MPs say local government pension schemes should consider investing in residential property to encourage institutional investors to follow suit and boost funding for housebuilding.
The communities and local government select committee published a report this week on financing new housing supplies.
It says 232,000 new homes a year are needed but the private sector has never delivered more than 150,000. It identifies a lack of finance as one of the biggest barriers to increasing housing supply.
Committee chairman Clive Betts says: “Pension funds and large financial institutions have a blind spot when it comes to housing but could deliver a significant number of new homes for rent and achieve a steady return on their investments. Public sector bodies and housing associations must encourage such investment.”
The report says Sipps could provide finance for rented housing and calls on the Government to asses the risks and benefits for investors and to bring forward proposals to help with such investment.
Hunter & Co director Robin Hunter says: “Investments should be made for economic reasons, not social ones. If returns are inadequate, it will hit pension funds.”