LGPS pools back £510 million affordable housing

London CIV has invested £100 million into the L&G Affordable Housing Fund, while ACCESS has invested £20 million, according to a press release from L&G.

L&G expects to be able to build between 3,500 and 4,000 homes with the funds it has currently amassed through its affordable housing strategy, which was launched last year.

The fund has a portfolio of 514 homes and anticipates having over 1,000 homes that are either in use or under construction by the second quarter of this year.

It also said that it has exchanged contracts on three funding opportunities to bring forward more affordable homes.

London CIV, the investment pool for London’s LGPS funds, is a new investor in the fund, providing £100 million in its second close. London CIV announced in December that it and the Church of England had invested a combined £104m in affordable housing via the Social Impact Investment Programme, a joint initiative between the church and the LGPS pool.

The ACCESS pool, which caters for LGPS funds in central and southeast England, provided a further £20 million towards L&G’s fund on top of a prior investment made last year.

Pension schemes are under pressure to invest in support of the UK government’s growth agenda.

L&G fund manager Ali Farrell said: “The level of interest we have seen in this fund since its inception last year is a testament to the attractive proposition that investors see in contributing to much-needed affordable housing in the UK, while seeking steady inflation-linked returns and positive social impact.”

The UK has built 55,000 affordable homes on average over the last decade, according to the Ministry of Housing, Communities & Local Government. This is well short of the National Housing Federation’s recommendation of around 145,000 new affordable homes every year until 2031.