Legal & General aims to offer 3,000 affordable homes a year

The UK insurer Legal & General is launching an affordable housing business with the aim of providing 3,000 new homes a year within four years.

L&G said it was in the process of recruiting a management team to run the new division, which is expected to build and buy homes to address a “chronic shortfall” of affordable housing.

“Affordable housing is a classic example of underinvestment with minimal new equity capital being deployed to the sector,” the L&G chief executive, Nigel Wilson, said.

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“This is not a sustainable position – either for the sector or for the 1.3m households currently on a waiting list.”

The affordable homes business will become a subsidiary of Legal & General Capital (LGC), which says it invests in areas where there has been a lack of investment and innovation.

L&G said it would offer a more “sustainable” approach to providing affordable homes after housing associations have taken on a lot of debt over the years to fund developments.

Theresa May has described the “national housing crisis” as one of the biggest barriers to social mobility in Britain, with 300,000 new homes a year needed to address the shortage. She has argued that key workers such as nurses, teachers and firefighters should be the priority for affordable homes.

A shortage of homes in the UK has helped to support house prices in recent months, despite a slowing economy and weaker consumer spending.

The average price of a home edged up 0.2% to £213,000 in April, according to the mortgage lender Nationwide, following two consecutive monthly falls.

It pushed up the annual rate of growth in house prices to 2.6%, from 2.1% in March.

“Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market but also with respect to interest rates,” the Nationwide chief economist, Robert Gardner, said.

“Subdued economic activity and the ongoing squeeze on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year.”

Nationwide is predicting UK house price growth of about 1% this year, down from 2.6% in 2017.