The Co-op has announced that its pension fund plans to invest up to €56.2m (£50m) into the social and affordable housing market over the next 12 months, providing needed support into a sector where demand is clearly outstripping supply. Across the UK, there are an estimated 1.15 million households on waiting lists for social homes. Many of these are key workers who exceed the income threshold to qualify for social housing, but struggle to afford to buy their own home. It is thought that around 100,000 new social homes are needed each year to support the demand. The annual delivery of homes, however, has been just half of this figure, and despite the increased size of the population, the amount of social housing stock has reduced considerably over the past 35 years.
PGIM Real Estate has been appointed to develop the portfolio as part of its inflation-linked property holdings. An initial investment in 50 units at the Fair Acres development, in Dunbar, Scotland, is being made, which upon completion, will be let to East Lothian Council. In addition, PGIM Real Estate has secured 48 units in Glasgow and 71 units in Yorkshire, and are actively pursuing developments across the UK. The €56.2m (£50m) investment will eventually provide 350 units.
Commenting on the decision, Allan Leighton, Co-op Chair said: “The decision by the PACE trustees to invest in the Social Housing sector illustrates the strength of the pension scheme and a positive will to invest in an area clearly in need of support. If this approach could be adopted more broadly across the pension fund industry, then the current supply gap could be narrowed much more swiftly and effectively. The Co-op is clearly making a sustainable and distinct difference that will help communities across the UK. I’m sure that Co-op colleagues, both past and present, will be heartened to know that a portion of their pension assets are being invested in this way. “
Harry Baines, Chairman of the Board of the Corporate Trustee of the PACE Pension Scheme, added: “Our investment strategy aims to meet the needs of our scheme’s members, but in a way that is aligned with the Co-op’s values. This move to funding social housing developments as part of our property portfolio aligns with our Responsible Investment Policy which was developed with the Co-op and our members. This funding provides a safe and secure investment opportunity for PACE that will benefit our members and at the same time is meeting a clear social need in the UK housing sector today.”
