Unlocking local authority pension funds could build 20,000 homes
According to specialist Hearthstone Investments investing the capital held in Local Government Pension Schemes (LGPS) could help build 20,000 homes.
Last November, Islington Council invested £20m (2.5%) of its pension fund into the TM Hearthstone UK Residential Property Fund to deliver new housing. If this all 89 pension funds did the same it would mean investment for new housing of around £4bn.
Christopher Down, chief executive of Hearthstone, said: ‘The recent landmark investment by Islington Council in the Hearthstone Fund provides a case study for how investment by LGPS can play a role in alleviating this crisis without requiring new sources of capital at a time of austerity.’
Richard Greening, Islington Council’s executive member for finance and performance, urged other pension schemes to join the fund to boost the delivery of new housing.
He said: ‘Our decision to invest in residential property was based on careful analysis of the options. It reflects our view that investment in this sector will produce good long-term returns for local taxpayers and the members of our pension fund.
‘We selected the TM Hearthstone fund because it is the only FCA regulated fund in the sector and is run by a team with considerable investment management experience. The fund offers a tax-efficient means for our pension fund to invest in the UK’s largest asset class without taking on the risks associated with investing in housing directly or in smaller schemes.’
The combined market value of all 89 LGPS in England and Wales at the end of March 2012 was £157bn.
Steve Clark