L&G raises further £130m for Affordable Housing Fund, boosting anticipated delivery to 4,000 homes

L&G’s fund was launched in July 2024, delivering on the firm’s plans to “crowd in” third-party investment in affordable housing.

At launch, it was backed by an initial £125m commitment from ACCESS and then raised £120m from the Greater Manchester Pension Fund (GMPF) in the next month. The GMPF invested a further £100m in the fund in January this year.

The total £510m in the Affordable Housing Fund comprises £220m from GMPF, £145m from ACCESS, £100m from London CIV, £10m from Better Society Capital and £35m of internal client capital.

L&G said the funds raised to date are expected to deliver approximately 3,500 to 4,000 homes.

It has already seeded the fund with a portfolio of 514 homes and has exchanged contracts on three funding opportunities to bring forward more affordable housing development, it said.

With the current pipeline, it expects the fund to have more than 1,000 homes either operational or under construction by the second quarter of the calendar year of 2025.

The fund’s assets are developed and operated by L&G’s for-profit registered provider Legal & General Affordable Homes. The provider has invested £1bn in affordable housing and has more than 8,000 homes in operation or development, since its launch in 2018.

L&G said that with “severe supply shortfalls in affordable housing across the UK, this additional capital highlights how the public and private sector[s] can come together to build more homes and make a meaningful impact”.

Ali Farrell, fund manager, asset management at L&G, 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.

“I am pleased to welcome our new partners as we leverage our sector-leading platform to execute our strategy and deliver high-quality housing in areas of acute need.”

Christopher Osborne, head of real estate at London CIV, said: “Through our LCIV UK Housing Fund, London CIV’s strategy is to help increase the supply of good-quality affordable housing in the UK, address an under-served part of the market, and deliver income-driven returns to our partner funds.

“We’re delighted to have committed capital into the L&G Affordable Housing Fund and to partner with an established manager and platform within the sector. We consider this strategy will both meet our target returns and contribute to providing more affordable homes in the UK.”

Drew Ritchie, investment director at Better Society Capital, said that the investor has “relished the opportunity” to participate as a challenger and endorser of the fund’s intended social impact.

“L&G will play a leading role in channelling private capital into affordable housing in the coming years, delivering thousands of vital homes for families in need throughout the UK,” he said.

“As a market-shaper, L&G can visibly evidence that private capital can be a long-term, sustainable, impact-driven funder of affordable housing. We were keen to back a team and platform sharing that common vision and that are committed to practical measures to help strengthen and reinforce those aims.”