A government report has revealed that institutional investors in the buy-to-let market could be the answer to funding large-scale property development for the rental market.
The latest report for the government by Sir Adrian Montague, published on 23 August, aims to encourage greater investment in privately rented property to help meet the nation’s housing demand.
The report - described as “a blueprint” for encouraging such investment by Housing Minister Grant Shapps - highlights that investment by professional organisations in large-scale developments for private rent has “real potential.”
According to the report, the following recommendations should be implemented in order to meet the growing demand for rental property:
• Council flexibility in the planning system to plan for and enable developments of privately rented homes where they can meet local need. This could include waiving affordable housing requirements on new developments of homes specifically for private rent, or reviewing stalled sites to see whether some of the new homes planned could be made available to rent rather than sell;
• That a task force be set up to encourage and support build-to-let investment from the private sector, and to develop voluntary standards that future landlords would meet and tenants could expect;
• That the Government look to provide a number of targeted incentives to encourage the development of Build-to-Let business models, which could include sharing development risk in the short-term to get spades in the ground and building started;
• That the Government allocate some of the redundant, formerly used public sector land and buildings being released for housebuilding to build-to-let development, and publish data on how this is done; and
• That the Government work with councils and the Greater London Authority to identify a number of sites where there is good demand for rental housing and make them available to developers on the grounds that a proportion of the homes built be let out to tenants.
The Government will issue a formal response later this year, but in an initial statement Grant Shapps said: "We're determined to encourage greater investment in the build-to-let market and boost the country's Private Rented Sector, which plays an integral role in meeting the nation's housing needs and aspirations. In the past it's often been seen as the Cinderella of the housing market, but when over three million people rely on this sector for their home, this is clearly no longer the case.
"A major part of this is to attract and encourage new players to the market, while at the same time avoiding the excessive regulation that would force up rents and reduce choice for tenants.”
Sir Adrian Montague added: "My review shows that the rental housing sector offers potential investment opportunities of interest to institutional investors. But real momentum has been inhibited by constraints affecting the supply of stock, the treatment of rented housing schemes under the planning system and the need to create confidence among investors.
"The recommendations in today's report are designed to challenge this, and remove the barriers that prevent the kind of investment that our private rented sector needs."
