Insurance specialists Legal & General have set up a new dedicated affordable housing division, to continue its ambitions in the housebuilding sector
Legal & General Affordable Homes, a subsidiary of Legal & General Capital, aims to become the leading private affordable housing provider in the UK.
It is targeting all areas of the affordable housing market, including new build Section 106 and grant-funded affordable rent, social rent and shared ownership units.
Legal & General Affordable Homes hopes to be fully operational and delivering 3,000 homes per year within the next four years.
The company says that the UK housing shortage is ‘particularly stark’ in the affordable housing sector with more than 1.3 million households on waiting lists and new additions averaging only 30,000 properties a year over the last 10 years.
Nigel Wilson, CEO of Legal & General, said: “Despite the fact that the UK is a great place to invest, 30 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 1.3 million households currently on a waiting list. This important sector has now been added to Legal & General’s £15bn UK direct investment programme.”
Simon Century, head of the new affordable housing division, added: “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.”