A landscape painting by Frank Auerbach acquired by Birmingham’s Barber Institute of Fine Arts has become the first work by a living artist to enter the collection.

Five pieces by the German-born figurative artist, who escaped Nazi persecution during the Second World War, have been acquired by Midlands galleries. The Barber receives one painting and Birmingham Museums Trust and New Art Gallery Walsall receive two works each.

The paintings, part of a collection of 40 works, were once owned by Auerbach’s friend and fellow artist Lucian Freud, who died in 2011, and accepted in lieu by Arts Council England in 2014.

Following its acceptance, the collection was shown in temporary exhibitions before the Arts Council’s announcement of where the 40 works were to be permanently displayed.

The Barber’s allocated work is a large oil painting on board 122cm tall by 152cm wide depicting London’s Primrose Hill, near Auerbach’s home in Camden.

In 1930, Lady Barber stipulated that no works created after the end of the 19th century should hang in the gallery – however, her condition was re-interpreted in 1967 to form the current 30-year rule.

The Barber Institute’s director, Nicola Kalinsky, said that while the painting was unashamedly modern, it would be highly appropriate to hang in the collection alongside historic paintings.

“Auerbach has always acknowledged his debt to the Old Masters, and, until comparatively recently, was to be found drawing in front of works in the National Gallery on a regular basis. His work follows the traditional genres, although it is unquestionably modern.

“We are very excited to have this work enter the collection and see many possibilities for it – not just in terms of display but also with its teaching and engagement potential.”

Auerbach, a naturalised British citizen, was born in Berlin in 1931 and sent to Britain in 1939 under the Kindertransport scheme which brought almost 10,000 mainly Jewish children to the UK. His parents died in a concentration camp in 1942.