120x120 Nayantara

Nayantara Nath

Investment Manager, Venturesome

Charities Aid Foundation

Measuring the social impact of community-led housing

1 March 2022

Why it matters and where to start

The shortage of affordable housing is an ever-growing issue in the UK. Many people are still unaware they can have a real say over where and what type of housing is built in their local area. Community organisations are tackling this issue, and the number of homes delivered by community-led housing (CLH) groups is expected to steadily grow over the next five years. Recent estimates suggest there are 895 CLH projects in development with over 21,000 homes in the pipeline.

These projects, run by individual community groups are determined to build reasonably priced homes that local people need and want. As with other affordable housing schemes, the impact of these CLH schemes often reaches beyond the community it intends to serve and promotes economic, social, and environmental wellbeing. The Department for Levelling Up, Housing and Communities found that CLH schemes promote a ‘greater sense of community and belonging’. It has also been proven that inexpensive and secure housing is a direct way of reducing child poverty. Community schemes contribute to a positive local economy, providing additional footfall to local shops and businesses, particularly in rural areas where the lack of affordable space has created an exodus of young people. Finally, CLH schemes are highly conscious of the environment and often have biodiversity and re-wilding schemes running alongside the housing (re-) development.

CLH schemes have a significant potential for social impact and recording this information can help to secure funding for projects. In its lifecycle, a CLH scheme may apply for start-up funding, revenue grants, capital grants and loans from public sector initiatives like Homes England, local authorities, housing associations, social investors (like CAF Venturesome), and non-profit foundations. A key part of any such funding application process is quantifying the potential impact of the CLH scheme within its local community.  

CAF Venturesome has supported CLH schemes since 2008, and as a social investor, we evaluate the potential social impact of a scheme as part of its funding application.

In early stages of the project, we assess that CLH groups gather, analyse, and provide data on:

  1. The need for affordable housing: The housing requirement in the area needs to be clear to secure support for a CLH scheme, both in terms of home size and tenures. CLH groups should engage with their local communities to design and undertake a housing needs assessments survey, often with information from local authorities and housing associations.  

  2. Equal access and help for vulnerable members: Beyond building new homes, CLH groups have a key role to ensure that homes will be offered to those most in need, who are priced out of the open market. A fair assessment of affordability is to link the proposed home sales/rent price to local average household income rather than open market price.

  3. Affordability for future generations: CLH schemes should demonstrate that affordability level meets the local demand not only now, but also in the future. Homes should remain affordable in perpetuity. Affordable tenures should be locked in for the long term through legal clauses such as resale covenants, thereby removing homes from speculation and associated price hikes.

  4. Environmental impact and sustainability: When members of the community have a say in the design of their homes, considerations such as energy efficiency and sustainability often factor more centrally. CLH schemes have the potential to be systematically eco-friendly, with sustainability at the core of the design, both to ensure long term affordability while also limiting environmental harm.

In addition, community groups need to demonstrate their ability and capacity to deliver on their ambition, with the buy-in from local residents. Key factors include:

  1. Governance: The community group is required to take a long-term formal role in the ownership, stewardship, or management of the homes. This may be enshrined in their legal entity and governance structure, or through a fair agreed policy for the allocation of the homes.

  2. Skill set of management: CLH groups are run by volunteers who may not always have the relevant skillsets. There is a wealth of expertise though from independent technical advisors, including on Community Led Homes.

  3. Community support: Groups may also be required to provide evidence that the local community has been fully engaged through extensive consultation and has consented throughout the pre-development process.

  4. Financial viability: The group need to undertake or commission a viability assessment showing financial assumptions and likely funding availability, updated through the lifecycle of the scheme. CLH financial viability assessment toolkits are available online.  

  5. Institutional partnerships: CLH groups benefit from engaging with Local Authority Housing enablers, Development officers, CLH officers, Local CLH hubs and Neighbourhood planning teams, which provides reassurance that the scheme is perceived as highly beneficial to the community.

The scope for generating wider social impact and increased socio-economic wellbeing through community-led housing schemes is significant. By strengthening and highlighting the social impact generated, there is potential to facilitate access to finance for individual CLH schemes, but also provide a national picture, which is a key condition to the creation of a permanent Community Housing Fund.

About CAF Venturesome

CAF Venturesome, the social investment team of Charities Aid Foundation, is celebrating 20 years of social investment in 2022. 

Since 2008, CAF Venturesome has helped community-led housing schemes to plan and build genuinely affordable homes. By providing flexible finance at every stage of the project, CAF Venturesome has supported over 40 CLH groups

For more information about applying for social investment for every stage of your community-led housing project visit our CLH Fund page or get in touch at venturesome@cafonline.org.