Council pension fund could finance 300,000 new homes, says report

Local authority pension funds could help build 300,000 new homes every year, according to a new report from the Future Homes Commission (FHC).

The Building the Homes and Communities Britain Needs report says the UK must ‘radically overhaul’ the way it funds and builds housing, and local authorities should pool their assets to provide local communities with better homes.

It recommends setting up a £10bn Local Housing Development Fund, to be financed by the largest local authority pension funds pooling 15% of their assets to invest in new housing. It also says councils should use the new powers at their disposals to lead the creation of sustainable communities and ensure a decent return of their investment.

Chair of the Future Homes Commission, Sir John Banham said: ‘We strongly believe that local government can become the leader of new development once again, by using their assets and powers to create the type of mature, sustainable, mixed tenure communities that Britain needs and that institutional and international investors want to invest in.

‘After decades on the sidelines, the time is right for local government to show real leadership and realise their potential to shape a positive future for local people by delivering strong, self-financing communities where people want to live and to kick start the demand for better quality housing in the future.’

Council leaders have responded to the report, saying it is finance rather than the planning system which is holding back growth.

Chair of the Local Government Association, Sir Merrick Cockell said: ‘The real stumbling block to economic growth and new development is not the planning system but a lack of finance which is leaving buyers unable to buy and developers unable to build. Local authorities can play their part in tackling this, but we first need government to lift some of the restrictions stopping us.

‘Councils are very keen to explore the opportunity to use pension funds to drive local economic growth. A few projects are already off the ground but with a bit more support we could put even more of the schemes’ billions of pounds in collective assets to work.

‘The LGA has been discussing the potential for unlocking further investment with pension funds to explore the obstacles to this type of investment that exist at present. We have asked the Government to help clear the barriers standing in the way of direct investment in job creating infrastructure projects.

The report, which is the first ever national comprehensive consultation considering the state of UK housing, was led British business leader Sir John Banham.