The developer’s 35-year loan will allow it to build 1,050 homes for social and affordable rent as well as 400 properties for market sale by 2020 to generate profits to invest in more affordable homes.

The announcement comes as One Housing aims to develop 4,000 homes across all tenures over the next five years, boosting its number of shared ownership properties.

“This innovative loan – using the growing value of our shared ownership portfolio – will help us to build thousands more high-quality homes to meet the critical demand in London and the South East,” said Paul Rickard, group director for finance at One Housing.

Mark Davie, head of social housing at M&G, said it had now invested over £6bn in UK social housing and was keen to do more.

“One Housing already provides much-needed homes in an area of the country where affordable housing is in short supply.

“This is our second transaction with One Housing and will enable further developments over the next few years.

“This approach brings benefits to our pension fund clients who will receive sustainable long-term returns, secured against residential property.”