Legal & General, Laing O’Rourke and Touchstone have joined forces to offer a one-stop shop to UK local authorities to help them build and manage new housing, involving the lease of land to L&G with councils subsequently leasing finished homes from the insurance group.
The three parties said their service would help councils meet housing targets and save money by using land they already own.
Pete Gladwell, head of public sector partnerships at Legal & General Property, said: “What this alliance is trying to do is simple – make accessing quality private sector support as stress-free and financially beneficial as possible for local authorities.”
The alliance between the three businesses aims to work with councils to build as many as 2,000 new homes a year initially.
It will offer investment into – and construction and management of – build-to-rent housing on local authority sites.
“While each element can be procured separately by a local authority, the combined expertise aims to generate significant synergies for those seeking to increase direct delivery of housing schemes,” the firms said.
They said the alliance was responding to the challenges in the Lyons and Elphicke-House reports.
It aims to solve problems that councils have – a lack of private sector investment and construction and design expertise, as well as expert management for the newly created homes, and the need for many procurement processes that take years to do.
Under the model the firms propose, councils will lease land to L&G, which will then fund Laing O’Rourke to build homes, which will then in turn be leased by L&G to the councils, and managed by Touchstone.
The homes will be rented out at a range of private rented and affordable tenures, the firms said.
At the end of the lease, there will be an option for councils to buy the homes for £1, which will allow them to benefit from the capital growth during the lease term.
In addition to owning the homes at the end of the lease, the councils will keep all rental income above the lease payments to Legal & General.