Investing in solutions to the UK homelessness crisis: opportunities for endowments and foundations 

UK homelessness is a growing social emergency. According to recent government figures, more than 132,000 households, including over 172,000 children, live in temporary accommodation, and around 5,000 people sleep rough each night. The human cost is severe, and some councils are being pushed to the edge of bankruptcy. Demand for affordable and supported housing is rising faster than funding and supply, creating an opportunity for investors seeking both impact and sustainable long-term returns.

In Marsh and BSC’s view, homelessness investing is emerging as a particularly compelling impact theme for UK endowments and foundations because it addresses a clear unmet need and can offer direct, tangible social impact.

Council spending on temporary accommodation reached £2.8bn in 2024/25, up 25% in a year, according to Shelter's analysis of government data. A long-running freeze on what councils can reclaim from government has made these costs, especially in London, the single biggest risk to local government finances.

Policy is moving in the right direction. Andy Burnham made ending rough sleeping his first instruction as Prime Minister, cementing its priority in the new government. The UK Government's National Plan to End Homelessness explicitly calls out the role of social and institutional investors, alongside catalytic funding, blended finance and grants that can help draw in private capital.

Public attitudes also appear supportive. Findings from the Better Society Index (an annual data-led platform developed by Better Society Capital), reveals one in four people say they, or someone close to them, has experienced housing insecurity in the past five years, rising to nearly half among 18 to 34 year olds. A majority of those polled supported private capital partnerships to tackle the issue, and over half say they would allocate part of their pension or savings to social causes such as homelessness if they had the option.

Homelessness investing sits within private markets, under real assets and property, and specifically within affordable and supported housing. This category spans four approaches, with most homelessness investment concentrated in the first and fourth:

Within investment manager funds, capital reaches homelessness housing through three broad models: equity, social outcomes partnerships and lending. 

The first is equity: building, acquiring and managing of homes. These strategies are underpinned by housing benefit, which has a long-term relationship with inflation, while giving investors exposure to the UK residential market and potential capital growth. 

The second is social outcomes partnerships between investors, delivery organisations and local and national government. The focus is on delivering outcomes through housing and support, with financial returns and social impact directly linked.

The third is social lending, where debt products finance housing and related support, across a range of structures.

Across all three, the common thread is partnership. Asset managers raise and deploy the capital and are accountable for returns, but they rely on housing providers with sector expertise and impact capability. 

Returns vary across the models. 

Equity strategies typically offer diversification through a steady distribution of inflation-tracking yield alongside exposure to UK residential property and potential capital growth. Well-designed models can also save local authorities money compared with more expensive alternatives. Together these features can make for a resilient risk-adjusted profile for long-term investors.

Social outcomes partnerships offer a different profile, with payments triggered only when pre-agreed outcomes are achieved. Social lending behaves more like conventional debt, often with structures designed to protect downside risk.

The impact case is well evidenced. For example, the "Everyone In" Social Investment Pilot (SIP), launched in 2020 and co-designed by Better Society Capital with the Ministry of Housing, Communities and Local Government, pooled £50 million of public and private capital and attracted a further £138 million of investment. By March 2025, it had funded 528 properties across England and Scotland, with more than 80% in areas with the highest levels of homelessness, temporary accommodation use and income deprivation. An independent evaluation of the pilot by Manchester Metropolitan University confirmed these outcomes, alongside improvements in tenancy sustainment and wellbeing for residents.

In Marsh’s experience, interest from endowments and foundations in homelessness investing is growing as confidence builds that established strategies can deliver both financial returns and measurable outcomes, although pitfalls remain and careful manager selection is essential. Further, good impact measurement looks beyond headline housing numbers to whether homes are being provided in the areas of greatest need, positive move-on outcomes for tenants, and how housing affects health, financial security, wellbeing, relationships and employment.

Three points stand out for endowments and foundations weighing an allocation.

First, be clear on impact intent and additionality: is the capital enabling housing and outcomes that would not otherwise exist?

Second, value local partnerships and size allocations appropriately. Sustainable outcomes depend on collaboration between managers, housing providers, charities and local authorities, and Marsh believes collaboration with other investors, including LGPS pools, could also be an important route to scaling investment in this area.

Third, conduct rigorous due diligence. This opportunity has a distinct risk profile and requires specialist expertise, so should assess a manager’s business, investment strategy, alignment and track record.

As more endowments and foundations explore mission-aligned investing, homelessness housing offers a rare chance to combine sustainable, long-term returns with measurable social change.

Watch our webinar playback that further explored these themes