As the UK’s housing crisis rumbles on, the coalition government is scraping the barrel by resurrecting right-to-buy and the country’s builders sit on their hands. I’m a contrarian to the pessimists.

Throughout 2012 I’ve been on a quest to persuade profit-driven investors they can make money from social housing while navigating a labyrinth of public sector bureaucracy and scepticism about how real estate investment trusts (Reits) could provide an answer for housing providers suffering from a dearth of options.

The problem cannot have escaped many people. This country has a substantial need for affordable social housing; we have a legal obligation to provide housing to those in poverty or requiring extra support, but local authorities, charities and other housing providers have almost no recourse to funding and investment aside from the highly leveraged options provided by commercial lenders and the bond markets. In some cases, this has left housing providers struggling to meet interest payments and forcing the Homes and Communities Agency (HCA) to keep a careful eye on the viability of businesses with millions in stock mortgaged to the hilt.

Now, following the chancellor’s autumn statement, the country faces a further period of austerity and the prospect of capital investment into the country’s crumbling social housing stock has disappeared for good. George Osborne’s statement also confirmed that the government has ruled out setting up its own social housing Reits to channel private money into the sector. Thankfully, private organisations can save them the trouble.

Houses4Homes (H4H) is bringing together two needs through a Reit. Working with the social housing providers sector, it is rolling out its model of supplying funding to housing associations for a lease premium set at an indexed 5%. It is transferring stock to the Reit and is in the process of appointing a nominated adviser that will assist the company with a stock market flotation and fundraising effort targeting between 200m and 500m from the likes of pension funds, life insurance portfolios and other capital-rich institutions looking for a safe haven and long-term returns.

During the Reit’s creation, the headwinds have been challenging. We faced what I termed a credibility gap. Investors wanted to see evidence that this enormous housing need could be turned into real housing demand at a pace and at a scale that would be of interest to them. They wanted this housing demand to carry no development risk – in other words, they wanted to buy the output or rental yield.

H4H had to demonstrate the demand by building up a development pipeline large enough to interest investors. This required H4H to earn the trust of the HCA and every local authority and housing provider that we encountered. Because the investors wanted development risk removed from the Reit, H4H had to forge relationships with developers of a range of sizes to deliver housing immediately.

Throughout 2012, we have built a strong relationship with the HCA and we are in dialogue with it to agree terms to allow for transfer of existing stock from providers in the sector. We are now able to demonstrate the real housing demand that we were challenged to provide.

As 2013 looms, we have a pipeline of around 1.5bn that can be transferred to the Reit over the course of two to three years, matching the capital investment into the trust so that yields are generated from day one. Local authorities have also begun to come round to the possibilities of putting their grant funding to better use by purchasing preference shares in the Reit.

Typically these grants would be paid as a form of capital investment never to be seen again. Now the Reit structure allows grants to be invested and cashed in at the end of a social housing project’s viable existence. This is particularly valuable for extra-care accommodation, which has to be bespoke. What happens when the individual living there dies or moves on? The grant money can be reinvested to support property adaptation or redevelopment.

I am confident we have proved how demand for an ethical investment solution like this exists in the City and beyond. I am also certain of the demand across our country for new sources of funding for social housing.

It’s been a significant challenge to marry those two difficult bedfellows, but 2013 will hopefully offer a big-society solution that David Cameron himself has overlooked.

Phil Shanks is chief executive of the Houses4Homes real estate investment trust

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