Background

Increasingly, in many major cities and towns across the world, housing, whether for sale or rent, has become increasingly unaffordable. See link below

How and where we work is changing substantially and governments . housing developers and investors can create opportunities to reduce the imbalance between supply and demand and types of housing, and therefore cost, of housing.

The role of , and opportunities relating to, the financing of social and affordable housing

There is tremendous scope to assist in the objective to improve housing availability and cost through financing. There are numerous ways in which financing for affordable and social housing can be provided, including

  1. PPP related financing with Central and Local government authorities entering into rental agreements of varying durations
  2. Single asset and portfolio financings
  3. Financing across the capital stack from senior secured debt to mezzanine finance, hybrid instruments and equity
  4. Financings for both developments and income producing properties
  5. Development of the market for Housing REIT focussed on social and affordable housing
  6. Credit enhanced debt financings so that financings  can be structured to meet the risk and return requirements of debt providers
  7. Equity financings in which renters of affordable / social housing are given shares based on the amount of rent paid on time and duration of tenancy

There is also the scope to structure transactions as “green” and / or sustainable financings.

Why is there not a larger market for the financing of social and affordable housing? What are your views? What are the obstacles?

Perhaps I am missing something obvious, but I am puzzled why the financing of social and affordable housing has not been growing very quickly and become a distinct Asset Class. As mentioned above there are various ways in which financing of social and affordable housing can be provided, with the scope for transactions to be structured to meet the risk and return requirements of a range of finance providers, differing  debt maturity profiles and financings tied to “green financing” and “Sustainable Financing” performance targets.

Would be interested in your views on obstacles that need to be overcome to develop a more vibrant finance market for social / affordable housing.

 

Property Prices Index by Country 2024 (numbeo.com)