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From the ���������Inquiry: Inquiry into social impact investment for housing and homelessness outcomes

This research is the first to examine the opportunities for, barriers to and risks to social impact investment (SII) for social and affordable housing in Australia.

SII aims to achieve a specific beneficial social objective together with a financial return and measure the achievement of both. Through collaboration between service providers, investors and governments, SII can untap new sources of capital (through accessing different types of investors) and enhance the return on government investment.

The largest demand for SII funds for social and affordable housing is from community housing providers (CHPs), which make up the only established system that meets the requirements for verifiable impact over time. 

The largest share of SII in social and affordable housing is from banks to CHPs, and is estimated to be in the order of $1.5 billion dollars. Another $20 million dollars was invested in non-community housing models by non-bank social impact investors.

SII in social and affordable housing does rely on government commitment in the sector. Private SI investors expect returns on their investment. Investment therefore only occurs when the CHP is able to generate a positive cash flow to support debt repayment or disbursements to equity holders. This requires the gap between tenants’ capacity to pay and the cost of housing provision to be funded by government. The funding of this gap provides an implicit government guarantee.

SII would be assisted by government providing legal clarity for superannuation funds investing in concessionary SII projects.