As parts of the investment-backed social housing sector come of age, the conversation around growth is beginning to change. The question is no longer simply how much can be delivered, but where investment is best deployed, how homes are designed and managed, and how growth can align with local and national priorities.
The need for affordable housing remains acute, and capital has a vital role to play in unlocking supply. But maturity brings with it a responsibility to be more deliberate – ensuring that growth supports long-term outcomes for residents, communities and the places in which homes are built. In this second Q&A on the Affordable housing market, Peter Merchant, Investment Director at Savills IM discusses why aligning investment, place and long-term affordability is crucial when investing in Affordable homes.
1) What long-term opportunities does deploying institutional capital bring to Affordable housing investment?
One of the clearest opportunities that comes with deploying long-term capital at scale is the ability to prioritise quality from the outset. Increasingly, that means new homes which are designed not only to meet regulatory standards today, but to perform well over decades.
For residents, affordability is about more than rent levels alone. Energy costs, maintenance and the overall cost of living in a home are also important considerations. Designing homes that are highly energy efficient, zero-carbon-ready and built to last is therefore as much a social consideration as it is an environmental one.
This approach closely aligns with Homes England’s focus on quality, sustainability and long-term value. By embedding these principles at the point of delivery, providers can reduce the need for future retrofit, lower long-term operating costs and help protect residents from volatile energy prices — all while supporting national decarbonisation objectives.
2) What ‘place‑based’ factors should be considered when building a portfolio of Affordable homes?
As portfolios grow and FPRPs mature, impact becomes less about these intended outcomes and more about execution.
What matters is not just how many homes are delivered, but how investment-backed providers approach ongoing asset management with considerations around; how safe the homes are, the ongoing maintenance of homes, processing resident service and feedback, and how effectively assets are stewarded for the long term.
There is also a growing recognition that impact strategies and business plans need to evolve together as early assumptions now give way to lived operational experience. Governance, data, systems and asset management approaches need to be refined as portfolios move from growth into long-term operation.
3) What lessons are there to be learned from what has come before in Affordable housing?
As investment-backed providers mature, their approach enables a more considered strategy as to where homes are delivered. Rather than pursuing growth wherever opportunity arises, there is increasing value in focusing investment in locations that reflect local housing need and policy priorities.
Devolution is changing how housing strategy is shaped, with combined authorities and local leaders playing a more active role in setting priorities around tenure, affordability, regeneration and placemaking. For providers, this creates an opportunity to align investment with local plans.
Consolidating portfolios geographically allows providers to build a meaningful presence in specific places. This supports deeper engagement with local authorities, Homes England, combined authorities and other stakeholders; and enables delivery that responds to local housing strategies rather than generic models.
A more concentrated operational footprint also brings practical benefits. It enables closer engagement with residents, clearer accountability and more consistent service delivery. It supports stronger relationships with local managing agents, maintenance providers and professional teams, helping to build resilient local supply chains.
From a place-based perspective, this matters. Local employment, skills and economic activity are increasingly part of how housing investment is assessed, particularly within devolved funding and delivery frameworks. A stable, long-term presence allows providers to contribute more meaningfully to local economies while improving operational performance.
4) How are investors approaching the Affordable housing space?
Well another feature of a maturing investment market is the nature of the capital itself. Many institutional investors, including pension funds, are increasingly interested in how and where their capital is deployed — not just the returns it generates. Indeed, INREV’s 2026 Investor Intentions Survey revealed that over half of Europe- and Asia-Pacific-based respondents plan to increase allocations to impact-driven investments in 2026.
There is growing appetite to see investment aligned with the places investors are connected to, linking capital deployment to local regeneration, housing delivery and infrastructure priorities. When aligned well, this creates a strong connection between private capital, Homes England’s strategic objectives and the ambitions of devolved authorities.
For local and national government, this offers a way to crowd-in patient, long-term capital that supports delivery at scale without compromising on quality or affordability. For providers, it reinforces the importance of working with investors who share a long-term outlook and an interest in place-based outcomes.
5) How will this increasing level of maturity change the way in which providers approach the long-term investment in the space?
Taking all these points together, I see market that will take a more purposeful approach to growth moving forward – one that prioritises:
- high-quality, low-carbon homes,
- affordability in use for residents,
- alignment with Homes England and local housing strategies,
- consolidated operational footprints, and
- long-term, place-based investment.
This is not about slowing delivery, but about being intentional in how capital is deployed. As the sector continues to evolve, maturity should give providers the confidence to be selective – to focus not just on how much they deliver, but on where, how and why.
If the first phase of investment-backed social housing was about establishing credibility, the next phase may be about demonstrating how capital, policy and place can work together to deliver better outcomes for residents and communities.
