Media release

Analysis on international private finance and institutional investment to fund the delivery of social and affordable housing

Countries with prominent and growing institutional and private finance investment in social and affordable housing, typically have long-standing government policies such as guarantees, enduring subsidies, or public and private loan intermediation (similar to NHFIC’s bond aggregator), which help reduce the funding gap, research released today by the National Housing Finance and Investment Corporation (NHFIC) found.

NHFIC’s paper is based on a comparison of country-level data for the US, UK, Canada and select European countries, supplemented by interviews with domestic and international investors, to gain insights into the barriers and enablers of private investment in subsidised housing.

Key insights from the report include:

  • Private investment flows into subsidised housing are larger and growing in markets such as the UK and the US relative to countries like Australia and Canada. Large institutional investors are driving most of the increased investment, primarily through debt financing such as well-established bond aggregators, government-backed finance (including tax exempt housing bonds) and other policy levers.
  • Common features used by governments to encourage private capital include longstanding government-backed guarantees for private financing, long-term subsidies such as tax credit programs, financing intermediaries (with similar or broader mandates to NHFIC), allowing for-profit housing providers to access government support, and planning requirements.
  • In the UK, around 70% of the capital to build affordable housing is currently sourced from private financing, up from 30-40% in the 2000s, while private finance to non-profit registered providers (like the community housing industry in Australia) stands at around £6 billion, up from £1.8 billion in the late 1990s.
  • In the US, institutional investment in subsidised housing has grown substantially, with annual transaction volumes standing at around $US36 billion in 2021, up from $US1.3 billion in 2011. Established in the 1980s, the national Low Income Housing Tax Offset helped catalyse $US71 billion in private investment activity between 2005 and 2014, and $US18 billion in 2022.
  • Large global pension and insurance funds invest in subsidised housing in countries with favourable arrangements, such as the UK. For example, in 2021 Legal and General invested £270 million to develop 1,400 new affordable homes across the UK and more recently has announced plans to invest a further £2 billion of retirement funds over the next five years to create 10,000 new homes nationwide.
  • International and domestic institutional investors cited several social and affordable housing investment enablers, including tax incentives and subsidies, risk diversification and stability of cash flows, regulatory reform to allow institutional investors to own social housing stock, allowing for profit providers to take on development risk and access government incentives, achieving ESG objectives and providing greater information on tender / funding opportunities.
  • Investment barriers cited by institutional investors included subsidised housing projects lacking sufficient commercial returns, insufficient scale, a lack of information on opportunities available, lack of data on vacancy risks, reputational risks around managing subsidised housing tenancies, and unfavourable market conditions.


The Federal Government has introduced legislation to transition NHFIC into Housing Australia, with expanded responsibilities to support delivery of their Housing Policy agenda. The legislation includes renaming NHFIC as Housing Australia with primary responsibility for delivering 40,000 new social and affordable homes over 5 years from 2024. This comprises 30,000 homes to be delivered with funding contributions from the Housing Australia Future Fund (HAFF) (20,000 social, 10,000 affordable) and 10,000 affordable homes under the National Housing Accord. These additional responsibilities are subject to the passage of the legislation. NHFIC will continue to deliver the Home Guarantee Scheme (HGS), the Affordable Housing Bond Aggregator (AHBA) and the National Housing Infrastructure Facility (NHIF, which was recently expanded as part of the Federal Government’s 2022 housing election commitments).