Legal & General sign £150m loan to provide 5,500 homes

Leading UK financial services provider, Legal & General, announced that a £150 million social loan has been signed. The funds will be used to finance 5,500 affordable homes and the loan was arranged by BNP Paribas, HSBC UK, and SMBC Group, in a transaction with Legal & General Affordable Homes (LGAH).

Since its launch in 2018, over 2,500 homes have been supplied and an additional 6,500 are on the way. As one of the Government’s strategic partners in the delivery of affordable housing, the homes will help to address the significant demand for homes across England.

By contributing to the affordable housing market LGAH aim to improve people’s health and well-being and make a positive contribution to the community.

The social loan will help fast-track the delivery of homes for social and affordable rent in addition to shared ownership across the country.

Chris Hewitt, financial director of Legal & General Affordable Homes, comments: “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.”

This marks the first UK insurance syndicated Use of Proceeds social loan, and it follows the Loan Market Association (LMA) Social Loan Principles, with all 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. Laetitia Girolami-Boyer, sustainable finance markets director, BNP Paribas, explains: “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.”

HSBC UK was the facility and security agent, joint lead arranger, and lender. SMBC were Joint Lead Arranger and Lender, with each bank committing £50m.

Robert King, head of sustainable finance at HSBC UK, concludes: “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.”