The homes, a mixture of houses and apartments in Croydon and neighbouring Boroughs, will be leased to Croydon Council on a 40-year term, after which time they will belong to the council. Rents will be set at Local Housing Allowance (‘LHA’) levels. The partnership is supported by a £44.6m investment from Legal & General.
The homes will provide much-needed stability for local families and residents, many of who have been living in emergency accommodation. The partnership will mean better outcome for Croydon families in housing need as well as creating around £20 million in savings for the council.
With waiting lists for UK affordable homes reaching over 1.3 million, and over 2,000 families requiring Temporary Accommodation in Croydon alone, it is hoped this scheme will create a blueprint for institutions and the public sector to work together to tackle the UK’s housing crisis. Legal & General’s investment, which requires no government affordable housing grant and does not rely upon Section 106 contributions, represents a first for the sector and an innovative new model that could be rolled out across other London Boroughs and UK local authorities.
The investment, being made on behalf of Legal & General Retirement Institutional, provides an excellent match for Legal & General’s long-term annuity and pension commitments. It 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. Legal & General were advised by Savills.
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 added: “Our motto ‘Own Your Own World’ is about more than society being able shape its future through savings. It’s about providing some of the most vulnerable in society with stable addresses to apply for work from, and a kitchen table where their children can study. And it’s about partnerships between forward thinking institutions and local authorities, which enables them to take control of their finances; with investments like this turning statutory duties, such as the provision of Temporary Accommodation, from revenue drains into revenue generators.
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.”
Eleanor Bucks, Managing Director, Direct Investments and Real Assets, Legal & General Retirement, commented: “We are delighted to be partnering with Croydon Council and investing in much needed local housing. We are committed to investing in the UK, particularly where we 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.”