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LGA and BPF seek views on increasing institutional investment into affordable housing
The Local Government Association (LGA) is seeking views on how the current level of institutional investment in affordable housing might be expanded to increase new supply.
This call for evidence is in partnership with the British Property Federation (BPF) and comes at a time when institutional investors continue to expand their footprint in the sector, largely via for-profit providers.
According to property consultancy Knight Frank, the number of homes owned by for-profits is set to treble to 86,000 by the end of 2028.
Earlier this week, a new registered provider of shared ownership homes was launched after a £405m deal with a higher education pension fund and a for-profit provider.
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At the end of last month, Sage Housing registered three new for-profit providers with the English regulator: Sage Green Homes, Sage Places and Sage Shared Ownership.
The Blackstone and Regis-backed for-profit providers also include Sage Homes RP and Sage Rented.
Blackstone entered the UK affordable housing market in 2017, when it launched Sage Homes, a for-profit provider of affordable homes. In 2021, Blackstone and Regis launched Leaf Living, a build-to-rent firm.
Also in July, a for-profit registered provider revealed it was scaling up its provision of extra-care affordable housing after securing more than £100m from one of the world’s largest investment managers.
Preferred Homes received the joint-venture funding from Chicago-based investment manager Nuveen, which is wholly owned by the US teachers’ pension fund manager Teachers Insurance and Annuity Association.
This was followed by the news that an Octopus Group-owned investment vehicle has secured a further £150m from pension funds as it increases its efforts to deliver more affordable housing, and Legal & General more than doubled the size of its Affordable Housing Fund in two weeks with a £120m investment from a large pension scheme.
In its call for evidence, the LGA reiterated its commitment to supporting the supply of more homes across all tenures, and said the findings of the review will be published in a report by the end of the year.
Claire Holland, housing spokesperson for the LGA, said: “Institutional investors already play an important role in funding new affordable housing, working with developers and registered providers and councils to deliver these vital homes.
“We want to hear from all stakeholders across the sector – institutional investors, registered providers, councils, charities – about how the current system works for their ambitions to deliver on their fiduciary duties and any wider social goals through affordable housing.”
Earlier this year, the BPF published a code of governance aimed at for-profit affordable housing providers.
It was created with consultants Campbell Tickell and an advisory group of investors and advisors led by Rob Beiley, a partner at law firm Trowers & Hamlins and chair of the BPF’s affordable housing committee.
The code, which took “almost a year” of work to complete, establishes a set of standards to promote good governance practice in the for-profit registered provider sector in England.
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