Gemma Bourne
- Innovative approach saves taxpayer £140m in ten years.
- Safe accommodation increases tenant wellbeing, delivering £17,500 in wellbeing benefits per person.
- Big Society Capital is calling on a future Government to grow use of the approach – which could quadruple impact, housing 23,750 people.
- Many local authorities are facing bankruptcy and skyrocketing temporary accommodation costs.
Big Society Capital, the UK’s leading social impact investor, has launched research showcasing the transformative impact of an innovative funding approach which has in ten years housed over 3,300 people, including 1,607 children, who were at risk of homelessness, resulting in significant savings for the government.
Known as homelessness property funds, the model operates by attracting capital from institutional investors including pension funds to acquire properties, refurbish them to a high standard, and lease them to homelessness charities and housing associations. Tenants are provided with stable, affordable accommodation in safe areas, which enables them to receive wraparound support with their health, wellbeing and seeking employment opportunities.
The findings are based on analysis of five funds managed by social property fund manager Resonance Ltd, which have between 2013-2023 acquired over 1,000 properties – that, alongside support services provided by their housing partners, have saved local and central government £140m in spend on temporary accommodation plus other homelessness costs on healthcare, mental health and criminal justice services.
The news comes as many local authorities face bankruptcy and grapple with mounting financial pressures, including skyrocketing temporary accommodation costs, which have increased 62% in five years.[1]
The research – which was conducted by Alma Economics – highlights the role that these funds have played in helping local authorities tackle this challenge. It demonstrates that thanks to the high-quality accommodation that enables access to wraparound care, tenants see a significant boost to their wellbeing when compared to those living in temporary accommodation – delivering wellbeing benefits equivalent to £17,500 per person.[2]
Tenant case study: Lee became a chef at nineteen and for twenty years he worked in the sector. He worked his way through the ranks, eventually becoming a Head Chef for ten years. However, alcohol was a big part of the industry’s working culture, leading to dependency and Lee finding his life start to spiral out of control.
“This home, it’s helped me to relax, to calm down a lot. It’s helped me manage my abstinence a lot better. And in all fairness, to find accommodation like this, for someone who was in my position before, it’s extremely difficult, and that’s why I feel like the people who have made this happen for me are doing a fantastic job. It does make a difference.”
75% of households in temporary accommodation live in poor conditions and more than two thirds of people have inadequate access to basic facilities; in contrast, 96% of tenants in Resonance homelessness fund accommodation report that the property is in good condition, with 97% reporting that it has had a positive impact on their relationships.[3]
Big Society Capital emphasises the important role that government grant has played in driving the success of these initiatives in recent years. For example, reallocation of existing housing investment made by the Department of Levelling Up, Housing and Communities (DLUHC) in 2021 and 2022 into the homelessness property funds leveraged significant additional funding from investors, multiplying the impact of government expenditure.
For every £1 of public and private investment into Resonance’s current fund, the National Homelessness Property Fund 2, £2.3 in financial and social value will be created over the next 10 years.
Big Society Capital is calling for the government to reallocate a larger proportion of its existing spend to further scale initiatives like this which enable taxpayer funds to go much further. With a £100m grant from government, it estimates that projected impact over the next ten years could be quadrupled – catalysing an additional £650m from investors, which could house 23,750 people and generate £1.1bn in public savings on homelessness.
Gemma Bourne, Managing Director at Big Society Capital, said: “The alarming reality is that vulnerable individuals and families are enduring substandard living conditions in temporary accommodation. This is not good for them and it puts a heavy financial toll on Local Authorities, pushing them dangerously towards bankruptcy. It also underscores a glaring shortage in social and affordable housing – with research showing that £16.9 billion will be needed every year to address undersupply.
“Our report demonstrates a solution which has now existed for over a decade – but for it to adequately address the challenge at hand, we need government to act now to actively crowd in further investment.”
Chris Cullen, Fund Manager and head of Resonance Homelessness Property funds, said: “Shockingly there are over 104,000 households living in temporary accommodation across England, including over 130,000 dependent children. This report from Big Society Capital and Alma Economics, highlights how social impact property funds can have an important role to play in not only successfully helping people in a housing crisis move on with their lives in safe affordable homes, but also the savings that can be achieved at both a local and central government level.”
[1] https://england.shelter.org.uk/media/press_release/homeless_accommodation_bill_hits_17bn_
[2] The research demonstrates the benefits to life satisfaction of being housed in these funds. It uses findings from the Fujiwara and Vine’s (2015) analysis which puts a monetary figure on the impact of living in private accommodation vs temporary accommodation on life satisfaction. (https://hact.org.uk/wp-content/uploads/2021/11/Homelessness-and-wellbeing-analysis_web.pdf)
[3] https://trustforlondon.org.uk/research/shelter-still-living-in-limbo-why-the-use-of-temporary-accommodation-must-end/ ; https://resonance.ltd.uk/news/news/homelessness-property-funds-social-impact-report-2022-23
