Legal & General spends £22m on Croydon council homes

Legal & General (L&G) is likely to roll out further investment in social housing ‘buy and leaseback’ schemes after spending nearly £22m buying 250 homes from Croydon council.

The finance giant announced it was using money from its pension funds to buy the homes, to be managed by Croydon, as part of an ongoing housing partnership with the local authority which has already seen its spend £45m on more than 150 homes across the borough.

An L&G spokesperson said the group was “actively speaking to other London boroughs and councils across the country who have expressed an interest” in the type of arrangement forged with Croydon, although details of the discussions have not been released.

Once the homes have been bought and are being managed by Croydon the pension provider takes a percentage of rents which are set at local housing allowance levels. Last year’s deal is expected to save the council around £20m in loan costs.

Homes covered by the latest investment, worth £21.6m, will be ear-marked for homeless people currently living in emergency accommodation, and will save Croydon council around £24m.

After 40 years homes covered by both deals will revert to Croydon’s ownership.

Describing the arrangement as “inclusive capitalism”, L&G said it was unlocking money from its pension arm, Legal & General Retirement Institutional.

Pete Gladwell, L&G’s head of public sector partnerships, said it was “developing a structure which supports our long-term pension commitments whilst improving lives and helping to create further savings for the council to reinvest”.