The Netherlands’ largest pension fund, ABP, has announced plans to invest €1 billion in building 3,000 mid-sized rental homes.

ABP aims to allocate the capital within five years, starting with 121 gas-free homes in Utrecht, in a joint venture with international developer CBRE Investment Management.

“We are pleased to have found something. It’s not easy these days to find projects that match our demands,” Harmen van Wijnen, chairman of ABP’s management board, told the Telegraaf.

The pension fund has deployed an initial €350 million to invest in 700 homes in the next few months.

Demand for small and family-sized rental homes is high, but commercial developers are put off by the high costs and the prospect of rent controls. Last month the government reeled back plans to freeze rents in privately owned rental properties for the next two years under pressure from the sector.

“We have calculated the mix of large and small to make it viable,” said Van Wijnen.

Looking further ahead, ABP plans to invest €5 billion in housing over the next five years, a target Van Wijnen said would be challenging. Constructors are hampered by the difficulty of obtaining environmental permits because the government has not managed to agree new rules to reduce nitrogen compound emissions.

“People are very keen to see pension funds investing more money in homes, but they need to be suitable projects,” Van Wijnen said. “I’m not convinced that we can deploy the entire €5 billion. It’s absolutely not the case that we can build homes where we like.”