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Wiltshire Pension Fund Affordable Housing Commitment

New build homes
Long term strategic asset allocationLong term strategic asset allocationLong term strategic asset allocation

Photographs: Developments at Fugglestone, Saltdean and Lewes

6 April 2022

Wiltshire Pension Fund is pleased to announce the completion of its first stage affordable housing portfolio implementation.

The initial commitments total £120m, with a target allocation of £150m.  This represents 5% of the total fund Assets Under Management (AUM) of £3billion.  Funds selected include the CBRE UK Affordable Housing Fund, an existing holding in its property portfolio; the Gresham House Residential Secure Income LP; and the Man GPM RI Community Housing Fund.  This allocation sits within the protection assets portfolio and is diversified to cover social rent, shared ownership, affordable private rent and mixed tenure assets across the UK.

Affordable Housing offers the potential for stable, secured inflation-linked returns whilst providing social and environmental impact for residents, local communities within the UK and the wider economy.  Quantifiable impact includes reduced rents compared with market rates and energy efficient, low carbon homes fit for a sustainable future.  The case for affordable housing in the UK is well-known, with demand greater than supply. Inflation-linked income with the potential for long term capital appreciation and low volatility meet the strategic investment needs of Wiltshire Pension Fund, but affordable housing also provides very positive benefits to those on lower or median incomes, priced out of home ownership in the less secure private rental sector.

Head of Wiltshire Pension Fund, Jennifer Devine, commented: "Investing in affordable housing is a really good match for our return requirements - the rental increases are linked to inflation, and tenants sign leases for long periods of time (for example, in supported living, or shared ownership models). There is a real need for this kind of housing - demand massively outstrips supply, and over recent years many areas across the UK have become unaffordable, with the ratio of house prices to median incomes increasing to levels where most people cannot afford home ownership.
For this portfolio, the positive social impacts are completely integral to the investment case. We will be measuring the financial performance of this portfolio, and a set of impact measures as well. There may also be opportunities for local (Wiltshire-based) investments."

A further tranche of capital will be allocated to the affordable housing portfolio later in the year, with a second manager selection expected late 2022.

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