Legal & General has taken an Impact Investing approach to its latest investment by agreeing to put £44.6 mln (€52 mln) into a partnership with London's Croydon Council to house 167 families, many of whom have been living in emergency accommodation.
L&G said it was taking a step to ‘innovate' with the aim of creating a blueprint for the private and public sectors to working more closely together to tackle the UK’s housing crisis. The investment will save Croydon Council £20 mln in loan costs for Croydon Affordable Homes, a charitable partnership set up last year.
The properties, a mix of houses and flats in Croydon and surrounding areas, will be leased to Croydon Council on a 40-year term, after which the ownership will transfer to the council. Rents will be set at Local Housing Allowance (‘LHA’) rates, which are used to calculate the housing benefit or universal credit housing element.
Pete Gladwell, head of public sector partnerships, Legal & General, said: ‘Alongside launching our new affordable housing business last year, this investment highlights our determination to innovate within the sector and to work together to address the UK’s chronic housing crisis.’
L&G is making the £44.6 mln investment on behalf of Legal & General Retirement Institutional, which will fulfil Legal & General’s long-term annuity and pension commitments. L&G said the tie-up with Croydon ‘demonstrates the positive social impact that a proactive local authority and long-term investment can deliver, enabling Croydon Council to meet its affordable housing needs and reduce the burden on the public purse’.
The homes will be managed by Croydon Council’s housing team and offered to those on the council’s housing waiting list.
Councillor Alison Butler, Croydon Council’s cabinet member for Homes and Gateway Services, said: ‘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.'
