Legal & General (L&G) has published a white paper setting out a new partnership model for long-term capital to unlock £9bn of investment into affordable housing annually.
The white paper, titled ‘Delivering affordable housing growth; a partnership approach for England’, details an investment model designed to channel more pension and insurer capital into the sector by helping housing associations rebuild their balance sheets, improve existing homes to benefit occupiers and increase affordable housing delivery.
L&G is now inviting institutional investors, housing associations and government to back the model, which it said could unlock the delivery of 80,000 affordable homes a year without additional government subsidy.
It added that the model would appeal to long‑term pension capital seeking stable, inflation‑linked returns from regulated affordable housing. The partnership model will be an option for housing associations with suitable stock and growth ambitions, alongside institutional investors seeking long-term, inflation-linked income.
L&G has already started utilising elements of the model in its partnership with Hyde Group announced last month. The 50/50 partnership launched with an initial portfolio of more than 1,000 affordable homes.
António Simões, chief executive of L&G, said the new model was designed to “unlock investment at scale accelerating the delivery of affordable homes across the country”.
“Solving the UK’s housing challenge is a shared responsibility that requires fresh thinking and long-term commitment – pension capital has a unique role to play in this transformation,” he added.
“If adopted widely, this approach could mobilise over £9bn of net new investment every year and support the delivery of more than 80,000 affordable homes annually, all without adding pressure to the public purse.”
Gareth Mee, chief executive of institutional retirement at L&G, said: “Investors like L&G are already helping to deliver social and affordable homes across the UK, and this model gives us – and other institutional investors – the ability to go further by putting long‑term pension capital to work where it is needed most, while delivering returns for our investors.
“Through our partnership with Hyde, we have already put some the principles of a partnership RP into action. We now hope other long‑term investors and housing associations will join us in adopting this model to help deliver the affordable homes the country needs.”
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