Legal & General’s Affordable Housing Fund up to £280m

Legal & General’s Affordable Housing Fund has secured an extra £120 million from the Greater Manchester Pension Fund, bringing its total pot to £280 million to invest in much-needed affordable homes in the UK.

There are 1.3 million households stuck on local authority waiting lists in England alone. L&G’s strategy is to invest in well-designed, purpose-built social rent, affordable rent and shared ownership housing across England and seek to work alongside councils and other providers in response to recent policy announcements by the government.

“With acute demand for affordable housing across the UK, this highlights how the public and private sector can come together to drive meaningful change,” said Laura Mason, CEO, private markets, asset management division, L&G. “With government signalling the delivery of more affordable homes as a top priority, the public and private sectors need to work together to drive change, and institutional investment has a pivotal part to play. Our evolving partnership with Greater Manchester Pension Fund is testament to this.”

The Greater Manchester Pension Fund (GMPF), the largest local government pension scheme fund in the UK and managing more than 375,000 pensions, has been a partner of L&G for over 20 years and the two have worked together to launch the L&G Affordable Housing Fund in July.

“As a leader of a council, as well as a chair of a pension fund I know the depth of the housing crisis in which we find ourselves as a nation,” said Gerald Cooney, chairman, GMPF. “That’s why we are proud to be the cornerstone of this investment with longstanding investment partner L&G and support the government’s plan to provide much needed affordable homes for hardworking families whilst aiming to deliver strong low risk returns to pay the pensions of our hardworking members.”

The fund aims to have a positive impact on hundreds of people’s lives, focusing on equity and affordability as its core social priority. The homes will align with L&G’s commitment in aiming to achieve net zero carbon by 2050 or sooner. The pipeline consists of new-build, energy efficient affordable housing stock, over 95% of which has an EPC rating B or higher.

The Fund has a strong pipeline of new homes via Legal & General Affordable Homes (LGAH).The Fund will operate a direct leasing model for greater control, high quality customer service and to reduce counter-party risk and will be managed by L&G’s asset management division.

With £1 billion invested in affordable housing to date, LGAH was established in 2018 as Legal & General’s own developer and operator of affordable housing, with the aim of attracting institutional investment into the asset class and increasing affordable housing delivery across the country. It now comprises more than 8,000 homes: over 5,500 in operation and 3,000 in development with further capital secured to support its growth.           

“When we launched our affordable homes business back in 2018, we had the aim of attracting new, much-needed institutional investment into the asset class and increasing affordable housing delivery across the country,” said Ben Denton, CEO, L&G Affordable Homes. “Now, with the launch of the fund and the support of partners like GMPF we can make a real impact on people’s lives across the country, delivering homes that people can afford and place-based solutions to support inclusive growth.”