The UK housing crisis topped the agenda at this year’s Autumn Statement and it isn’t looking like it’s moving from that position any time soon.
The UK housing crisis topped the agenda at this year’s Autumn Statement and it isn’t looking like it’s moving from that position any time soon. The social sector welcomed the government’s commitment to build 40,000 affordable homes, and while a positive move forward, it still does not go far enough to meet the demand from families most in need of affordable accommodation. For example, in England alone, there are more than 1.8 million households waiting for a social home.
People have been forced to start thinking differently to deliver the affordable homes their communities need. Community-led housing is one alternative: local residents are taking control of the affordable housing crisis at a community level and doing it themselves. While the community-led housing model is not new, it has seen a rapid growth in recent years. According to The Smith Institute, the sector is currently developing up to 400 homes a year, with an indication that this is likely to rise over the next three to five years. With rural schemes making up most of the completed projects in recent years, there are larger, urban schemes moving towards development that will contribute substantial affordable housing stock.
But while the numbers are part of the story, what is most exciting is the social impact of community-led housing. Not only does it provide affordable homes for those most in need but it also empowers local residents to design and deliver their own solutions to a self-identified problem. At a time when the issue of community cohesion is being publically debated in response to Dame Louise Casey’s report, community-led housing offers one opportunity to bring communities together and get buy-in behind a project. It also builds broader confidence in the community so that they feel able to tackle other complex issues themselves in future, and with assets and an income stream with which to do so.
For communities to be able to realise their ambitions they need the appropriate support and tools. From my own previous experience at The Prince’s Regeneration Trust, I have seen first-hand the passion communities bring to development projects but also the multiple complex challenges they face. These projects have three main needs: capacity building support, access to networks and appropriate funding.
I’m encouraged by the continuing growth of the infrastructure to support community-led housing projects. The membership bodies, such as the National CLT Network, Locality, and the Co-housing Network, play an important role in providing structured support to projects as well as sharing networks, whether of professions or peers for support. These enablers are vital and it’s positive to see increased cooperation and coordination of support to best meet the needs of projects in a comprehensive and effective way.
Projects require a range of types of funding as they move through their journey from initiation to completion – sometimes grants and sometimes repayable finance like social investment. A number of funders are already engaged with this space, including many grant providers that help communities kick-start their projects such as the Nationwide Foundation. Communities are also using alternative ways to fund projects, whether working with the local councils to secure free or discounted land, raising community shares or starting a crowd funding campaign.
With the emergence of larger community-led housing projects there will be increased funding need, and we thought that social investment might be able to play a role. So we’ve been exploring whether these projects can access the appropriate finance they need. After consulting with many organisations that work with projects, and talking to communities themselves, we found that in the short to medium term there was unlikely to be sufficient riskier (junior) capital to meet the demand from larger projects moving towards the development stage. In response we have designed a £15 million facility to meet this need and increase the available development capital for community-led housing projects.
We’re pleased to be working with FSE Group, Northstar Ventures, and Social and Sustainable Capital as the initial cohort of social investors to deliver this additional funding. BSC will invest alongside these participating intermediaries into larger projects where the intermediary is unable to fully fill a project’s funding gap due to constraint on how much it can lend. It should also simplify the process communities experience when putting a complex funding package together, minimising the numbers of doors they need to knock on for funding.
So what does success look like for us? Firstly, we’re hoping the facility will help get up to twelve projects across the finishing line in the next two years, delivering affordable homes to households in their community. Secondly, that the facility can leverage significant capital into the sector which could be up to £60 million on top of BSC’s £15 million.
And finally, that a track record of larger projects is built up which evidences the positive social impact and financial returns that investors can point to with confidence to support projects in future.