Ethical Investment: Property

Ethical Investment: Property

1st February 2017, 19.00 - 21.00

Hurtado Jesuit Centre

This seminar was the first of a series of three. They were aimed at investors, treasurers, and those directly related, either practically or academically with investment.


Professor Anne Power, Head of Housing and Communities at LSE


Susan Ralphs CEO of the Ethical Property Company

The talks ended with a discussion on what ethical investment in property would look like.



Ethical Investment Seminar I:  Investment & the Housing Sector

1st February 2017 @ Hurtado Jesuit Centre



Synopsis of Talk

In accumulation of assets the Church has a tendency to become rich.  It owns buildings for its own functions (worship, accommodation, social works, education), and these buildings have often become more valuable over time. Church bodies have also acquired property investment portfolios in addition to these functional buildings for everyday use.

As the saying goes, wealth tends to corrupt.  Pope Francis says that it is not the Church’s primary job to use its wealth to help the poor – It is the Church’s job to be poor.

There are two ways the Church could address the situation for investment in the housing sector.

First, it can review its functional buildings and try to identify ways of using them for greater good; education, health care, community centres, low cost housing.  These properties can be underutilised and with imagination could be put to better use (e.g. Ann Power’s own initiatives in Islington in setting up nurseries in church buildings; the Archbishop of Turin’s recent offer of church properties for the homeless).

Second, with its property investment portfolios, Church groups could accept lower investment returns in exchange for achieving other social goods.  Prevailing wisdom may be that more good can be done by maximising returns and then using those returns for apostolic works.  However, this approach risks the corrupting influence of profit-maximising behaviour upon the Church, c.f. Martin Luther King’s apt restatement of Machiavelli was that ‘the means are the end in the making’.

The Challenge

With its property assets, churches could be creating low cost housing of a decent standard for lower income tenants.  It could be aiming to be a just and sympathetic landlord.  It would be content with the consequent lower rental returns it would get, because doing the right thing is an end in itself.  It can also be the smart thing to do in the longer term.

This is far from being an abstract challenge.  In the 19th century, there were philanthropic low-cost housing programs, in particular Peabody estates and other ‘4% Philanthropy’ schemes, which made major inroads into poverty and which have resulted, over a century later, in valuable and architecturally significant property portfolios.

There are other models; the communally-owned ‘Garden Cities’, the great Quaker ‘company towns’ (Port Sunlight, Cadbury’s) which led the way in corporate social responsibility and which led to more successful companies, as well as better and fairer social conditions.

Professor Power proposed that in present-day UK there is not a critical shortage of housing as such – residential space per head of population has never been higher – but there is a crisis in distribution of housing, whereby the rich own multiple properties (or large under-utilised properties) and the poor do not have the means to own or to pay the present levels of rents.  One solution would be to tax rich property owners more heavily.

Pope Francis has reminded us that goods excessive to needs are not goods that we own, but are those of the poor… and we have to share them.



Synopsis of Talk

Susan gives an example of a particular ethical housing project, in which church bodies could invest.

The Ethical Property Company (EPC) is a British shareholder-owned, for-profit property company.  It owns or manages 250,000 sq. ft. of office space in 23 city-centre buildings around Britain with a current valuation of £33m.  Its mission is to be a landlord, which is not only financially successfully but which also makes money for its shareholders in a way that is socially and environmentally responsible. EPC therefore subjects itself to ‘triple bottom line accounting’, measuring its performance not only financially but also socially and environmentally.

EPC provides affordable office space for about 350 tenants, who are judged on social and ethical as well as financial grounds.  Thus most tenants are charities, social enterprises or local businesses.  EPC also deals with another 650 organisations who use space in other ways (e.g. for hiring).  Its buildings are located in cities with vibrant civil societies so that they are of most relevance.  Annual rent increases are capped at RPI + 3%.  EPC pays ‘the living wage’ and there is a 5x limit on the ratio of highest to lowest salary in the company.  EPC attempts to foster community within its properties by encouraging tenants to meet and cooperate (The Foundry in Vauxhall is ‘a place for change’). Its buildings also conform to strict environmental standards, aesthetically and in terms of their energy use; bicycles are used instead of cars for instance.

  • Shareholders can buy EPC shares through the Social Stock Exchange. One assumes that the total market value of shares roughly equals the total market value of assets less any debt carried by EPC.  Debt comes from ethical sources, Triodos Bank in particular.
  • Financially, EPC has done well since its foundation in 1998. It started paying dividends in 2001 and has never missed a year since, and its share values have grown. Socially too, EPC exhaustively surveys its tenants and staff and 80% of tenants have said that being with EPC helps them achieve their goals to a greater extent than they would be achieved with anyone else.
  • EPC has a long waiting list for tenants, equal to twice the amount of space that it rents out now, and also exceptionally high occupancy (95%) and low turnover. EPC, however, is a ‘minnow’ size-wise in commercial real estate terms.

For more information on EPC see:


1)  How to know if a tenant is a safe bet for the landlord (Will they pay the rent)?

2)  It was suggested that the Charity Commission wants charities to maximise financial returns on financial assets: How then does this allow for ethical landlords, where, for example, rents are capped?

3) Churches in general are very income-hungry; so how does this permit the sacrifice of investment returns for ethical purposes?

4) Is student housing a good investment for a church?

5) If as an ethical landlord you have tenants on sub-market rents, can you keep those rents capped when you sell the building to someone else?

6) Where does all the exorbitant rent income go?


7) There are several residential housing projects around (e.g. Green Pastures, Hope Into Action) which cap rents and invite investors to accept sub-market returns, and which also attempt to convince other landlords to be more responsible.

8) Housing cooperatives, in which tenants are effectively landlords, can have reasonable rents, low turnover and a stable community.

9) Ethical Money Churches exists to encourage churches to make the most of their assets, in a social sense.

Answers from Ann Power & Susan Ralphs

1) You need to follow three rules as landlords:

  • first, have a close relationship with tenants;
  • second, make sure they are not taking on too much;
  • third, be absolutely clear that if a tenant does not pay, s/he cannot remain in the rented space.

An example was given of a very poor housing estate in Germany, in which there were almost no defaults.

2) The Charity Commission guidelines have to be considered, but it is certainly possible to be an ethical landlord without breaking the rules.

3) Churches may well be ‘income-hungry’ but it should be remembered that they are often inefficient users of assets too.

4) Yes, but you need to follow the three rules sketched out above

5) (How to protect tenants when selling on) This is a tricky one because of the intense financial pressures involved.  EPC has managed to sidestep the issue by rehousing tenants in new buildings whenever it is sold a building.  Meanwhile local councils and housing associations almost always displace tenants and create socially unbalanced communities when they redevelop because of financial constraints.

6) Current rent levels are ‘grotesque, obscene and wrong’ and it is not edifying to speculate where all that money goes!

8) Housing cooperatives are an excellent idea because of tenant control, no profiteering and very little scope for waste.  It is disastrous that governments have not fostered the model.



[i] Professor Anne Power of LSE

To quote from LSE’s information –

Anne Power has been involved in European and American housing and urban problems since 1965. She is Professor of Social Policy at the London School of Economics and Head of LSE Housing and Communities, a research group based within the Centre for Analysis of Social Exclusion. She is author of many books, reports and articles on housing, cities and low-income communities.

Not so long ago she was involved in analysing the Olympic legacy in Newham, a bit further East from here.

From her list of publications just from last year, 2016, are:

 the impacts of regeneration on the Rayners Lane Estate

Europe’s new industrial revolution

How Europe’s industrial cities bounced back from the brink of ruin

Council estates: why demolition is anything but the solution

Cities for a small continent: international handbook of city recovery

 & Studies on several European cities:  Torino City Story Bilbao city story  Leipzig City Story  Belfast city story  Sheffield city story

[ii] Susan Ralphs is The Ethical Property Company’s Managing Director, taking over in 2011 after some years as its Finance Director. A qualified Chartered Accountant, she had previously worked for Oxfam and the YWCA of England and Wales.

The Ethical Property Company is a business supporting a wide variety of organisations while also providing shareholders with a viable investment and payment of an annual dividend. Since the launch in 1998, investment has come from over 1350 shareholders & enabled them to build a property portfolio valued at over £22 million.