Legal & General set up affordable housing company
Legal & General Affordable Homes aim to deliver 3,000 homes per year within the next four years. They say they will be targeting all areas of the affordable housing market, including new build section 106 and grant-funded affordable rent, social rent and shared ownership units.
The insurance company has made a big push into the housing sector in recent years. In December 2015, they formed a build-to-rent partnership with Dutch pension fund PGGM as a 50:50 development joint venture.
The partnership will invest over £900m into developing purpose-built rental accommodation across the UK, providing over 4,000 homes. Legal and General also opened modular homes factory opening in Leeds in February 2018, which they hope will deliver up to 3500 homes per year.
Nigel Wilson, CEO of Legal & General, says: ‘Despite the fact that the UK is a great place to invest, thirty years of underinvestment have led to poor productivity, low real wage growth and numerous market failures. Affordable housing is a classic example of underinvestment with minimal new equity capital being deployed to the sector.
‘This is not a sustainable position – either for the sector or for the 1.3million households currently on a waiting list. This important sector has now been added to Legal & General’s £15 billion UK direct investment programme.’
Simon Century, head of affordable housing at Legal & General, says: ‘Many housing associations are becoming increasingly highly leveraged, as they have funded significant amounts of development through debt funding for many years. They have no ability to raise equity and maintain a sustainable financial structure – therefore forcing many to significantly limit their growth ambitions.
‘Legal & General Capital is building a more natural and sustainable model – one in which institutional investors are the long-term holders of the assets working alongside the best-in-class affordable housing operators who will provide the highest-quality housing management.’
