The 125-unit development on a former NHS site marks the start of long-term partnership between Pension Insurance Corporation and London Square
A pension insurance company has made its first investment into affordable housing as part of a plan to invest £500m in the sector.
Pension Insurance Corporation (PIC), which insures defined benefit pension schemes, has invested £50m towards the development of 125 affordable and shared ownership homes on the former Hawks Road Health Clinic site in Kingston upon Thames, Surrey.
The former NHS-owned site will offer 100% affordable homes, comprising 44 apartments at London Affordable Rent and a further 81 units for shared ownership.
The scheme, which will be funded through a mixture of debt and equity, will be delivered by London-focused housing developer London Square and its for-profit affordable housing arm, Square Roots, as part of a long-term partnership with PIC.
Construction of the main buildings is now under way, with the development expected to be completed by November 2025. London Square is acting as contractor/developer, with Square Roots as the affordable housing provider.
Square Roots, which aims to have 4,100 homes under construction or in ownership by 2029/30, last month posted a loss of £808,000 in results for its first year.
PIC, which has invested almost £4bn as debt in sectors including affordable housing since 2012, aims to invest £500m over the coming years into affordable homes in London to help tackle the housing shortage while “providing cash flows to back the pension of PIC’s policyholders.”
The development also includes a £4.9m grant from the Mayor of London’s Affordable Housing Programme.
“We are excited to be partnering with London Square and Square Roots on this development and our inaugural equity investment in social housing,” Allen Twyning, investment director at PIC, said in a statement.
“We are also delighted that a grant was secured from the GLA Affordable Housing Programme that has made the overall scheme viable, given the high interest rate environment, and inflated building costs. Not only does this create secure, low-risk cashflows with which we can pay the pensions of our policyholders pensions, but it creates huge social value in Kingston upon Thames.”
Adam Lawrence, chief executive of London Square, described the new partnership as “excellent news for London Square and Square Roots.”