Legal & General’s affordable housing strategy grows to £280m following GMPF investment
The Greater Manchester Pension Fund (GMPF) invests £120m into Legal & General’s Affordable Housing Fund, as it continues to invest to increase much-needed affordable housing supply in England
- GMPF and Legal & General have worked closely together to design the strategy which led to the launch of the Legal & General Affordable Housing Fund in July. The strategy now has commitments of £280m (as at 5 August) and builds on Legal & General’s intentions to scale its private markets capabilities.
- L&G and GMPF have had a long-standing partnership of over 20 years; today’s announcement follows the most recent joint investment in Bruntwood SciTech, the specialist property provider serving the UK’s science and tech sectors.
- With housing cemented as a top priority by the UK Government, today’s announcement reaffirms the central role of institutional capital in expediting affordable homes delivery.
Legal & General (L&G) today announces that it has secured a further £150m in commitments for its UK affordable housing strategy, following the recent launch of the Legal & General Affordable Housing Fund, bringing total commitments to the strategy to date to £280 million. The bulk of this new capital comes from Local Government Pension Scheme (LGPS) Fund, GMPF, who have committed £120m alongside internal client capital. With acute demand for affordable housing across the UK, this highlights how the public and private sector can come together to drive meaningful change.
GMPF are the largest LGPS fund and the eleventh biggest defined benefit pension fund in the UK. They look after more than 375k pensions, paying over £750m of benefits each year[1]. These benefits are enjoyed by people who work for the ten local authorities in Greater Manchester and other organisations such as the National Probation Service, academy schools and housing associations.
As 1.3m households sit on local authority waiting lists in England[2], L&G’s strategy will invest in well-designed, purpose-built social rent, affordable rent and shared ownership housing in areas of acute need and demand across England and seek to work alongside councils and other providers in response to recent policy announcements and those due in October.
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 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. The Fund will be managed by Legal & General’s asset management division – which is uniquely placed having invested client capital into the real estate sector for more than 50 years.
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: over 5,500 in operation and 3,000 in development with further capital secured to support its growth.