Legal & General launches new fund to deliver affordable housing across England
- The fund has received a cornerstone commitment of £125m from ACCESS Pool to manage its affordable housing investment strategy, showcasing combined commitment to increasing much-needed affordable housing supply in England.
- The announcement builds on Legal & General’s recent strategic update, in which the Group announced its intentions to scale its private markets capabilities by bringing together its asset management and origination businesses
- Legal & General Affordable Homes assets to seed portfolio, with the fund managed by L&G’s Asset Management Division
Legal & General today announces the launch of the L&G Affordable Housing Fund (“the Fund”), alongside a £125m commitment from Local Government Pension Scheme (LGPS), ACCESS - a collaboration of Central, Eastern and Southern Shires, composed of 11 LGPS Administering Authorities with assets totalling c.£40bn. The vehicle is aiming to deliver a diversified inflation-linked cash flow for investors.
The level of new affordable homes being built (under 55k over the last decade1) falls short of the National Housing Federation’s recommendations of c.145k a year until 20312. As 1.2m households sit on local authority waiting lists in England3, the Fund will invest in well-designed, purpose-built affordable rent and shared ownership housing in areas of acute need and demand across England.
The Fund will aim to positively impact hundreds of people's lives, focussing on “Equity and affordability” as its core social priority. The homes will align with Legal & General’s commitment in aiming to achieve net zero carbon by 2050 or sooner. The pipeline consists of new-build, energy efficient affordable housing stock, >95% of which has an EPC rating B or higher.
The strategy has a strong pipeline of new homes via Legal & General Affordable Homes (“LGAH”). At launch, the Fund will hold over 750 homes, the majority of which will benefit from affordable rent, with the remainder being shared ownership and social rented homes. The Fund will operate a direct leasing model for greater control, high quality customer service and to reduce counter-party risk. The Fund will be managed by Legal & General’s asset management arm – which is uniquely placed with a proven track-record, having invested client capital into the real estate sector for more than 50 years.
As a leading direct investor, developer, and operator of residential property4, Legal & General has one of the largest and most diverse platforms in the UK. It has successfully scaled up multiple operating platforms across a range of tenures, building houses to sell and rent, providing retirement communities, and finding new ways to deliver affordable housing. We believe Legal & General’s enduring commitment to affordable housing reflects the opportunity to secure steady, inflation-linked returns alongside positive social impact within local communities.
With £1bn 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 new, much-needed institutional investment into the asset class and increasing affordable housing delivery across the country. Leveraging its wide network and established developer partnerships it now comprises 8,000 homes: 5,000 in operation and 3,000 in development with further capital secured to support its growth.
1Department for Levelling Up, Housing & Communities - Affordable housing supply in England: 2022 to 2023.
3Department for Levelling Up, Housing & Communities - Social housing lettings in England, tenants: April 2021 to March 2022.