Legal & General (L&G) is investing £44.6m (€51.6m) into an affordable housing partnership with a UK local authority.

L&G said it has entered into a partnership with Croydon Council to provide 167 homes for families on the housing waiting list.

L&G’s investment is being made on behalf of Legal & General Retirement Institutional.

The investment, which requires no government affordable housing grant, represents a first for the sector and an innovative new model that could be rolled out across other London Boroughs and UK local authorities.

Councillor Alison Butler, Croydon Council’s cabinet member for homes and gateway services, said: “The council set up Croydon Affordable Homes so hundreds of local families can get good-quality homes with secure tenancies, and Legal & General’s investment will save us around £20m in loan costs that means we can assist even more families in the long term.

“At a time when the Government is squeezing how much it funds local authorities, this innovative partnership offers us better value for money than more traditional loans available to councils, and I hope this encourages other councils and financial institutions to follow suit.”

Pete Gladwell, head of public sector partnerships at Legal & General said alongside launching the new L&G affordable housing business last year, this investment highlights the company’s determination to innovate within the sector and to work together to address the UK’s chronic housing crisis.

Eleanor Bucks, managing director, direct investments and real assets, Legal & General Retirement, said L&G is committed to investing in the UK, particularly where it can play such an important part in people’s daily lives.

“This is a great demonstration of our purpose to deliver inclusive capitalism, using our assets in an economically and socially useful way.

”We have been able to support our long term pension commitments whilst improving lives by developing a structure that is beneficial to Croydon Council and its residents.”