Legal & General Affordable Homes will be a subsidiary of Legal & General Capital, which invests capital into sectors lacking investment and innovation.

The affordable housing provider is aiming to be fully operational and delivering 3,000 homes per year within the next four years.

It will look to accelerate and grow the provision of affordable housing across the UK and target all areas of the affordable housing market, including new build Section 106 and grant-funded affordable rent, social rent and shared ownership units.

“Despite the fact that the UK is a great place to invest, 30 years of underinvestment have led to poor productivity, low real wage growth and numerous market failures,” said Nigel Wilson, CEO at Legal & General.

“Affordable housing is a classic example of underinvestment with minimal new equity capital being deployed to the sector.

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“This important sector has now been added to Legal & General's £15bn UK direct investment programme."

Simon Century, head of affordable housing at Legal & General Capital, claimed that many housing associations were becoming increasingly highly leveraged, as they had funded significant amounts of development through debt funding for many years.

“They have no ability to raise equity and maintain a sustainable financial structure – therefore forcing many to significantly limit their growth ambitions.

“Legal & General Capital is building a more natural and sustainable model – one in which institutional investors are the long-term holders of the assets working alongside the best-in-class affordable housing operators who will provide the highest-quality housing management.”

Last month, Legal & General Group announced that Legal & General Capital had acquired full ownership of CALA Homes.