In recent years, ‘social housing' has become an increasingly important component of our sustainable funds at RLAM. However, it is crucial to find the right way to invest in the sector, in a manner which respects the strong social benefits that it provides.
The provision of affordable homes is a clear social benefit, and one which makes the sector attractive for our funds. As housing charity Shelter England puts it, social housing "gives social renters better rights, more control over their homes, and the chance to put down roots".
The sector's approach to its own environmental, social and governance (ESG) obligations has also been maturing. Royal London Asset Management (RLAM) fed into the consultation for the first set of industry-wide standards on sustainability reporting and we are encouraged by the numbers of housing associations that are taking them up.
Standardised data
The production of standard data should help investors to better compare the relative ESG performance of different social housing borrowers. Increasingly, however, our analysis is driven by more than an assessment of operational policies and practices, preferring to make a more holistic assessment of what each association offers. For example, we aim to scrutinise the future development pipelines that our bonds are funding to assess how much is being put towards badly needed general purpose social housing, as opposed to homes for market rent or shared ownership.
There are two major ways in which investors can get exposure to the social housing sector. The first, and our preferred method for our sustainable funds, is to buy bonds issued by registered not-for-profit housing associations. This is one of the most ‘impactful' elements of our portfolio as, while many businesses we invest in have a positive impact, here much of the lending we provide is going directly into the construction of new social housing properties.
This article was funded by RLAM
Past performance is not a guide to future performance. The views expressed are those of the authors at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.
