Overseas pension funds reconsider UK housing investment over remediation and planning risks

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Highlights

Aware Super paused new UK housing investment after remediation costs of £337.5 million at East Village and significant planning-related delays.
UK post-Grenfell regulations and planning policies have driven increased remediation expenses and lengthy permit delays, dampening overseas pension funds’ appetite for housing investment.
Despite UK government efforts to attract foreign pension capital, funds like Aware Super and Oxford Properties are wary due to retrospective liabilities and uncertain regulatory environment.

Housing exposure faces policy and cost pressures

As reported by the Financial Times, Australia’s Aware Super has halted new investment in the sector and Oxford Properties, the real estate arm of Omers, is becoming more cautious on some future multi-family housing deals after difficulties with recent UK assets.

Aware Super chief executive Deanne Stewart says the fund has seen enough problems in its portfolio to pause, while a person familiar with Oxford Properties’ thinking says the group would be very cautious about further investment in multi-family housing because of its experience.

Aware, which says it has invested close to £900 million in UK real estate, points to issues tied to East Village in Stratford, east London, the former 2012 Olympics athletes’ residences later converted into housing by the Olympic Development Authority. Get Living, which owns and manages the market-rent homes there, is 22% owned by Aware Super.

After Britain tightened fire safety rules following the 2017 Grenfell Tower blaze, Get Living had to set aside £337.5 million for remediation works at East Village. Stewart says the development authority received the development profit while investors were left carrying the remediation burden.

Oxford Properties is also an investor in Get Living, although the person familiar with its position says the group’s move into single-family housing has been more positive.

Government housing ambitions face investor caution

New rules introduced after Grenfell, where 72 people died, ban combustible cladding and other materials on the outside walls of high-rise flats. In 2024, the National Audit Office estimated that fixing cladding on all buildings taller than 11 metres in England would cost £16.6 billion, with just over half of that funded by the government.

Aware also says planning policy is deterring investment. Matthieu Elshout, who oversees European property at the fund, says repair work after a burst pipe at one Lewisham development requires permits that can take as long as six months, delaying deployment of capital.

The reassessment comes while the UK government is trying to draw more overseas pension money into strategic projects and pursue its target of building 1.5 million homes during this parliament. It has created a new Supers Unit led by the Office of Investment to encourage collaboration and channel capital from Australian pension funds into growth sectors, including real estate.

Australian superannuation funds already hold about £41 billion in UK investments as of mid-2025, and Aware holds about 3% of its assets under management in the UK. Get Living interim chief executive Gertjan van der Baan says long-term pension investors are deterred by legislative changes, especially when liabilities are applied retrospectively.

Our earlier report on UK Labour’s leadership shift under Andy Burnham highlighted growing expectations that a first autumn Budget could introduce new wealth and asset tax measures. We noted that advisers and investors were concerned about added tax complexity and potential knock-on effects for property decisions and broader market confidence, even as Burnham’s team floated a more pro-growth, simplified approach.

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