Westminster Council's Pension Fund Committee is considering a potential investment in temporary accommodation, aiming to generate impact and financial returns. The committee met on Wednesday, 5 November 2025, to discuss the proposal, which would involve the pension fund providing a loan to an LLP (Limited Liability Partnership) for the acquisition of properties used for temporary housing. The proposal is detailed in the Temporary Accommodation Impact Investment Opportunity document.

The council has a duty to provide accommodation for people who are homeless or at risk of homelessness. The proposed investment seeks to align with this duty while also providing a return for the pension fund.

The loan agreement will be secured against the properties acquired by the LLP and the credit tenant lease with the council. Additionally, the loan will apply a charge over the future tax raising revenues of the council, providing further security for the pension fund.

Patrick Porega, who presented the report, addressed concerns raised at a previous meeting regarding cash flows and the impact of RPI (Retail Prices Index) caps. He explained that the model includes various scenarios with different RPI uplifts. The default scenario assumes a 3% uplift and an expected IRR (Internal Rate of Return) of 6.4%. Porega outlined a range of IRR projections based on different RPI uplift scenarios:

  • 3% uplift: 6.4% IRR
  • 2% uplift: 5.4% IRR
  • 4% uplift: 7.3% IRR
  • Historic situation (previous 40 years of RPI): 7.22% IRR

Porega also clarified the management of the properties and the mitigation of property-level risks. He stated that the pension fund officers would act on behalf of the pension fund to ensure its interests are protected. Under the Phoenix A2D arrangement, which this proposal seeks to replicate, the council would be required to manage and maintain the properties as if they had full ownership, providing security for the loan. If the council neglects the properties and they drop in value, the pension fund would only be concerned if the council couldn't repay the loan. In the unlikely event that the council was unable to pay the loan, the loan will apply a charge over the future tax raising revenues of the council.

Councillor Ryan Jude, Cabinet Member for Climate, Ecology, Culture and Air Quality, raised questions about potential conflicts of interest and the management of minimum energy efficiency standards. Porega responded that external advice confirmed the investment was appropriate and aligned with fiduciary responsibilities. He also noted that the council would be responsible for ensuring the properties meet minimum energy efficiency standards, and that the pension fund would not be liable if those standards were not met.

Councillor Jude also raised concerns about the Energy Performance Certificate (EPC) ratings of the properties, and the potential risk to the council if grant funding for upgrades was withdrawn. Porega assured the committee that the primary approach would be to select properties that already have an EPC rating of C or above, and that a plan to meet minimum energy efficiency standards would be outlined if necessary. The percentage of properties currently available that meet this standard was not specified.

Councillor Tim Mitchell questioned the structure of the LLP and whether the arrangement effectively constituted a transaction with the council, which is not permitted. Porega clarified that the LLP is a separate legal entity, and that this structure overcomes the inability to contract directly with the council.