Insurance giant Legal & General is to enter the equity release market and plans to build five new towns over the next 10 years at a cost of up to £5bn.
In an interview with The Sunday Times, L&G chief executive Nigel Wilson says the construction of new homes is the best way to address the housing crisis.
Wilson says: “Demand far outweighs supply, and if we’re going to tackle this problem we should look at what has worked in the past and see how it can be updated.
“If we can bring communities with us and agree planning, we’d like to help build several new towns across the country. We’re already developing towns within cities, in partnership with enlightened local authorities and boroughs.”
Separately, he told the Telegraph L&G plans to enter the equity release market in the future.
He says: “Regulation is clearer now, which should enable us to provide the right good-value products to help grow an undersized but vitally needed market.”
Wilson also urged the Government to scrap the Help to Buy scheme in London to avoid “creating a bubble for the future”.
He says: “Help to Buy turbo-charges an already rising market inside London – stopping it would be economically sensible and help prevent the North-South divide getting even wider.”
Last June, the insurer revealed it planned to start building homes on land it owns, with L&G Assurance Society chief executive John Pollock saying it wanted to celebrate its mortgage club’s 21st birthday in 2016 “with a real key to our first real front door”.
In March, L&G agreed a deal to acquire a joint 46.5 per cent stake in national housebuilder Cala Group with private equity group Patron Capital Partners from Lloyds Banking Group, with L&G paying £65m for its share.
In November, Mortgage Strategy revealed the insurer had shelved plans to launch its own mortgage lender. L&G exited the mortgage lending market in 2002 when it sold its mortgage and deposit account business to Northern Rock. Its book was around £1.2bn at the time of the sale.