Long-term public-private partnerships play a crucial role in unlocking institutional investment.

This is particularly true at a time when private sector finance is increasingly entering the affordable housing market while the government pushes to build 1.5 million homes by the end of the decade.

The importance of private capital to support the government’s ambitions – and its own funding – is clear. A recent JLL report suggested £100bn of private capital will be required to support the £39bn of public money destined for affordable housing programmes which were highlighted in the government’s Spending Review.

Our involvement with Habiko, a public-private affordable housing delivery partnership with developer Muse and government housing agency Home England, is playing an important part in bringing together private capital, housing delivery expertise and the government’s desire to target such housing where it is most needed.

Habiko aims to deliver 3,000 affordable and sustainable homes for rent over the next 12 years, equating to around £1bn in terms of completed value. Since we are targeting up to 100% affordable homes on each site, with 75% as a minimum, Habiko-delivered projects will be an attractive proposition for local authorities looking to deliver genuinely affordable and social rent housing models, backed by long-term funding.

In addition to their affordability, Habiko’s homes are designed to meet ambitious sustainability standards, minimising embodied carbon through efficient, low-impact construction methods, reducing operational energy demand through high-performance fabric and all-electric systems, and embedding circular economy principles across materials, design and delivery.

Joining the Habiko partnership represents a strategic decision for us – one that’s rooted in confidence in the calibre of the organisations involved. The risk adjusted profile of being a partner with a respected and experienced developer like Muse, alongside Homes England, is a highly attractive proposition, especially given our long-term responsibility to PIC policyholders.

It also aligns with our commitment to securing stable, long-term returns – supporting the £2bn we pay out every month to more than 400,000 policyholders. This is a long-term commitment requiring assets which offer safe, secure and index-linked cash flows; affordable housing does this. The 10-year rental settlement agreed in the Chancellor’s Spending Review also gives us confidence, as does the commitment to rental increases of CPI plus 1%.

And along with the cash generative element of such an asset class, we lean into the idea of creating social value through the provision of good quality, affordable housing. Read any research, look at the statistics, and there are significantly improved outcomes for people who have a stable, affordable home environment.

Our values – resilience, adaptability and loyalty – are aligned with those of Muse and Homes England under the banner of Habiko. We support our policyholders through a secure cash flow stream which comes in part from building good quality, low energy, low-cost homes for those who need them most.

Habiko is a blueprint for the future of public-private partnerships. We are proud to be a part of a venture which builds confidence in such an approach to tackle some of the social and demographic issues of our time.