L&G Affordable Homes aims to be delivering 3,000 homes per year within the next four years
Insurance firm Legal & General haves announced the launch of Legal & General Affordable Homes, a new wholly-owned affordable housing provider.
The new arm of the business is a subsidiary of Legal & General Capital, which invests capital into sectors where it identifies a shortage of investment and innovation, focusing on growth opportunities and scale ups.
The firm points out that government figures show the UK has a shortfall of over 100,000 homes per year, while in the affordable housing sector, over 1.3 million households are on UK waiting lists with new additions averaging only 30,000 properties a year over the last 10 years.
Legal & General Affordable Homes will aim to be fully operational and delivering 3,000 homes per year within the next four years, with the goal of becoming the leading private affordable housing provider in the UK.
The insurer says the new business will be looking to accelerate and grow the provision of affordable housing across the UK, targeting all areas of the affordable housing market, including new build Section 106 and grant-funded affordable rent, social rent and shared ownership units.
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, 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.”
Legal & General has been involved in supply side housing activities for nearly 20 years. It also owns house builder CALA Homes, which is on track to deliver an annual capacity of 2,500 units and revenue of around £1bn in 2020.