Council pension assets could hold the key to solving the UK’s affordable housing crisis, according to a new report released by the think-tank Localis.
The report, titled “New Stable: expanding and reforming the role of the LGPS in driving affordable housing,” urges the government to utilize the £392 billion worth of assets held by the Local Government Pension Scheme (LGPS) to address the country’s chronic underinvestment in affordable and social housing.
Localis argues that investing in these types of housing projects aligns with the long-term and ethical principles of town hall pension funds and would provide a boost to social prosperity and national economic growth.
The report highlights the government’s ongoing reforms to the LGPS, including the push for “megafund” pools, which aim to enhance investment in UK growth-related assets. It also notes the substantial aggregate surplus currently held by LGPS funds in England and Wales.
With the government’s focus on housing delivery and increasing institutional investment, the paper outlines key recommendations for creating the right conditions to channel LGPS funds into a crucial sector where underinvestment and underfunding are a serious impediment to national growth plans.
These recommendations include reclassifying social housing as national infrastructure, using pension surpluses strategically, aligning local growth plans with LGPS investment strategies, and providing enhanced guidance and support for LGPS investment.
The report also suggests extending the LGPS pooling deadline to 2027 and offering clear guidance on investments linked to national missions. It also calls for central oversight by Homes England, which could provide support and resources for developing a credible and effective affordable housing pipeline.
Joe Fyans, head of research at Localis, stated, “By implementing these recommendations, the ‘New Stable’ report argues that the LGPS can become a pivotal source of patient capital, contributing significantly to alleviating the housing crisis, supporting local economic development, and fostering national economic growth.”
Steve Simkins, public services leader at Isio, added, “These recommendations recognise that the LGPS is part of the wider local government ecosystem in which social housing plays a crucial part. They encourage integrated approaches and solutions to both LGPS investment and funding to be found at a time when the government needs to make the best use of available resources.”
Adele Gritten, chief executive of Local Partnerships, also commented, “Affordable housing is a priority for both central and local government. Local Partnerships is delighted to support this timely report that offers practical ways to unlock investment from the Local Government Pension Scheme, enabling local authorities to take a leading role in tackling the housing crisis and supporting national growth.”
The report, which was distributed by https://pressat.co.uk/, concludes with a set of recommendations for maximizing the value of LGPS investment and responding to the surplus, unlocking investment in social and affordable housing, and creating a pipeline for affordable housing development.
An advance copy of the report is available for download on the Localis website.
Derick is an experienced reporter having held multiple senior roles for large publishers across Europe. Specialist subjects include small business and financial emerging markets.