Legal & General launches new Suburban Build to Rent arm, as it looks to deliver 1,000 new family home a year

The new housing arm will partner with UK housebuilders and undertake a direct delivery programme to bring forward over 1,000 homes each year from 2024. As an investment market which is forecast to grow to in excess of £200bn, Legal & General aims to be the UK’s first choice SBTR platform creating much needed, high quality family homes in areas connected to schools, transport infrastructure and key amenities. 

In 2019 the operational UK BTR market was valued at c £10bn. As a Group, Legal & General has a strong track record within the sector.  Having launched its Build to Rent Fund in 2017, it now has over 5,000 homes in operation or development across the UK’s major towns and cities. The SBTR sector, however, has lacked the same concentration of institutional investment, with less than 1% of the market having benefitted from patient capital investment compared to c. 6% for the urban sector. Recognising this untapped potential and the societal need for high quality family homes to rent, Legal & General is establishing a new product to meet the increasing demand.

Legal & General’s SBTR schemes will be community focused and service-led, offering resident’s choice, security of tenure and flexibility.  This level of offering is largely unavailable in the wider residential market, particularly outside the UK’s urban centres. Legal & General’s SBTR developments will offer a mixture of houses and low density apartments, whilst being designed to reflect new ways of living, post-COVID, such as incorporating home offices and more extensive outdoor space.  In line with Legal & General’s wider commitment to sustainability, SBTR will implement a robust ESG framework into its developments in order to enhance and create viable, long-lasting communities. Alongside Legal & General’s other housing businesses, SBTR will target to be operationally carbon net zero by 2030.

Legal & General Capital is Legal & General Group’s alternative asset platform, creating assets that back pensions with an improved yield or deliver strong growth prospects with low correlation to equities.  Its purpose is to achieve risk-adjusted returns for its shareholders and level up regional economies. It has built its market leading capabilities in a range of alternative assets, including residential property; specialist commercial real estate; clean energy; alternative credit; and venture capital, delivering depth of resource, track record and intellectual property.  It invests in the real economy, creating alternative assets that deliver a tangible impact, investing society’s capital for society’s benefit.  As LGC grows its platform, SBTR will form a natural evolution to its investment strategy. SBTR will utilise Legal & General’s diverse capital streams, robust track record and commitment to socio-economic investing to deliver well-managed, mass-market single family rental housing. 

LGC’s SBTR arm is headed up by Simon Century, who has led the investment and scale up of a number of major housing businesses, such as Legal & General Affordable Homes.  He will be supported by David Reid, who will act as Managing Director of the new business, having joined Legal & General from Rowan Asset Management in January 2020. The wider SBTR team is now being established, seeking talent from a diverse range of backgrounds including investment, operational and residential development sectors.