Legal & General (L&G) has secured an additional £130 million for its affordable housing fund, raising the total to £510 million following a second close of the fund. The fresh capital comes from London’s Local Government Pension Scheme (LGPS) and highlights strong investor interest in contributing to the UK’s affordable housing sector.
The funding round saw substantial contributions, including £110 million from London CIV, the investment pool for London LGPS, and £20 million from Access Pool, a collective of 11 local authority pension schemes with £40 billion in assets. Social impact investor Better Society Capital also added £10 million to the fund.
London’s LGPS, which manages £50.8 billion in assets across 20 funds, is focusing on increasing the supply of affordable housing through strategic investments. Access Pool had previously committed £125 million to the fund when it was launched in July 2024. A few weeks later, the Greater Manchester Pension Fund (GMPF) added £120 million, and earlier this year, the GMPF invested an additional £100 million in a regional arm of the fund dedicated to the Northern LGPS.
Ali Farrell, fund manager for L&G Asset Management, emphasized the fund’s strong market appeal, stating, “The level of interest we’ve seen since the fund’s inception last year highlights the attractive proposition for investors looking to contribute to much-needed affordable housing while also seeking steady, inflation-linked returns and positive social impact.”
Key Developments and Impact
The new capital will help deliver between 3,500 and 4,000 affordable homes across the UK. L&G has already seeded the fund with a portfolio of 514 homes and is progressing with three additional funding opportunities for affordable housing development. The company anticipates having over 1,000 homes operational or under construction by the second quarter of 2025.
These developments will be managed by L&G’s for-profit arm, Legal & General Affordable Homes, which currently operates or is developing more than 8,000 homes.
Christopher Osborne, Head of Real Estate at London CIV, stressed the importance of this strategy in addressing the UK’s housing shortage, stating, “Our goal is to increase the supply of good-quality affordable housing while delivering income-driven returns to our partner funds.”
Drew Ritchie, Investment Director at Better Society Capital, commended L&G’s leadership role, saying, “L&G will play a pivotal role in channelling private capital into affordable housing, delivering thousands of homes for families across the UK. Their commitment to long-term, impact-driven funding is crucial in shaping the future of affordable housing in the country.”
This collaboration between private investors and local government pension schemes highlights a growing trend of funding for social impact projects that aim to address housing challenges while providing sustainable financial returns.
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