Pension funds could finance new homes, report suggests

 
Rooftops of homes in Eastbourne The report suggests setting up a central fund of council pension fund assets

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A possible 100,000 to 300,000 homes could be built in the UK every year without using any government money, a study has claimed.

The Future Homes Commission, set up by the Royal Institute of British Architects, said council pension funds could be used to reach the target.

Some of the assets in local government pension schemes could be pooled to provide a £10bn housing fund, it said.

Housing Minister Mark Prisk said the ideas would be considered carefully.

He described the proposals as innovative and interesting.

'No better time'

The report said a housing revolution that would lead to economic growth and create tens of thousands of jobs was possible without increasing government debt.

Commission chairman Sir John Banham said local councils should lead new development.

"There is no better time to tackle the UK housing crisis," he said.

"After a year-long national inquiry, the Future Homes Commission has concluded a housing revolution is entirely possible and will lead economic growth.

He added: "We need to increase massively the number of quality homes being built for many years to come, but also to develop communities which enhance the quality of life for both new residents and those living in existing communities nearby. All this has to, and can, happen without any additional government funding.

"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."

Borrowing ability

The Local Housing Development Fund would be used to build quality homes that could be sold in the future to replenish the pot.

The study said the UK needed a threefold increase in the number of new homes to help end the "blight" of poor housing.

Councils have responded positively to the report but said the government must also ease restrictions on the ability of local authorities to borrow for house building.

The president of the Royal Institute of British Architects , Angela Brady, said the commission's recommendations "provide an excellent starting point for delivering a radically improved housing market".

 

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  • rate this
    +3

    Comment number 592.

    Both my pension funds have large commercial property assets throughout the world I can see no reason why they could not get involved in house building.The main objective must of course to maximise the value of the pension fund not to subsidise the government, the money belongs to the pensioners not the government.

  • rate this
    +3

    Comment number 574.

    Surely to get a good return on investment there would have to be another housing boom?

    Considering new mortgage regulations are coming in and the average wage isn't going to rocket I can't see how there will be another boom, unless they start miss-selling mortgages again.

    I think this has the potential to leave a lot of people out of pocket come retirement.

  • rate this
    +9

    Comment number 440.

    I'm struggling to understand why pension funds wouldn't already be invested in property if it was a financially viable option. The answer must be that it really isn't

  • rate this
    -3

    Comment number 421.

    Csae studies in Europe appear to show that this can work. The housing won't necessarily fit the bill of 'affordable housing' which the UK requires at the moment as the main incentive for the investment has to be maxmising and securing the return for the stakeholders. Although increased supply in the market will help to ease the demand pressure on prices across the board.

  • rate this
    +24

    Comment number 358.

    Its a nonsense. The main objective of pension funds is to maximise the value of their investments to pay people's pensions. Property is not often the best way in the long term to achieve that and may not even be a decent way depending on how that market performs against others.It would have been a disaster just a few years ago. A truly desperate idea that could result in huge pension shortfalls.

 

Comments 5 of 13

 

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