LGPS Central: Make social and affordable housing more investible
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Pension funds can help address the UK's housing shortage, LGPS Central has said but is calling on the government to ensure consistent policy, more efficient planning, support for SME builders and tax incentives among others. The asset pool plans to develop a Social Housing Fund in 2027 and hopes to expand its partnerships with housebuilders and housing associations.
In a report published on Friday, the Local Government Pension Scheme pool handling more than £100bn in assets looks at the attractions and challenges of investing in affordable housing as the UK is faced with an acute shortage.
Chief executive Richard Law-Deeks said: “Housing, including affordable and social housing, can offer stable, potentially inflation-linked income, diversification and exposure to strong underlying demand."
The report, 'Growing LGPS investments in UK housing', lists six measures it argues could help create a better pipeline of investible housing opportunities:
macro-economic stability, including addressing inflation;
consistent policy – eg, LGPS Central suggests that towards the end of the 10-year affordable rent settlement, government should extend it or set out a new settlement so that investors have predictability of rents;
more efficient planning through digitalisation and delegation reforms, introducing strategic land partnerships with local authorities to unlock public land for housing, supporting local government to engage early with developers, and clearer and more efficient decision-making by Homes England to help investors navigate its programmes;
support for SME builders, such as targeted risk sharing;
more support to local government and others to build, eg enabling joint ventures between councils and institutional investors, and providing technical assistance and procurement support to smaller authorities and providers; and
financial and regulatory incentives, such as reliefs on capital gains or stamp duty for affordable housing projects, as well as removing “regulatory impediments” to co-investment between Public Finance Institutions and the LGPS.
The Wolverhampton-based asset pool suggests its 14 partners funds could ramp up their combined exposure to social housing from £600m to £1bn, with much of this additional investment delivered through direct exposure, thus creating 6,000-7,000 new homes over five to 10 years. The pool currently invests 8% of assets in property.
Additional supply is sorely needed; About 1.34m households were on local authority housing waiting lists in March 2025, while 64,762 affordable homes were delivered in England during 2024-25.
What are the main reasons holding pension funds back from investing in affordable housing?
