Partner Article

Ken’s pension fund designs are right idea

Norman Peterson, director of Carlton & Co Investments, responds to London mayoral candidate, Ken Livingstone’s plans to use Local Authority pension funds for social housing projects.

I read with interest the article about Ken Livingstone and his plans to use Local Authority pension funds to build more social housing if he wins his bid to be elected as Mayor of London.

This approach is a step in the right direction, but it needs to be rolled out as a nationwide policy, not just for London and the South East.

The UK is facing a substantial housing problem as a result of a collapsed house building industry due to lack of finance. As a consequence, there is now a demand/ supply imbalance, resulting in rapidly rising rents and affordability issues. Continued reductions in government funding emphasises the necessity to act now and engage with institutional investors.

The housing market, in particular affordable housing, needs substantial funding and the institutional investors have the financial resources available, but are faced with a lack of suitable investment opportunities. The right investment grade asset in the residential sector has the potential to attract the substantial investment required to build new homes in volume and address the market demand.

Local authorities are well placed and have a detailed insight of local housing needs, if they were to invest their pension funds into its regional housing projects, they would act as a catalyst, sending out a strong message, to attract additional funding from a wider pool of institutional investors.

Once a building project is fully funded, construction begins, jobs are created, and new homes are available to the local authority.

Whoever wins the race for the Mayor of London, local authorities throughout the UK have the opportunity to shape the initiative and more importantly, benefit from this pension fund investment strategy.

This was posted in Bdaily's Members' News section by Norm Peterson .