Council pension assets should be utilized to address the UK’s affordable housing crisis, according to a new report by the think-tank Localis. The report, titled “New Stable: Expanding and Reforming the Role of the LGPS in Driving Affordable Housing”, urges ministers to establish investment vehicles and provide incentives to tap into the significant £392bn worth of assets held by the Local Government Pension Scheme (LGPS).
The report, which was published on Wednesday 14 May, 2025, highlights the government’s ongoing reforms to the LGPS, including the push for “megafund” pools, to enhance investment in UK growth-related assets. It also notes the substantial aggregate surplus currently held by LGPS funds in England and Wales.
According to Localis, institutional investment in affordable and social housing would not only address the housing crisis, but also boost social prosperity and national economic growth in a way that aligns with the long-term nature and ethical principles of town hall pension funds.
The report outlines several key recommendations for creating the right conditions to channel LGPS funds into affordable and social housing, including reclassifying social housing as national infrastructure and utilizing pension surpluses for capital spending budgets. It also calls for enhanced guidance and support for LGPS investment, as well as central oversight by Homes England.
Head of research at Localis, Joe Fyans, explains, “By implementing these recommendations, the ‘New Stable’ report argues that the LGPS can become a pivotal source of patient capital, contributing significantly to alleviating the housing crisis, supporting local economic development, and fostering national economic growth.”
The report has received support from Steve Simkins, public services leader at Isio, who says, “These recommendations recognize that the LGPS is part of the wider local government ecosystem in which social housing plays a crucial part. They encourage integrated approaches and solutions to both LGPS investment and funding to be found at a time when the government needs to make the best use of available resources.”
Adele Gritten, chief executive at Local Partnerships, adds, “Affordable housing is a priority for both central and local government. Local Partnerships is delighted to support this timely report that offers practical ways to unlock investment from the Local Government Pension Scheme, enabling local authorities to take a leading role in tackling the housing crisis and supporting national growth.”
The full report is available for download on the Localis website.