Legal & General are set to move into the UK affordable housing business – with plans to develop, buy and manage ‘affordable’ rented homes built by others. The move by the UK insurance giant is the latest example of investors moving into a sector traditionally dominated by charities.

L&G are set to speak at our Berkshire & Thames Valley Development Plans Conference in Reading this June where they’ll be giving an overview of their ambitious vision and future plans. Legal & General Capital, the insurers investment business, will both develop and buy homes whilst managing properties for affordable properties built by other developers.

Affordable homes are usually included within property development projects to aid the much needed availability of homes within that price range – and these are sometimes sold on to housing associations for management. L&G’s movements into the market comes as they begin hiring and management team and kickstarting their work with the social housing regulator to gain approval.

Nigel Wilson, Chief Executive of L&G, said affordable housing was a ‘class example of under-investment’. He said: ”This is not a sustainable position, either for the sector or for the 1.3m households currently on a waiting list.”

Interest in the income stream available from social housing has picked up among investors over the past few years. In 2016, Civitas became the first group to launch a listed fund investing in social housing, while a similar fund, Residential Secure Income, launched last summer. Hedge funds have also spotted an opportunity: Cheyne Capital, for example, moved its first tenants into affordable housing in 2016. While developing and owning affordable homes is new for L&G Capital, the group has had exposure to social housing for several years through buying bonds issued by housing associations.

Other insurers are lenders to housing associations: this week, the Pension Insurance Corporation lent £60m to Phoenix Community Housing, a south London housing association. L&G also has a housebuilding business, Legal & General Homes, with a pipeline of about 3,000 homes across sites in Oxfordshire and Berkshire and is one of the major lenders to developers in the build-to-rent market. Last month L&G Capital took full ownership of upmarket housebuilder Cala Homes.