Author: Barbara

Barbara Mettle-Olympio

The Renters’ Rights Bill builds on the groundwork established by the previous government’s Renters’ Reform Bill, introducing changes designed to provide renters with more security and fairness. At the same time, the bill ensures that responsible landlords can continue to manage their properties effectively. These new measures are not expected to impact landlords who already follow fair practices and maintain quality properties. Instead the proposed legislations focus on addressing major issues such as unfair evictions, unpredictable rent increases, and poor living conditions, which have affected millions of renters across England.

If passed, the bill is expected to become law by summer 2025, marking a step forward in housing reform. In this article, we’ll highlight the key proposals in the bill and examine how they will affect both tenants and landlords.

Tenancy Reforms

  • Periodic Tenancies
    Fixed-term assured tenancies will be replaced with Periodic Tenancies, offering greater flexibility for both tenants and landlords. Under this system, tenants can remain in their home for as long as they need, with a two months’ notice to leave. This allows tenants to adapt to life changes, such as a new job or buying a home. The introduction of Periodic Tenancies will abolish Section 21 ‘No-Fault’ Evictions.

  • Grounds for Possession
    The bill strengthens and clarifies the grounds for possession, ensuring that responsible landlords can regain their property for legitimate reasons while protecting tenants from arbitrary eviction. Landlords’ rights to reclaim properties for personal reasons, such as selling or moving in, are preserved, with tenants receiving a 12-month protection at the start of their tenancy and four months’ notice if the landlord needs the property back. Special provisions also ensure properties in sectors like supported accommodation remain available for their intended purposes. Landlords can give notice at any time during a tenancy if a tenant is at fault, such as for antisocial behaviour, property damage, or significant rent arrears. To protect tenants in temporary arrears, the eviction threshold will be raised from two to three months of unpaid rent, and the notice period will be extended from two weeks to four. This gives tenants more time to repay while ensuring landlords are not overburdened. Landlords can still use discretionary grounds for repeated late payments.
  • Rent Arrears Protections
    Tenants can challenge unreasonable rent increases, preventing landlords from using rent hikes as a way to force evictions. Landlords can only increase rent once per year to market rates, with two months’ notice using a Section 13 Notice. Tenants can challenge any increase at the First-tier Tribunal, which will determine if the proposed rent is fair. To protect tenants, rent increases will not be backdated, and tribunals will no longer have the power to raise rent beyond the landlord’s initial request. In cases of hardship, the tribunal can defer rent increases for up to two months. Other rent increase methods, like review clauses, will no longer be allowed, ensuring transparency for both tenants and landlords.

Implementation of Tenancy Reforms

The new tenancy system will be implemented in a single stage, applying to all existing and new private tenancies on a specific date. This will convert fixed-term tenancies into periodic tenancies, and Section 21 evictions will no longer be allowed. The aim is to provide immediate security for all tenants and avoid a confusing two-tier system. The government will work with the sector to ensure a smooth transition and give sufficient notice before implementation.

For the social rented sector, the abolition of Section 21 will occur later, as it requires updates to the Regulator of Social Housing’s Tenancy Standard, following a statutory consultation process. Most social tenants already have secure tenancies that don’t use Section 21.

Private Rented Sector Database

The Renters’ Rights Bill will also introduce a Private Rented Sector Database that will require all landlords of assured and regulated tenancies to register themselves and their properties. Landlords who fail to do so could face penalties. The database will offer a one-stop shop for landlords while providing access to guidance and compliance information, ensuring they stay updated on legal responsibilities.

For tenants, the database will increase transparency, allowing them to check landlord information before renting and helping them to enforce their rights. Local councils will also benefit, as the database will provide crucial data to help identify non-compliant properties, enabling more effective enforcement against rogue landlords.

Private Rented Sector Landlord Ombudsman

A Private Rented Sector Landlord Ombudsman Service will also be introduced under the new proposals. All landlords in England with assured or regulated tenancies must join, including those using managing agents. Tenants can use this free service to resolve complaints about landlords’ actions or behaviours, with the ombudsman providing fair, impartial, and binding decisions, including requiring apologies, remedial action, or compensation.

The service will also benefit landlords by offering a quick and cost-effective way to handle complaints and improve practices. Tenants can seek rent repayment if landlords persistently fail to join. Landlords must comply with ombudsman decisions, and failure may result in expulsion and further enforcement.

Prohibiting Rental Discrimination

The bill aims to tackle rental discrimination against families with children and those receiving benefits, ensuring fair access to housing. It targets both overt practices, like “No DSS” adverts, and more subtle discriminatory actions by landlords or agents. While landlords retain the right to assess tenants based on affordability, they can no longer refuse tenants solely because they have children or receive benefits. These protections will be introduced in England, with similar measures extended to Wales and Scotland through collaboration with their governments.

Rental Bidding

The Renters’ Rights Bill will outlaw rental bidding, where tenants are forced to compete by offering higher rents. Landlords and agents will be required to publish a set asking rent and will be prohibited from accepting offers above this price. This change aims to create a fairer system for renters and eliminate exploitative practices by a small number of landlords, improving the rental experience for tenants across England.

Pets

Under the new bill, landlords cannot unreasonably refuse tenants’ requests to have pets. Tenants will have the right to challenge unfair denials. To address landlords’ concerns about potential damage, the bill allows landlords to require pet damage insurance, ensuring any harm caused by pets is covered. Guidance for both landlords and tenants will be published before these rules take effect.

Decent Homes Standard

The Decent Homes Standard (DHS) will be introduced to the private rented sector, ensuring that all tenants live in safe and decent homes. This new standard will clarify housing requirements and give local councils enforcement powers to maintain consistent quality across the sector. While most landlords already provide good-quality housing, the DHS will establish a clear, uniform standard for all, benefiting both tenants and responsible landlords.

Awaab’s Law

The Renters’ Rights Bill extends Awaab’s Law to privately rented homes, ensuring that landlords address hazards like damp and mould within a specified timeframe. Inspired by the tragic death of Awaab Ishak, this law empowers tenants to challenge unsafe conditions, and landlords who fail to act can face enforcement action through the courts. This measure aims to ensure that all rental homes in England are safe and healthy for tenants.

Conclusion 

The Renters’ Rights Bill is a key step toward reforming the Private Rented Sector, providing stronger protections for tenants while ensuring landlords’ rights remain clear and fair. By addressing issues such as evictions, rent increases, and housing standards, the bill aims to create a safer, fairer, and more transparent rental market.

For more details, including FAQs on the bill, please visit Guide to the Renters’ Rights Bill. You can also sign up to our newsletter below for the further updates.


Barbara Mettle-Olympio

London, one of the world’s most dynamic and populous cities, faces a significant housing crisis that has resulted in an alarming rise in the use of temporary accommodation. Temporary Accommodation (TA) refers to short-term housing provided by local authorities to individuals and families who are experiencing homelessness or are at immediate risk of homelessness. The provision of temporary accommodation is intended as an interim solution until permanent housing can be found. However, in London, the demand for TA has surged to unprecedented levels, and many families find themselves stuck for months or even years. This article explores some of the challenges of TA in London, examining its root causes, the social and economic consequences, and potential solutions to address this growing issue. 

Understanding the scope of temporary accommodation

The use of TA in London has grown significantly over the past decade. As of March 2023, there were over 60,000 households living in TA, accounting for more than two-thirds of the total number across England. This figure includes around 85,000 children; equating to one child per class. To add complexity 10 per cent of these households had a member with a physical disability or ill health. The total number of households in TA represents a 40% increase compared to a decade earlier. The rising number of people in TA is a direct result of an acute shortage of affordable housing, coupled with a high rate of homelessness due to economic pressures, welfare reforms, and the impacts of the COVID-19 pandemic. 

Local authorities in London are legally required under the Housing Act 1996 to provide temporary accommodation to eligible homeless households. However, the growing demand for such accommodation has strained local authority budgets and resources. In 2023-2024, London boroughs collectively spent more than £90 million per month on temporary accommodation, a figure that has been rising steadily each year. This level of expenditure is startling, unsustainable and diverts funding away from other essential public services.

Causes of the rising demand for temporary accommodation 

Several factors contribute to the rising demand for temporary accommodation in London, reflecting broader issues within the housing market, socio-economic challenges, and policy shortcomings. 

  • Lack of affordable housing 
    The most significant factor driving the use of temporary accommodation in London is the lack of affordable housing. Over the past two decades, house prices in London have skyrocketed, outpacing wage growth and making it increasingly difficult for low- and middle-income households to afford housing. The average house price in London is now over £550,000, nearly double the national average, making homeownership unattainable for many. At the same time, private rental costs have also increased, with the average monthly rent in London exceeding £2,000, compared to the national average of around £1,200. 

    The shortage of social housing further exacerbates the problem. Social housing stocks have dwindled due to a combination of factors, including the Right to Buy policy introduced in the 1980s, which allowed tenants to purchase their council homes at discounted rates, and a lack of new social housing construction. The result is a severe mismatch between supply and demand for affordable housing, pushing many low-income households into temporary accommodation when they cannot secure a long-term home.

  • Rising homelessness 
    Homelessness in London has been on the rise, driven by various socio-economic factors. A significant contributor is the shortage of affordable housing, which forces families and individuals into precarious living situations. In addition, welfare reforms, such as the introduction of Universal Credit and the benefits cap, have reduced the financial support available to low-income households, making it harder for them to afford rent. According to Crisis, London accounts for more than half of all rough sleepers in England, with over 8,000 people sleeping rough in 2023. 

    The COVID-19 pandemic has further exacerbated the issue by causing job losses and economic instability. Many households, especially those in low-paid or precarious employment, have found themselves unable to pay rent or meet mortgage repayments, leading to evictions and homelessness. The “Everyone In” initiative, launched by the government in March 2020 to provide emergency accommodation to rough sleepers during the pandemic, highlighted the scale of the issue but also strained local authority resources as they tried to find more sustainable housing solutions post-pandemic. 

  • Policy and regulatory challenges 
    Housing policy and regulatory challenges have also contributed to the problem. Planning regulations and the high cost of land in London make it difficult to develop affordable housing at the scale required. Moreover, local authorities face limitations in their ability to build new social housing due to restrictive borrowing caps, limited funding, and complex planning processes. While recent reforms have aimed to relax some planning rules, the impact has been limited in addressing the fundamental shortage of affordable homes. 

    Additionally, the lack of coordination between local and central government has led to piecemeal approaches that fail to tackle the root causes of the housing crisis. The reliance on temporary accommodation as a stopgap measure has become entrenched, with insufficient focus on preventive measures and long-term solutions. 

The impact of temporary accommodation 

The reliance on temporary accommodation in London has significant social, economic, and psychological consequences for individuals, families, and society as a whole. 

  • Impact on families and children 
    Living in temporary accommodation can be extremely destabilising for families, particularly for children. Temporary housing is often of poor quality and overcrowded, lacking basic facilities such as adequate cooking, bathing, or play areas. Many families are placed in hostels, bed and breakfasts, or converted office spaces that are not designed for long-term living. According to Shelter, over 60% of families in temporary accommodation in London are placed in such unsuitable conditions. 

    Children living in temporary accommodation are more likely to experience disruptions in their education due to frequent relocations and long commutes to school. They’re also at a higher risk of mental health issues, such as anxiety and depression, due to the instability and stress of their living situation. These children also have worse educational outcomes and lower levels of wellbeing compared to their peers.

  • Financial strain on local authorities 
    London boroughs are collectively spending around £90 million per month, or about £3 million daily, on temporary accommodation—a nearly 40% increase from the previous year. Local councils face financial strain as the government subsidy for these costs is frozen at 2011 levels, despite the substantial rise in accommodation expenses over the past 13 years. This funding gap exacerbates the financial strain on local authorities, already constrained by limited support, making it difficult to manage growing temporary housing needs effectively. The reliance on TA is not a cost-effective solution. It leads to a vicious cycle where local authorities are forced to allocate more resources to short-term measures rather than investing in long-term housing solutions. This financial strain limits the ability of councils to provide other essential services, such as education, social care, and public health.

  • Social and community impacts 
    The widespread use of TA also has broader social impacts. When families are placed in temporary housing outside of their local area, they are often uprooted from their support networks, schools, workplaces, and communities. This displacement can lead to social isolation, a breakdown of community ties, and a loss of social capital. For vulnerable individuals, such as the elderly, people with disabilities, and those with mental health issues, the lack of stable housing and support networks can have severe consequences for their wellbeing. 

    Moreover, the concentration of temporary accommodation in certain areas can strain local resources and create tensions within communities. Areas with high levels of TA may experience increased demand for services such as schools, healthcare, and social support, without a corresponding increase in funding or infrastructure. 

How do we solve this crisis?  

Addressing the issue of temporary accommodation in London requires a comprehensive and multi-pronged approach that tackles both the immediate needs of homeless households and the underlying causes of the housing crisis. 

  • Increasing the supply of affordable housing 
    The most effective long-term solution to the TA crisis is to increase the supply of affordable housing in London. This can be achieved through direct government investment in building more social and affordable homes, with at least 90,000 needed annually to meet demand. Utilising surplus public land for housing development, as outlined in the  King’s Speech, along with providing incentives to developers for affordable units can also help address shortages. Additionally, reforming planning laws to streamline approvals, increase density, and set mandatory affordable housing quotas could accelerate the construction of new homes. 

  • Enhancing homelessness prevention strategies 
    Preventing homelessness is key to reducing the demand for TA. Local authorities should be empowered and funded to implement effective homelessness prevention strategies to strengthen housing support services, such as mediation and financial advice, to prevent homelessness early. Expanding rent support, increasing Local Housing Allowance rates, and reforming welfare policies can help households avoid eviction due to financial difficulties. Additionally, scaling up rapid rehousing models like Housing First, which provide immediate, permanent housing with support, offers a sustainable alternative to relying on TA solutions. 

  • Improving the quality and management of temporary accommodation 
    While reducing the reliance on TA is crucial, improving the quality and management of such accommodation is also necessary to protect the wellbeing of those who need it. This includes setting and enforcing minimum standards for safety, space, and accessibility, increasing oversight and regulation to ensure compliance from providers, and providing adequate support for families to minimise disruptions in education, healthcare, and their search for permanent housing. These measures would ensure TA is safe, suitable, and better managed to meet residents’ needs. 

Conclusion 

The problem of TA in London is a symptom of a broader housing crisis characterised by a lack of affordable homes, rising homelessness, and policy shortcomings. The current reliance on TA is not only extremely costly and unsustainable but also has severe social, economic, and psychological consequences for individuals, families, and communities. 

Addressing this issue requires a comprehensive approach that includes increasing the supply of affordable housing, enhancing homelessness prevention strategies, and improving the quality and management of TA. By prioritising these solutions and committing to long-term investment and reform, the government and local authorities can work together to provide stable, secure, and affordable housing for all Londoners, ultimately reducing the reliance on temporary accommodation and building a more inclusive and resilient capital. 

Useful Sources


Barbara Mettle-Olympio

The cost-of-living crisis is an escalating issue across the UK, with more working families feeling the pinch as they struggle to manage rising expenses. This situation has brought the role of state benefits, particularly Universal Credit (UC), into sharper focus. Many working families now rely on these benefits to make ends meet, challenging the outdated notion that benefits are solely for the unemployed or disabled. 

According to a report by the Joseph Rowntree Foundation, nearly 40% of Universal Credit claimants are employed. This underscores the significant number of working individuals and families who depend on state assistance due to inadequate wages and rising living costs. This shift highlights a crucial aspect of the modern workforce: that employment does not necessarily equate to financial security. 

In this article, we explore the impact of rising living costs on working families traditionally seen as financially stable; the misconceptions surrounding Universal Credit, and the critical role landlords can play in helping alleviate the strain. 

The rising living costs in the UK

The cost of living in England has been climbing steadily, driven by several key factors:

  • Housing Costs 
    The price of buying and renting homes has soared due in part to economic factors such as interest rate rises and supply and demand issues. In cities like London, high demand and limited supply drive up prices, making affordable housing increasingly challenging. The ONS reported a 6.2% increase in average rents 12 months to January 2024 in the UK, with London having the highest annual percentage change in private rental prices at 6.9% due to tenant demand. This supply squeeze, along with a lack of social housing, forces more families into the private rental sector, facing higher costs and less security. 

  • Utility Bills 
    Energy costs have risen significantly, placing additional strain on household budgets. The ONS found that 49% of bill payers reporting that they struggled to afford payments. This sharp rise in energy costs is due to a combination of factors, including increased global demand, geopolitical tensions affecting supply chains, and reduced production capacity. Families are facing higher bills for electricity, gas, and water, making it more challenging to manage their monthly expenses. For many households, this means having to make difficult choices, such as cutting back on other essential spending or prioritising heating over other utilities during colder months. 

  • Food Prices 
    The cost of food has also seen substantial increases due to supply chain disruptions and higher production costs. The Food Foundation reports that the price of essential food items has risen by 6.7% over the past year. This further exacerbates the cost-of-living crisis for many households. If the cost of these essentials rise, even by a small increase, they can have a substantial effect on their overall financial stability, forcing many families to make difficult choices, such as cutting back on nutritious foods or other necessities to balance their budgets. 
     
  • Stagnant Wages 
    Overall, these factors are have been intensified by the fact that wages have not kept up with rising expenses. The ONS reports that while inflation has surged, wages have remained relatively stagnant, reducing the real income of many households. This disconnect between wages and living costs means that even those in full-time employment may struggle to cover basic expenses, including rent. 

Misconceptions About Universal Credit Claimants

For landlords, this shift necessitates a re-evaluation of their tenant criteria. The traditional preference for full-time employed tenants doesn’t necessarily guarantee the financial security it once did, and despite the increasing reliance on UC among working families, there is still a prevalent misconception among landlords that UC recipients are unreliable tenants. 

However, the current economic conditions challenge this notion. Furthermore, the rise of gig economy jobs, zero-hour contracts, and part-time employment means that many workers do not have the stability or income levels traditionally associated with full-time work. Some face under-employment, wanting to work more hours than is available to them.

By adapting to these new economic realities and fostering a supportive rental environment, landlords can play a pivotal role in alleviating some of the pressures caused by the cost-of-living crisis. This approach not only benefits tenants but also contributes to the overall stability and health of the rental market.  

Useful Sources


Barbara Mettle-Olympio

The importance of good housing as a fundamental human need cannot be overstated. It’s a basic human right essential for personal stability, security, and self-respect. But beyond the immediate provision, good housing good housing provides broader societal benefits and forms the bedrock of family life, enabling individuals to thrive, access vital services, and contribute meaningfully to their communities.

However, the gap between the availability of good affordable housing and rising demand, exacerbated by a cost-of-living crisis, has led to an increasing number of families living in substandard or temporary accommodation.

This article explores the critical importance of good housing and its impact on families, highlighting two housing projects that are making a real difference and demonstrate significant Social Return on Investment.

Positive Social Impact of Quality Housing

  • Financial stability
    Good affordable housing is crucial for alleviating financial strain on families. With housing costs often consuming a significant portion of household budgets, access to affordable initiatives enable families to allocate resources towards other essential needs.

    According to the National Housing Federation (NHF), there’s a widening disparity in housing costs between the wealthiest and poorest households. Alarmingly, nearly half of the poorest households spending over 40% of their income on housing, compared to just 4% of income on housing for the wealthiest households. This growing gap underscores the severe financial strain experienced by low-income families, who are left with limited resources for other essential needs such as food and energy bills. This disparity also extends across generations. Stable and secure living environments contribute to social mobility and long-term prosperity. Children raised in good affordable housing are more likely to perform better academically, achieve higher education levels, and secure well-paying jobs, breaking the cycle of poverty and inequality.

  • Health and affordability
    Inadequate housing poses significant health risks. High-profile cases, such as Awaab Ishak’s, have underlined the devastating effects of mould and dampness on health, prompting legislative changes. Overcrowded homes also compound physical health risks. In another NFH survey, 76% of respondents reported adverse physical health effects due to cramped living conditions. Beyond physical health, inadequate housing impacts mental well-being. The lack of dignity associated with substandard housing fosters worry and shame, leading to mental health issues like depression, stress, and anxiety. Research shows that 60% of young people living in inadequate housing feel that this directly negatively affects their mental health. Inadequate housing costs the NHS approximately £1.4 billion annually, with two-thirds of this directly attributed to mould and damp-related issues. Investing in affordable housing can significantly reduce these health burdens.

  • Educational outcomes
    The link between stable housing and children’s educational outcomes is clear. A secure home provides the emotional and psychological stability necessary for academic success. Children living in good homes are able to better focus on their studies, leading to improved academic performance and future opportunities.

    A Shelter survey of teachers revealed several challenges faced by children in inadequate housing. Issues included absenteeism, hunger, tiredness, and arriving at school in unwashed clothing, stem directly from the lack of proper facilities in temporary and inadequate accommodation. Good housing located in low crime and poverty in proximity to good schools and enriched with access to community resources like libraries and extracurricular activities further support a child’s educational journey, underscoring the importance of thoughtful urban and community planning in enhancing educational outcomes.

Innovative housing projects with a social impact

Two innovative, standout housing projects that help address the challenges of good affordable homes are the Goldsmith Street development in Norwich and the Hackney New Primary School & 333 Kingsland Road. Both projects have set benchmarks in integrating architectural innovation with social responsibility, offering solutions that go beyond traditional housing concepts.

Goldsmith Street Norwich – Mikhail Riches with Cathy Hawley

Goldsmith Street in Norwich, awarded the 2019 Stirling Prize is a remarkable example of how innovative architectural design can significantly impact social housing. Developed for Norwich City Council, this project offers 93 home at 100% social rent using the ‘Passivhaus’ method to develop a community-focused environment, setting a new standard for affordable housing.

Residents have testified to the life-changing impact of living in Goldsmith Street from the way in which the design of these Passivhaus homes caps annual energy bills significantly below the national average, alleviating financial stress and allowing savings for other essentials. Moreover, the improved warmth and ventilation have markedly enhanced residents’ health, reducing the need for medications and eliminating damp-related issues prevalent in previous living situations. Such advancements underscore the critical link between well-designed affordable housing and its potential to uplift the financial and physical well-being of its inhabitants.

Hackney New Primary School & 333 Kingsland Road

The Hackney New Primary School & 333 Kingsland Road project stands as an example to the innovative fusion of educational spaces and community living in London’s dynamic urban landscape. Developed for the London Borough of Hackney, this project combines the functional requirements of an outstanding 350-pupil primary school with the complexities of urban housing.

The project capitalises on the limited site area to prioritise educational facilities while ensuring protection from the urban hustle. The development represents a deeper, community-focused approach to learning.

Central to this development is the acknowledgment of the vital link between stable, supportive housing and children’s academic growth. The project offers more than just classrooms and a home; it provides a nurturing environment conducive to learning and personal development, illustrating the profound impact of community planning on educational success.

The project offers 68 new homes ranging from one to three bedrooms, situated above the primary school and a 298m² commercial unit that contributes to the area’s economy.
This project to provide affordable rental homes is a crucial aspect of this development, targeting Londoners on low to middle incomes struggling to find quality housing near their workplaces. This approach addresses a critical need, ensuring that working individuals and families have access to affordable, quality living spaces within the city.

Conclusion

The successes of Goldsmith Street and the Hackney New Primary School & 333 Kingsland Road have demonstrated their significant SROI serve as models for future housing projects. They represent not just a response to the housing crisis but a visionary approach to building resilient, supportive communities where families can flourish.
As such, we call on policymakers, developers, and investors to explore similar initiatives that recognise and leverage the interconnections between housing, health, financial stability, and education, paving the way for a more equitable and prosperous society.

Useful resources


Barbara Mettle-Olympio

For investors seeking to make a meaningful impact beyond financial returns, understanding the essence and impact of the Social dimension within the ESG framework is vital. In this first instalment of our blog series on Environmental, Social, and Governance (ESG) investing, we delve into the crucial “S” component and the principles to calculating Social Return on Investment (SROI), particularly in relation to social housing.

The rise of ESG investments

In the dynamic landscape of global finance, the emergence of ESG investing has marked a significant shift, highlighting the interconnection between financial markets and broader societal concerns.

The early 2000s were pivotal, prompting policymakers to critically evaluate the role of public services and government actions in fostering public value. This period laid the groundwork for the concept of social value, which was eventually encapsulated in the UK Public Services (Social Value) Act of 2012. This shift aligned with global efforts, such as the UN Sustainable Development Goals, emphasising the need to balance societal well-being with economic progress.

The global pandemic further propelled ESG investing into a new era. As COVID-19 spread across the world, it exposed deep-seated inequalities and vulnerabilities in healthcare systems, labour markets, and community support networks. This unprecedented crisis highlighted the urgent need for resilient social infrastructures that can withstand such shocks and protect the most vulnerable populations.

Investors began to recognise that social factors, such as employee health and safety, equitable access to services, and robust community support, are not only ethical considerations but also critical to long-term financial performance. This shift brought the ‘S’ in ESG into sharper focus, underscoring the fragility and importance of societal structures.

The SROI Framework

Measuring the components of ESG can be challenging and complex. While the environmental and governance aspects are relatively straightforward, with quantifiable metrics such as carbon emissions and company policies, the social pillar is often more difficult to quantify. It encompasses a wide range of factors, including labour practices, community engagement, human rights, and customer satisfaction. Some aspects, like employee turnover rates or diversity metrics, can be measured quantitatively, but evaluating community impact remains qualitative and subjective.

The SROI framework is particularly valuable for calculating the social return on ESG investments. It offers more transparency and accountability, enabling investors to gauge the success of their investments in terms of social outcomes and encouraging further investment.

SROI Principles and practice

Assessing the SROI of a project involves adhering to eight key principles outlined by Social Value UK. These principles guide a comprehensive process, offering deeper insights into social impact beyond traditional financial metrics.

  • Principle 1: Involve stakeholders
    Involving stakeholders means engaging with all relevant parties to ensure diverse perspectives are considered. For example, developers might hold community meetings to gather input from local residents, while also consulting with housing associations, government agencies, and potential tenants. This inclusive approach helps to align the project with the needs and priorities of those it will impact.

  • Principle 2: Understand what changes
    Identifying the social impacts of a social housing project involves evaluating various outcomes. For instance, providing affordable housing could lead to improved health and well-being due to better living conditions, higher educational success among children as a result of a stable home environment, and stronger community bonds through communal spaces and activities. It’s important to track and measure these changes, acknowledging both positive outcomes and any potential negative effects, such as displacement of current residents.

  • Principle 3: Value the things that matter
    Valuing the things that matter requires understanding what stakeholders prioritise. This might involve conducting surveys to determine what residents value most—whether it’s safety, access to public transportation, green spaces, or community services. By integrating these values into decision-making, developers ensure that the project not only meets economic goals but also enhances the quality of life for residents.

  • Principle 4: Only include what is material
    Focusing on material information requires prioritising the most significant impacts. Factors such as the improvement in residents’ health due to better living conditions and access to healthcare services would be considered material. These impacts are likely to influence stakeholders’ decisions significantly, whereas less critical outcomes might be excluded from the primary analysis.

  • Principle 5: Do not overclaim
    To avoid overclaiming, the project should only report on the social benefits directly attributable to the housing initiative. For instance, if the provision of affordable housing leads to a reduction in stress-related illnesses among tenants, this can be claimed as a direct benefit. However, broader societal improvements, like overall economic growth, should not be attributed solely to the housing project without clear evidence.

  • Principle 6: Be transparent
    Transparency involves sharing detailed information about the project’s goals, methods, and outcomes. This could include publishing reports on how data was collected and analysed, and openly discussing both successes and areas for improvement. Engaging stakeholders through regular updates and feedback sessions helps build trust and ensures that the project’s impact is accurately understood and communicated.

  • Principle 7: Verify the result
    Verifying SROI results involves seeking independent assurance from third parties. This might mean having external auditors review the project’s impact assessment to confirm the accuracy of the reported outcomes. Independent verification adds credibility to the claims and assures stakeholders that the findings are reliable.

  • Principle 8: Be responsive
    Being responsive means adapting to feedback and changing circumstances to maximise positive social impact. In social housing, this could involve regularly revising project plans based on tenant feedback or new policy developments. Implementing this Impact Management Approach ensures that strategic, tactical, and operational decisions are aligned with stakeholders’ evolving needs and priorities, allowing the project to remain effective and relevant.

Conclusion

By embracing the SROI framework and its principles, investors can navigate the complexities of social value creation, making informed decisions that align profits with purpose. This contributes to a more sustainable and equitable future, demonstrating that investment can and should go hand in hand with social responsibility. The journey through the ‘S’ in ESG represents a fundamental shift towards a more conscientious investment landscape.

Useful resources