Legal and General rows in behind Reeves’ housebuilding drive with £125m fund
Legal and General (L&G) has thrown its weight behind the government’s house building push today with a pledge to inject at least £125m of pension cash into affordable housing.
The FTSE 100 pensions firm, which itself is a major housebuilder, said in a statement it had launched a new affordable housing fund with an initial £125m commitment from the Local Government Pension Scheme, Access, which will be used to finance house building across the country.
At launch, the fund will hold over 750 homes, the majority of which will benefit from affordable rent and the remainder being shared ownership and social rented homes, L&G said.
The move comes as Keir Starmer and Rachel Reeves look to unlock a wave of investment from pension funds to finance a major housebuilding and infrastructure drive across the UK. In its election manifesto, the party pledged a sweeping shake-up of the pension rules to try and merge smaller schemes and allow investment to flow more easily into assets like infrastructure and private companies.
L&G chief executive, Antonio Simoes, said in a statement today that the private and public sector would now need to “work together” to unlock investment and narrow the huge shortfall of housing in Britain.
“Today’s launch is an important step forward in putting pensions capital to work by investing in tangible assets that can help benefit the real economy and enhance local communities,” he said.
L&G has been at the forefront of efforts to get pension money flowing into private markets and alternative assets like property and infrastructure. Last month, it launched a new private markets platform for some 5.2m of its members which aims to allow more pension money to flow into areas outside of listed stocks and bonds.
While pension cash has typically been shut out of such assets due to the higher costs associated with managing the money, minsters and regulators have been looking to ease the way that retirement money can be invested over the past two years.
The new Labour government has also made narrowing Britain’s huge housing shortfall one of their key pledges since taking office. A shortage of affordable housing is particularly acute, with under 55,000 being built over the past decade, well short of the National Housing Federation’s recommendations of around 145,000 a year until 2031.
In her maiden speech as Chancellor last week, Reeves said the government wanted to“get Britain building again” and would bringing back compulsory housebuilding targets for the government, with a plan to build 1.5m homes in England over the course of this parliament.
She called out pension investment as key to financing the plans, saying the party would be “turning to the pension system” to finance construction and British companies.
Some of the UK’s largest property and housebuilding firms have welcomed the promise from Labour and described the reintroduction of compulsory housebuilding targets as “hugely encouraging”.
“Building more new homes will bring huge economic and social benefits to the UK, and it is vital that local and central government are united with industry to plan positively to deliver high quality new homes and developments across the country,” said David Thomas, CEO of Barratt Developments last week.
Rob Perrins, CEO of Berkeley Group, also welcomed the shift in tone, declaring the plans a “very positive start”.