The housing crisis in the UK is an ongoing problem that affects thousands of people and families across the country. Despite billions of pounds being poured into affordable housing initiatives, the problem persists. Investment in this sector is often hampered by a lack of funding and the high cost of provide quality housing. As a result, many communities are facing a growing shortage of affordable housing.
This presents a significant challenge for the government, housing developers, and investors. It requires an alternative solution to be sought, one that will help the UK, and specifically the affordable housing market, attract more investment and financial resources. Impact investing could be a potential solution.
Impact investing has come to be recognised as an innovative, effective way to provide financial resources to help social and environmental issues. Impact investing has become a popular concept in recent years, leading an increasing number of investors, corporations, and other stakeholders to weigh the impact of different investment decisions and strategies.
Impact investing involves investing capital to achieve social and/or environmental objectives, as well as financial returns. It is different from other forms of investing, such as philanthropy and traditional investment, because it involves assessing the expected return on an investment in conjunction with its potential impact.
Investors and funders can use impact investing to support a range of initiatives from renewable energy projects, to access to clean water, to improved housing for people in need. In the UK, impact investing has been used to fund numerous affordable housing initiatives.
One of the most prominent projects in this field is the Impact Investing Institute, a non-profit organisation that works to mobilise capital for social change. Established in 2018, the Impact Investing Institute helps investors find more effective ways to send money to causes where it can have the biggest impact. The organisation offers a range of resources, from training to industry research, to help investors maximise their investments in impact projects.
In addition to the Impact Investing Institute, there are a number of other organisations that are helping to drive impact investing in the UK. Acumen, for example, has been operating in the UK since 2011 and focuses on providing investments to businesses that focus on providing services and products to the poor.
Other organisations that are driving impact investing in the UK include UBS Optimus Foundation, which provides grants to organisations that drive purpose-filled change, and ClearlySo, which helps connect investors and entrepreneurs to social impact projects.
Despite the growth of impact investing, there is still a need for more investors to drive the field forward. Impact investing can be challenging and risky, with investors often needing to rethink how they approach portfolio decisions and take on more sophisticated strategies to make a tangible social difference.
The UK government also has an important role to play in helping to develop and promote impact investing in the UK. In recent years, the government has provided financial and legislative frameworks to encourage and support impact investors.
A notable example is the 2017 Social Investment Tax Relief (SITR), which provides tax relief for social and community investments between £30,000 and £10 million. This has been essential in helping to unlock capital from individual investors, and encouraging more traditional investors to make impact investments in the UK.
Moreover, the government has sought to provide clarity around the definitions of social and community investments, helping investors better understand the impact of their investments. This has led to increased transparency and accountability, helping investors to better assess their investments and providing valuable information on their potential return and impact.
Overall, it is clear that impact investing can be a powerful tool for addressing the housing crisis in the UK. While more work needs to be done to increase investor engagement and improve the understanding of impact investment strategies, there is a growing recognition of the importance of impact investment in providing new sources of capital for affordable housing projects in the UK.
The UK government has taken important steps to support impact investing, while organisations such as the Impact Investing Institute and ClearlySo are helping to mobilise capital for social change. As more investors learn about and invest in impact projects, the hope is that more individuals and families in the UK can access the quality and affordable housing they need.