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L&G association to be largest for-profit in the sector
A new housing association being set up by insurance giant Legal & General (L&G) is likely to be the largest for-profit landlord in the sector.
Speaking to Inside Housing, Simon Century, head of affordable housing at L&G, who will lead the new association, said it was necessary for the organisation to be run for profit in order to exist within the company’s existing structure.
Mr Century said: “It will act in the same way as a traditional housing association or registered provider, within the boundaries of being an institutional investor.”
Mr Century also confirmed that L&G does not intend to manage the homes they build, but to partner “with the best in the sector” to manage them.
The association has started discussions with housing associations about managing homes on their behalf, but the investor has not reached any agreements yet. Mr Century said that it could end up partnering with local associations in individual regions or with large, nationwide organisations.
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He told Inside Housing: “There’s a balance between local expertise, which is incredibly important, understanding the local market, understanding local politics, understanding what people are thinking on the ground and understanding the culture, combined with scalability as well.”
Mr Century was strategy director at 18,000-home association BPHA before joining L&G two years ago to work on their modular housing business.
He revealed that the new housing association will not seek to build all its homes through L&G’s modular factory, although the technology will be used to meet some of its development pipeline.
The entrance of L&G – which has £984bn of assets under management – into the affordable housing sector follows private equity firm Blackstone’s acquisition of a controlling stake in for-profit housing association Sage to buy Section 106 properties, and the growth of real estate investment trusts in the sector.
However, the Labour Party last week proposed a ban on for-profit housing associations, which at the moment make up a relatively small part of the sector.
Asked about this policy, Mr Century told Inside Housing: “I’ll let them speak for themselves as to their views as to why that panned out. For us, the only thing we really care about is how do you increase output, how do you get more affordable homes delivered?
“There are 1.3 million people on the social housing waiting list. That’s not going anywhere. We need to do something about that and for us, the answer is deploying long-term, patient capital.”
