The Falkirk Local Government Pension Scheme Fund has awarded fund manager Hearthstone Investments £30 million.
Over 300 homes are expected to be delivered with the Scottish Government providing an initial investment of over £6 million towards 126 social homes in Falkirk and Clackmannanshire.
Hearthstone has predicted its 'Housing Fund for Scotland' will achieve £150 million total investment from a number of pension funds.
Over 1,000 affordable and private rented homes are expected to be developed.
Castle Rock Edinvar, part of the Places for People scheme, is the delivery partner for Hearthstone.
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It will manage the initial building programme for socially rented homes.
Hearthstone has agreed a £15 million loan facility with Places for People as part of the pension scheme fund investment.
Social Justice Secretary Alex Neil said: "The £30 million Falkirk Local Government Pension Scheme fund investment will, I believe, act as a trailblazer and encourage other Scottish local authority pension fund trustees to take the plunge and invest in housing.
"This investment demonstrates that Scotland has taken a lead in the UK at looking at new ways of funding the homes people need."
Councillor John Patrick, said: "Funding housing projects through the pension fund is an original idea and is testament to the creative thinking of the Council, the Pensions Committee and our partners who have helped get this idea up and running."
Christopher Down, Chief Executive of Hearthstone, said: "The Housing Fund for Scotland will help address the need for new housing supply in Scotland, delivering over 1,000 professionally managed homes in the affordable and private rented sectors.
"We are delighted to be launching this new fund in conjunction with Falkirk as the lead investor, and welcome the support expressed by Scottish Government today."
(LM)
