Legal & General has announced that it has signed a £150 million Social Loan where Use of Proceeds will finance 5,500 affordable homes. Housing Industry Leaders investigates how this will help to address the significant demand for affordable housing across England.
The deal was structured as a Social Loan, which is available for projects that help to tackle major social issues such as the delivery of more affordable housing. This is the first UK insurance syndicated Use of Proceeds social loan.
Sustainable Finance Can Support Affordable Housing
It adheres to the Loan Market Association (LMA) Social Loan Principles, with all the schemes screened by LGAH’s Scrutiny Panel, which oversees the selection, evaluation, and monitoring of investments.
BNP Paribas acted as Social Loan Co-ordinator, Joint Lead Arranger and Lender; HSBC UK as Facility and Security Agent, Joint Lead Arranger and Lender; and SMBC as Joint Lead Arranger and Lender, with each bank committing £50 million.
Speaking about BNP Paribas contribution to the social loan, Laetitia Girolami-Boyer Sustainable Finance Markets Director at BNP Paribas, said: “BNP Paribas is delighted to have partnered with L&G Affordable Homes on this social loan. This collaboration demonstrates the power of sustainable finance to support affordable housing, wellbeing and community engagement.”
The alignment with the LMA Social Loan Principles catalyses best practice in the sector, and the transparency embedded into the loan is a further feature to ensure tangible social impact.
Affordability Is Now More Important Than Ever
Now, during the cost-of-living crisis, affordability is more important than ever, as people shouldn’t worry that they can afford to be comfortable, warm, and run their homes.
Robert King, Head of Sustainable Finance at HSBC UK said: “As a bank, HSBC UK are committed to the principle of ‘achievable change’ and supporting our clients to accomplish their business goals through tailored and innovative solutions.
“We want to show our clients how their ambitions for sustainability and social responsibility will not only have a big impact on the world around us but make good business sense.”
We are committed to supporting our clients’ sustainability ambitions through tailored and innovative solutions like this social loan for Legal & General Affordable Homes.
The Delivery Of Affordable Homes Must Be Accelerated
LGAH was launched in 2018 to increase the supply of affordable housing and now operates over 2,500 homes across the UK, with a further 6,500 in its pipeline.
As one of the UK Government’s strategics partners on the provision of affordable housing, LGAH’s mission is to significantly increase the supply, sustainability, and quality of affordable homes.
Its aim is for the provision of its services to help reduce inequalities, improve people’s health and well-being, making a positive contribution to the communities it serves.
Chris Hewitt, Financial Director of Legal & General Affordable Homes said: “Since launching four years ago, Legal & General Affordable Homes has deployed institutional capital at pace to accelerate the delivery of affordable homes across the country. In the last few years, Legal & General has committed over £1bn of its own retirement funds to these efforts, and they will be used alongside this innovative social loan structure.
“This product reinforces our commitment to the sector, and our work to help reduce inequalities in communities across the country. Whilst we are pleased with our progress, 1.4million households remain on social housing waiting lists across the UK and there are still major challenges to address this shortfall.”
With a new government being formed, we hope the affordable housing agenda will be central to any new policy and look forward to continuing to work in partnership with the sector to deliver the housing the country so desperately needs.
The new loan is said to help accelerate the delivery of homes for social rent, affordable rent, and shared ownership across the country. This will help to address the significant demand for affordable housing across England.