At the end of 2022, investors owned 26,400 affordable homes, of which 85% were owned by just four providers. However, increases in private capital commitments through for-profit registered providers will see this market grow 120%, reaching 58,100 homes within three years.

This is almost double the projected rate of multifamily growth of 65%, with the broader investor stock set to increase by 104% to 258,100 homes.

JLL has tracked £35bn of investment in private build-to-rent acquisitions, against just £4bn in affordable housing. This has seen affordable account for just 10% of private investment in rental housing, however this share is expected to rise.

Large commitments from institutional funds with those FPRPs, in partnership with major housing associations, will spur growth in the coming years. However, it is still a small proportion of the real need for social housing.

JLL’s Affordable Housing 2023 report estimates a potential market of 6.2m households in England, of which just two thirds are in social rented households, leaving 2.2m that do not have the social housing they need. The number compares to 1.2m households on local housing registers.

As a result, that unmet demand is reliant on housing in other sectors. This includes those in temporary housing, homeless or hidden households, but also, the private rented sector.

Over the past decade, some £99bn has been paid in housing support to social rented tenants in England, with a further £61bn to private landlords, according to analysis of English Housing Surveys. Together some £160bn in housing support, under the current government grant allocation scheme would provide 2.5m homes.

In the UK, JLL estimates need for 7.5m social rented homes, with unmet demand rising to 2.6m, compared to 1.5m on housing registers. Currently the institutional share accounts for just 0.4% of the total sector, by 2025 this is set to rise to 0.8%, still a small minority, with significant potential for growth.

Richard Petty, head of affordable housing at JLL, said: “Institutional capital has a growing part to play in affordable housing delivery. We have seen a significant increase in institutional investment across all the living sectors, spanning PRS, multi-family, single family, specialist supported and mainstream affordable.

“The sector needs to embrace that and make the most of investors’ willingness to work in partnership. Together, we cannot let the possible imbalance of supply and demand go on much longer without making the sort of changes to the model that will be necessary to deliver real increases in supply.”

Emma Rosser, research associate at JLL, added: “Investors are diversifying from city centre flats to a range of tenures and housing types. While there are challenges to entry, the scale of demand is higher than any other living sector, and the current pressure on household finances will only increase this.

“Institutions are responding to this call-to-action and have laid the foundations for long-term investment at scale, also supporting broader social impact goals.”