FALKIRK EAST MSP ANGUS MACDONALD WELCOMES FALKIRK PENSION FUND INVESTMENT IN SOCIAL AND AFFORDABLE HOUSING
Wednesday, 23 April 2014 09:13
Falkirk East MSP Angus MacDonald has welcomed a decision taken by the governors of the Falkirk Council Pension Fund to invest £30 million into social and affordable housing within Scotland. The move follows continued lobbying from SNP Members of Falkirk Council who have been calling on the Pension Fund to take action since 2010.
In June 2010, Angus MacDonald, then a governor of the £1 billion Falkirk Pension Fund and a Grangemouth Councillor, tabled a motion to Falkirk Council’s Full Council meeting calling on the local authority to look at investment by the Falkirk Council Pension Fund into social and affordable housing, arguing that such an investment, while ensuring the delivery of much needed housing would also provide the Falkirk Council Pension Fund with a guaranteed, index linked ethical investment.
Falkirk Council’s Chief Finance Officers were instructed to “further explore suitable market funds and the potential to incorporate a specific Forth Valley social housing project” and report back to Councillors.
Speaking at the time, (then Councillor) Angus MacDonald said:
"We badly need more social housing in Falkirk district, and indeed the wider Forth Valley. This initiative ticks all the boxes, allowing construction of social housing and the resultant construction jobs it would bring, while providing the Falkirk Pension Fund with a guaranteed index-linked investment.
"Affordable housing is a low risk, ethical investment so in effect, everyone’s happy!
"This initiative will allow social landlords to construct properties when they are currently finding difficulty in securing funding from traditional sources such as our banks.
Governors of the Falkirk Pension Fund, which in 2010 was overseen by the Investment Committee at Falkirk Council had previously decided to invest 3% of its ‘Alternative’ section of the Strategic Asset Allocation in infrastructure projects, and (then) Councillor MacDonald argued that social housing would be an ideal vehicle for capital investment.
Following the initial idea being mooted and Angus MacDonald’s subsequent election to the Scottish Parliament, SNP Councillors on the newly formed Pensions Committee at Falkirk continued to pursue the initiative, and their perseverance has won through with the announcement this week that Hearthstone Investments, the specialist residential property fund manager, has won a £30m investment mandate from Falkirk Council Pension Fund to invest into social and affordable housing within Scotland. The investment will form the first stage of a new Housing Fund for Scotland, managed by Hearthstone.
The fund is the first of its kind and allows pension funds to invest in local housing infrastructure, adding to the supply of new homes and supporting local economies. Investors in the fund will benefit from stable, long-term returns associated with residential property, matching the typical investment objectives of many pension funds.
The Housing Fund for Scotland will invest into social housing via fixed rate corporate bonds issued to registered social landlords of appropriate credit standing. Affordable housing will be delivered via the purchase of properties from major developers seeking to meet section 75 planning obligations. These properties will then be let to a Housing Association on an operating lease for an initial period of ten years. The mixture of investment between social and affordable housing will flex to ensure that overall returns from the fund stay within a pre-defined range.
Welcoming the announcement, Angus MacDonald MSP said:
“I am delighted members of Falkirk Council’s Pensions Committee have agreed to move forward with this investment in social and affordable housing, and I commend the determination of the SNP Councillors who continued to press for this much needed ethical investment. It is anticipated the first phase of investment from Falkirk will provide funding for around 300 new social and affordable homes which is tremendous news.
“Housing Associations have a major role in delivering social housing and this is an ideal way of supporting housing partners to deliver good quality homes”.
Hearthstone was selected by Falkirk following a competitive tender process run by Hymans Robertson LLP, who are advisors to the Falkirk Pension Fund.