families are vulnerable to the UK’s housing crisis and are priced out of decent, stable homes in the communities where they want to live and work. Man Group’s Community Housing Team have set clear and ambitious targets for the fund, including 90 per cent affordable housing assets and significant improvements in the energy efficiency of homes.”
The Office for National Statistics defines as “affordable” a property that can be bought with five or fewer years’ income. The median annual disposable household income was £35,000 in 2023, while the the median house price was £298,000: the equivalent to 8.6 years of household income. In England, only the top ten per cent of households in terms of income could afford an average-priced home with less than five years’ household income in 2023. In London, the average home was not affordable for any household-income decile. House prices have increased twice as quickly as household incomes in England in recent years.
A new vision for housing, Homes For All, endorsed by Archbishop Welby last year, suggested that, by the end of the current Parliament, no household on an average income or below should be obliged to pay more than 35 per cent of their disposable income on direct housing costs (News, 3 May 2024).