In a bold move to tackle the UK's escalating housing crisis, Lloyds Banking Group is transforming its unused office spaces into social housing and expanding its affordable rental offerings.
The banking giant, which began reassessing its property portfolio during the 2020 Covid lockdown, is converting a disused data and office site in Pudsey, West Yorkshire, into 80 affordable homes. This initiative marks the first step in the bank's plan to repurpose various office and data center locations across the UK for similar projects.
In parallel, Lloyds is expanding its Citra Living private rental division to venture into the affordable housing sector. Established in 2021 to diversify income beyond traditional lending, Citra will now acquire homes and act as the landlord, while local councils manage day-to-day operations. The pilot project will begin in Cambridge next month, offering rentals to low-income households at 80% of market rates.
This initiative is part of a broader strategy unveiled by Lloyds' CEO, Charlie Nunn, who will be hosting a forum for housing leaders and policymakers in London. At the forum, Nunn will advocate for the construction of 1 million social and affordable homes, aligning with Chancellor Rachel Reeves' commitment to build 1.5 million new homes over the next five years to tackle the UK’s housing crisis.
While this initiative may raise concerns about potential profit loss for the bank, Nunn emphasises that affordable housing represents a stable income source in the face of the UK's chronic housing shortage and soaring property prices.
By offering affordable rents, Lloyds aims to help tenants save for home ownership, indirectly benefiting the bank as the UK's largest mortgage lender. "Affordable housing is an essential pathway to home ownership," Nunn asserted, highlighting Citra's first rent-to-buy scheme launched last year.
Lloyds is also actively seeking co-investors, particularly insurers and pension funds, for its affordable housing projects, aiming to provide stable returns for savers and retirees. The bank has set aside £200 million in loans for small housing providers, accepting lower returns to fulfill its commitment to addressing the housing crisis.
