Covid-19 has put the UK’s housing crisis into sharp focus. TGE CEO Sarah Forster explains how a pioneering collaboration of investors and housing associations could help unlock the investment necessary to tackle this entrenched and deadly issue

The Covid-19 pandemic has seen the social housing sector demonstrate nthe breadth of its value to local communities, by mobilising quickly andn efficiently to support thousands of vulnerable people in a myriad of nways at a time of unprecedented need.

Data released last week by the Office of National Statistics give a nshrill warning about why, more than ever, there is an acute need for ngood, affordable homes to become the norm. It found people living in then most deprived parts of England and Wales are dying from Covid-19 at then twice the rate of those in the most affluent areas – poor quality nhousing and over-crowding are widely cited among the most likely factorsn underlying this disparity. The lockdown is reinforcing how important itn is for people to have a good home at a price they can afford.

The UK was in the midst of a housing crisis long before the cruel nblow of Covid-19. Likewise, The Good Economy’s work, alongside Peabody nand Centrus Financial and nine partners, on how to sustain and increase ncapital flows into the UK social housing sector started many months nbefore the onset of the generational challenge we face today.

Today, we published a joint white paper setting out recommendations ndesigned to boost levels of socially responsible investment in social nhousing. The paper focuses on defining Environmental, Social and nGovernance (ESG) considerations viewed as material both to business nstrategy and investment decision-making.

The ten themes and 45 criteria in the ESG approach represent a nconsensus between working group housing association and investor membersn on what is important to measure and report on from an ESG perspective. nWe are now taking this to wider consultation with a dedicated website www.esgsocialhousing.co.uk, where comments, feedback and ideas are now invited.

The paper points out the £2tn UK sustainable investment market is ngrowingly rapidly, with increasing focus on integrating ESG nconsiderations into investment strategies across all asset classes, nincluding real estate. Social housing is already part of this rising ntrajectory, having seen investment from the debt capital markets nincrease from c.£16bn in 2013 to £39bn in 2019.

The traditional drivers of value have been shaken, new ones will gain prominence, and there’s a possibility that the gulf between what markets value and what people value will close.

Covid-19 means it is more vital than ever to sustain this trajectory.n While a return to austerity feels increasingly impossible, the nGovernment will undoubtedly be working under new fiscal constraints as nit attempts to plot its way through a “new normal”. While public ninvestment will continue to be essential, particularly to deliver socialn rent homes, increased levels of private investment are needed to tacklen the UK housing crisis.

These testing times, and the search for diversification and yield by ninstitutional investors, is fueling increased investor interest in new nsectors including social housing. This suggests there could be more nmotivation for flows of capital to be influenced in ways that tackle npreviously entrenched issues, such as the housing crisis. The aim of ourn white paper is to help housing associations demonstrate their ESG ncredentials so they can take advantage of any surge in interest.

We believe all investment should be driven by both financial and nsocial value creation. The UK social housing sector has strong social nvalues and a tradition of building financially strong business models ndriven by a social purpose.

With increasing investor interest in the social housing sector, nincluding new entrants bringing new private equity and ownership models,n it is important the integrity of the sector and its social purpose are nnot diluted. This is particularly important at a time when all market nparticipants need to focus on delivering homes that are genuinely naffordable to those on low-incomes and also investing in building safetyn and decarbonisation.

This is what I believe Mark Carney, former Governor of the Bank of England, was alluding to in an article he wrote for The Economistn last month: “The traditional drivers of value have been shaken, new nones will gain prominence, and there’s a possibility that the gulf nbetween what markets value and what people value will close… economic ndynamism and efficiency have been joined by those of solidarity, nfairness, responsibility and compassion.”

And I think we should be confident he is right.