Legal & General has announced that it has raised £510 million for its affordable housing investment strategy, as part of the second close of its affordable housing fund, which it says is aimed at tackling the UK’s housing crisis head on.

New investors include London CIV, the entity that manages London Local Government Pension Scheme (LGPS) assets, which has invested £100m, alongside social impact investor Better Society Capital. In addition, ACCESS Pool, an LGPS collaboration of Central, Eastern and Southern Shires, has invested a further £20m on top of a previous allocation in 2024.

Since launching its affordable housing fund in July 2024, L&G says its investment strategy has attracted strong investor interest, demonstrating the attractive proposition that the asset class offers institutional investors seeking inflation-linked returns alongside positive social impact. The additional capital raised builds on previous commitments from Greater Manchester Pension Fund and ACCESS Pool.

The funds raised to date are expected to deliver approximately 3,500-4,000 homes. Alongside completing a second close of the fund, L&G is announcing that it has seeded the fund with a portfolio of 514 homes, and has exchanged contracts on three funding opportunities to bring forward more affordable housing development. With the current pipeline the fund expects to have over 1,000 homes either operational or under construction by Q2 2025.

The fund’s assets are developed and operated by Legal & General Affordable Homes, which has £1bn invested in affordable housing and over 8,000 homes in operation or development since the business was established in 2018.

Ali Farrell, Fund Manager, Asset Management, L&G, said: “The level of interest we have seen in this Fund since its inception last year is a testament to the attractive proposition that investors see in contributing to much-needed affordable housing in the UK, while seeking steady inflation-linked returns and positive social impact. I am pleased to welcome our new partners as we leverage our sector-leading platform to execute our strategy and deliver high quality housing in areas of acute need.”

Christopher Osborne, Head of Real Estate, London CIV, said: “Through our LCIV UK Housing Fund, London CIV’s strategy is to help increase the supply of good quality affordable housing in the UK, address an under-served part of the market, and deliver income driven returns to our Partner Funds. We’re delighted to have committed capital into L&G Affordable Housing Fund and to partner with an established manager and platform within the sector. We consider this strategy will both meet our target returns and contribute to providing more affordable homes in the UK.”

Drew Ritchie, Investment Director, Better Society Capital, said: “L&G will play a leading role in channelling private capital into affordable housing in the coming years, delivering thousands of vital homes for families in need throughout the UK. We’ve relished the opportunity to participate as a challenger and endorser of the Fund’s intended social impact. As a market shaper, L&G can visibly evidence that private capital can be a long-term, sustainable, impact-driven funder of affordable housing. We were keen to back a team and platform sharing that common vision and that are committed to practical measures to help strengthen and reinforce those aims.”