Homelessness emerges as high-impact area for social investors in new research from Better Society Capital

More social investors should get involved with tackling homelessness in the UK, says Better Society Capital, on the back of research published this week. 

The research is the first edition of a new Better Society Index, which looks at how specific social issues are understood and addressed in the UK, and highlights how social investment can help tackle them and support public service delivery across the country. 

Homelessness is particularly well suited for impact investors to tackle because it offers sustainable investing opportunities while addressing one of the UK’s thorniest issues.

The research, based on a survey of more than 2,000 people and 258 freedom of information requests with local authorities, emphasises the scale of the issue in British society. More than a quarter of people surveyed report they or someone close to them has experienced housing insecurity in the past five years; nearly half say it is a significant issue in their local area, and 43% find it is getting worse. 

Meanwhile, efforts to tackle homelessness are putting pressure on local authorities, which spent a combined £1.65bn on homelessness services in 2024/25, a median increase of more than 10% year-on-year, according to the data.

Drew Ritchie, investment director at Better Society Capital, said the data was “a reminder of the depth and scale of the problem, how many people are affected, and the fact that that social issue is up front and centre for lots of people”.

He added: “It is also, therefore, a big opportunity for social investors and social enterprises working together to make a bigger difference.” 

Ritchie said he hoped the research would “embolden” social enterprises and impact investors to start or increase their work tackling the issue. 

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Open to alternatives

While over half of respondents say homelessness services should be funded through public money, public opinion appears open to alternatives: a majority back public-private partnerships (56%) to address the issue. 

Support is particularly high when services are provided by purpose-led organisations: 71% of respondents say they trust charities and social enterprises to deliver housing and services to people facing homelessness. More than half say they would be happy to invest a portion of their savings or pensions to fight the problem.

We don't want this to be opportunistic, we don't want it to be extractive

Ritchie argued that these findings should help alleviate concerns about the perceived moral integrity of using private investment to deliver homelessness services. “Sometimes there can be a worry or a concern about the role of private capital operating in a space like homelessness, and we've had the same worries or concerns,” he said. 

“We don't want this to be opportunistic, we don't want it to be extractive. We want to make sure that private capital is working alongside the existing sector – the social sector, housing sector, homelessness sector – in a really sustainable way that meets everyone's objectives.”

Increasing the flow of capital

Ritchie said one of the objectives of the research was to increase the flow of capital towards tackling homelessness, both from a demand perspective – reassuring social enterprises and charities that they are not facing a reputational risk by taking on private investment, as long as purpose is preserved – and the supply side, by showing social investors that they have a chance to make a major difference to one of the country’s big problems. The data could also be used as a tool to convince boards to increase their focus on the issue, he argued.

While social investors had been investing in the sector over the past decade, the scale of the problem showed this needed to be scaled up, Ritchie said. Potential investors include pension funds, but Ritchie also pointed to an opportunity for trusts and foundations: an increasing number of foundations are starting to invest their whole endowment in line with their mission, instead of just focusing on returns and giving away the profits, so showing them that the homelessness sector had a high impact potential for their endowments was important, Ritchie argued. 

It is a bit of a sweet spot for how to deliver deep impact and sustainable investment models

Social investment was particularly well-suited to tackling homelessness, because it enabled investors to create high impact while still ensuring returns, he explained: investing in housing for people facing homelessness was a safe bet for investors, like any asset-backed investment strategy, while addressing one of the country’s biggest problems. “It is a bit of a sweet spot, I guess, for how to deliver deep impact and sustainable investment models,” Ritchie said.

But social investment does not appear to be on the general public’s radar as a funding solution. The survey found that nearly a third of respondents still say homelessness services should be funded by government funds (although not directly drawn from taxation), and 21% from taxpayers’ contributions. Under 6% think those services should be funded through social impact investment, and 13.6% backed blended finance – described as a mix of public funds, charitable and private capital.

Top image: Josh was adopted when he was younger – a very difficult time in his life. As soon as he left home at 19, he found himself homeless in a new town; but after finding support from social enterprise First People, he feels he is now living somewhere where he is treated with respect. Source: Centre for Homelessness Impact / Credit: Christopher James Hall.