Legal & General is lending £50m (€69m) to a UK housing group to fund more than 800 new homes.

The 40-year loan, to Adactus Housing Group’s Chorley Community Housing subsidiary, will be used over the next three years to build homes in the north west of England.

L&G said the homes would be built with annuity money, with the return on the loan paying pensioners’ annuities.

Legal & General Retirement managing director Kerrigan Procter said annuity money was “ideally suited” for investment in housing and infrastructure, “as it can be invested for 20, 30 or 40 years, delivering economic growth and increased pensions for retirees”.

L&G’s lending arm, LGIM Commercial Lending, provided the funding. 

The financing is secured against a portfolio of existing assets, as well as Chorley’s development pipeline.

The investment produces a better return for pensioners than investing in Gilts, L&G said.

The loan is LGIM Commercial Lending’s second to Adactus following a £25m, 40-year loan in July last year.

The division has now invested a total of more than £1.2bn across 14 deals.

Transactions include seven loans to the social housing sector, two loans in the student accommodation sector, two hotel debt deals and a loan to the care home market.