The Royal Borough of Kensington and Chelsea (RBKC) has unveiled plans to use up to £100m from its pension fund to buy 250 properties for homeless households.

Under the plan, to be decided by the council’s leadership team on Wednesday evening (4 June), the council would acquire the rented accommodation portfolio to ease a temporary accommodation crisis, leasing and managing the properties on a long-term basis.

The £100m purchase price would represent 5% of the council’s £1.81bn pension fund.

RBKC said the plan, part of its Housing Strategy 2025-2030, would cut spending on hotels, bed-and-breakfast accommodation and properties from private landlords to house homeless people and would operate at “no cost to taxpayers”.

This is because rents paid to the council, although at a discounted rate, would still cover payments to the pension fund, management and maintenance costs.

Kensington and Chelsea council leader Elizabeth Campbell said that if agreed, the plan would “potentially unlock hundreds of good-quality homes for vulnerable families at no new cost to our taxpayers”.

She added: “London is facing a growing homelessness emergency that is devastating lives and placing huge pressures on councils’ finances. This would reduce the amount we spend on unsuitable and unsustainable temporary accommodation and provide stability and a brighter future for those who need it most.”

Quentin Marshall, chair of the council’s investment committee, said: “The purpose of the fund is to ensure that the pensions we owe our existing and former employees are rock solid. But it’s also right that we deliver for taxpayers and residents.

“This plan both provides for an attractive and commercial return to the fund as well as delivering great value to taxpayers and homes for some of the most vulnerable in our society. It really is a win-win proposition.”