The secure long-term inflation linked income streams that are generated from investment in social housing and the funding needs of the housing associations themselves, has created a 'win-win' scenario for pension funds looking to invest in this asset class, according to Aviva Investors managing director Phil Redding.

Speaking at the National Association of Pension Funds (NAPF) investment conference in Edinburgh, Redding stated that there is "currently two and a half million households in social accomodation in the UK and it is a very heavily regulated and very secure sector."

He added that there is a "strong and deep demand in social accomodation which offers "40 to 50 year stable returns for matching pension fund liabilities." Housing associations will also benefit from the investments.

Redding highlighted how the sale and lease back approach is particularly effective where a whole set of housing accomodation is bought, leased back to the housing association for a term of around 50 years and the income stream is shared between both parties which can offer real yields of around 2.5 per cent.

Long term secure income stream alternatives were also highlighted such as ground rents and commercial assets but the latter Redding accentuated does come with a degree of credit risk.

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