UK pension scheme Nest has announced a new partnership with Legal & General (L&G) and PGGM, collectively investing up to a billion pounds into building Build to Rent schemes across the UK. 

Nest manages £43bn of assets on behalf of a third of the UK workforce. Initially backed by £350m of combined investment, the new partnership builds on an existing joint venture between L&G and PGGM.

The partners said the commitment will directly support the government’s target of delivering 1.5 million more homes.

Commenting on the announcement, Elizabeth Fernando, Nest’s chief investment officer, said: “We’ve been carefully considering the UK market and where best to invest so that we can help boost our members’ pensions and support economic growth.

“We can see there’s a critical shortage of housing supply, coupled with increasing demand for high quality rental homes. By building more properties, we can extend to our members a great investment opportunity while helping to meet this demand and bolster the rental market.”

Fernando added: “After working with L&G for many years, we’re delighted to extend our partnership into this new area. L&G and PGGM have already been successfully investing in UK build to rent sites, giving us confidence that this is a tried and tested approach we’ll now be extending to Nest members.

“This is a great deal for our 13 million members and the UK. By also drawing in international investment from PGGM, we’re amplifying our impact and providing much needed residential properties across the UK.”

L&G and PGGM have been investing together in UK build to rent schemes through a joint venture called the Access Development Partnership (ADP). Launched in 2016, the ADP was established to expedite the delivery of high-quality rental homes across the UK while aiming to drive stable returns for institutional investors.

Since then, L&G has deployed over £3bn of capital into the Build to Rent sector, delivering more than 10,000 rental homes – forming a key part of its growing residential platform, one of the largest and most diverse in the UK.

The announcement is for the second phase of the ADP partnership, in which Nest will also now co-invest.