Local government pension funds are increasingly looking for long-dated, inflation-linked exposure that matches their liabilities. Structured well, a council's own temporary accommodation portfolio can deliver exactly that.
I recently worked on a £50m funding structure between Westminster City Council and the City of Westminster Pension Fund. The Council sold and leased back 124 of its existing temporary accommodation properties to a council-owned LLP, funded by a 40-year, index-linked loan from the Pension Fund. The transaction released a capital receipt that the Council can reinvest in additional TA supply, while the Council retains full use of the properties under the leaseback.
What the structure achieved
- 124 existing TA properties sold and leased back via a council-owned LLP
- £50m of Pension Fund capital released as a capital receipt for reinvestment
- A 40-year, index-linked funding term, matching the fund's own long-term liability profile
- Continued Council use of the properties for TA throughout, under the leaseback
Why this matters
This sits alongside the earlier 42-year institutional funding structure I led for Westminster's TA portfolio. Together, the two transactions show a Council recycling the value already tied up in its own housing stock, and using different pools of long-term capital (institutional debt and its own pension fund) to keep expanding TA supply without relying on ever-larger new borrowing.
For Local Authorities under sustained TA cost pressure, this is a live example of unlocking capital from existing stock to fund new supply, backed by the council's own pension fund.