Legal and General (L&G) and Hyde Group have formed a 50/50 investment partnership to help develop affordable housing across the UK, with a seed portfolio of 1,000 homes.
The joint venture (JV’s) initial portfolio will comprise a mix of social rented and shared ownership homes to be acquired by Halesworth and Lanecroft Homes, existing for-profit registered providers jointly owned by Hyde and L&G.
The partnership will be jointly equity financed by Hyde and L&G and supported through L&G’s annuity portfolio.
This JV forms part of L&G’s £2bn commitment to drive “positive social impact and growth” across the UK’s housing sector.
The JV said its funding model will allow it to share financial obligations and invest on a greater scale more quickly. Hyde will recycle any profits into creating more affordable housing.
While the National Housing Federation estimates that England needs 90,000 new social homes a year for a decade, the JV said the government’s recently opened £39bn Social and Affordable Homes Programme would account for around 20% of the funding required.
The JV is targeting EPC ‘B’ certification by 2027 and EPC ‘A’ by 2030 for the homes it develops, as part of L&G’s pledge to make all new homes operationally net zero by 2030. The partnership said it would also invest in homes requiring green retrofitting.
Hyde Group chief executive Andy Hulme said: “There’s a gulf between the funding available and the funding needed to deliver the affordable homes the country needs. Grants alone will not close it.
“Hyde offers institutional investors a complete end-to-end service, from investment structuring through to managing homes and the community around them, with every penny of commercial profit reinvested in building more affordable homes and improving existing homes.
“With L&G’s long-term capital and our national platform, we can deliver more homes, faster.”
Catherine Raynsford, managing director, stock acquisitions at L&G Affordable Homes, added: “Since establishing our affordable housing business in 2018, L&G has built a strong track record as a trusted leader in delivering high-quality, affordable homes across the UK.
“This new partnership with Hyde marks an exciting milestone, combining our heritage and expertise with an innovative approach that aims to attract institutional investment and accelerate the delivery of much-needed affordable housing nationwide.”
Earlier this month, L&G invested £46m to acquire the affordable homes element of Arada London and Shaw Corporation’s student scheme in Southwark, south London.
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