The 'X Factor' boss plans to offer the socialite - who is 11 weeks pregnant with his first child - her own plush pad on the Trousdale estate in Beverly Hills once she divorces her estranged husband Andrew.
The 53-year-old star will continue to live in his own property nearby, so he can keep a close eye on Lauren and be directly involved in the child's upbringing.
A US property source told the Daily Mirror newspaper: ''Simon has amassed a lot of houses with his fortune and will want to provide for his child.
''But he seems to give away a house every time he splits from a girlfriend, so he is getting through them more quickly than he thought.
''He has instructed his advisers to let Lauren have the house, which means she can be nearby but crucially not too close so he can get on with his work and usual lifestyle.''
Lauren, 36, is expected to live at the 7,265 square-foot property with her mother, Carole Saland, and the baby, where they will be able to make the most of its ocean views, four bedrooms, digital screening room and private swimming pool.
Simon has a habit of buying expensive abodes in the Hollywood Hills for his exes, including former fiancee Mezhgan Hussiany, all of whom he has remained good friends with.
The insider added: ''Simon has lots of housing in Beverly Hills all close to each other and now lots of it contain his exes.
''He doesn't seem to mind that he could bump into them at any time, but the rate he is going he may need to buy some more.''
However, Simon is still thought to still be dating Lauren, who he allegedly began having an affair with in 2009.
Entrepreneur Andrew, who was one of Simon's good friends, filed for divorce last month, citing the music mogul as a co-respondent in papers and blaming adultery as the reason for the failure of his marriage.
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