Is social impact investing the solution to the temporary accommodation crisis?
Social impact investing is a way to grow your money by putting it into people- and planet-centred projects, unlocking opportunity for those on the margins. Big Society Capital found it has kept 3,300 people out of temporary accommodation in the last decade
Lee has been able to end a cycle of alcohol abuse and hospitalisation after social impact investing helped him into his own flat. Image: Big Society Capital
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If there was any doubt whether money mattered when it comes to ending homelessness, just ask Lee. The former chef doesn’t believe he would be alive today if it wasn’t for the power of social impact investing.
The rigours of life in the hospitality industry saw Lee walk away from it all: swapping kitchens for camping in the woods at the age of 41 to escape the rat race and 60-hour working weeks.
He was homeless through choice up until June 2020 when he contracted peripheral neuropathy ataxia, a condition affecting co-ordination, balance and speech, and that meant that he had to head indoors for good.
But moving out of street homelessness only compounded Lee’s problems. Life in between countless shared accommodation and hostels took its toll on him and he turned to drink to cope, sending his health into rapid decline.
“I came from a professional background and living the free life and then I was just in a really grotty, filthy house surrounded by complete and utter fucking chaos, absolute hell,” he tells Big Issue.
“I was turning to alcohol to relieve myself from the anxiety and the stress of living there. I was getting myself into a worse physical condition because of the alcohol but it was my only way of coping at the time.
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“My drinking was getting bloody serious. I was in intensive care six times and had over 20 hospital admissions in two and a half years. That was all due to the housing they put me in, like a hostile environment. This is what needs to be seriously addressed because I believe everybody in this world is entitled to somewhere safe to live.”
The relentless pattern of being hospitalised, discharged, placed in more unsuitable accommodation and drinking himself back into hospital ended in May 2022.
This time when he was told he was being discharged into emergency accommodation he said no. “I told them: ‘I don’t know about you guys but I’m starting to see a pattern emerging. Just listen to me’,” says Lee.
He was placed in a one-bedroom self-contained apartment in Bristol for two months before social impact investing paved the way for him to move into the flat he has called home for the last 18 months.
Lee was housed through a homelessness property fund. The fund operates by attracting capital from institutional investors such as pension funds to acquire properties, refurbish them to a high standard and then lease them to homelessness charities and housing associations.
Big Society Capital (BSC) – one of the UK’s biggest social impact investors – launched research with the help of Alma Economics last week into how the funding has impacted the housing crisis.
The study looked at five funds managed by social property fund manager Resonance encompassing more than 1,000 properties. It found social impact investing has kept 3,300 people, including 1,607 children, facing homelessness out of temporary accommodation.
The model has saved the taxpayer £140 million on temporary accommodation in the last decade – a sizeable benefit at a time when the cost of these properties is threatening to overwhelm councils.
The gains also extend to mental health and criminal justice services and, as Lee demonstrates, other homelessness costs on healthcare.
Providing safe accommodation alongside wraparound care delivers an estimated £17,500 in wellbeing benefits per person, the study found.
The homelessness property funds also turbocharge government investment. BSC found reallocating existing housing investment from the Department for Levelling Up, Housing and Communities in 2021 and 2022 into homelessness property funds leveraged additional funding from investors to multiply the impact of government spending.
Big Issue Invest, the Big Issue’s social investment arm, is also a social impact investor and has invested over £80m in more than 550 organisations aimed at unlocking opportunity for people affected by poverty – including those at risk of homelessness. For example it runs a £10m ‘‘London Affordable Housing Programme’ which is supported by the Greater London Authority and aims to support housing associations and charities in providing new affordable housing in London.
Big Issue Invest has also recently launched a new £20m fund (‘Social Impact Debt Fund IV’) which supports charities, social enterprises and mission-driven businesses across the UK to increase the supply of affordable housing and improve its quality, including wrap-around support.
Now, BSC wants the government to utilise the model even more. The investor estimates that pouring a £100m government grant in could quadruple its projected impact over the next decade. That could catalyse an additional £650m from investors and house 23,750 people while generating £1.1 billion in savings on homelessness for the taxpayer.
Gemma Bourne, managing director at Big Society Capital says: “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 £16.9bn 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.”
Homelessness property funds have already made a big difference for people like Lee, who celebrated his 50th birthday earlier this month.
Former chef Lee has been able to rekindle his love of cooking and eat more healthily. Image: Big Society Capital
Having a stable base and wraparound support has enabled him to keep out of hospital and even rekindle his love of cooking now he is living in a place with a kitchen to himself.
“The reality of my situation is that if I didn’t have this I don’t think I’d be here today and that is not being dramatic – what I went through to get here was awful and I wouldn’t wish it on anybody,” he says.
“I’m a lot healthier now. I’m not drinking excessively to the point of the brink of death so it’s all positive and it’s just been amazing.
“I’ve got an absolutely lovely flat in a lovely area and I know all my neighbours. When I look out my window I’m not looking at concrete, I’m looking at a park. It’s really helped me so much to calm down, find my feet again and regroup my life.
“I eat really healthy food now – having my own kitchen has just been massive for me really.”
Are you a charity, social enterprise or mission-driven business focused on tackling homelessness in the UK seeking funding to provide housing? Apply for Big Issue Invest’s Social Impact Debt Fund IV now.
This article is taken from The Big Issue magazine, which exists to give homeless, long-term unemployed and marginalised people the opportunity to earn an income. To support our work buy a copy!
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