UK private rental sector must grow, says Montague report

To Let sign There are a number of recommendations to speed up the timescale for building privately-rented homes.

Institutional investors could fund the large-scale building of private housing for rent, a report for the government by Sir Adrian Montague has said.

He says a combination of recent tax changes and wider market conditions could help the sector to grow.

Sir Adrian was asked for ways to tackle the UK's housing shortage, especially in the private rental sector.

But Labour has criticised suggestions that future developments might not cater to lower-income households.

Housing Minister Grant Shapps told the BBC he thought private funding for rental homes was "an interesting idea; I think it's odd that it doesn't exist".

He said the UK housing market was "unusual in that there is no institutional sector in building homes for rent to get a long term rental income".

'Targeted incentives'

Sir Adrian's report makes a series of recommendations for speeding up the timescale for building privately rented homes.

It is hoped that any major housebuilding programme could also boost the stalled construction sector and reduce unemployment.

Suggestions include calling on councils to review stalled development sites, to see whether some of the new homes originally planned could be made available to rent rather than sell.

There could also be some new measures to get redundant public sector land and buildings made available for housing development.

And the Montague report also says the government could 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.

In areas where there is a high current demand for rented housing, the report says land could be made available to developers on the grounds that a proportion of the homes built be let out to tenants.

And a code of standards could be adopted so that tenants knew what standards to expect of new rental developments.

'Missed a trick'

Start Quote

[The report] offers nothing for the millions of people already in the sector, paying sky-high rents and living under constant threat of eviction or further rent rises”

End Quote Shelter

The Montague proposals also include councils being asked to consider relaxing requirements for developers to build affordable social accommodation as well as private housing, something the Labour Party opposes.

Labour shadow housing minister Jack Dromey said "many of the measures recommended in this report are sensible, for instance on the use of public land, on attracting investment and on standards in the private rented sector".

But he said Labour was "not convinced that the answer to the crisis created by this government is to further water down affordable housing requirements that councils place on developers".

And homeless charity Shelter said that while it welcomed the report's recognition of "the need for more and better quality homes for people to rent", it had "missed a trick" in not addressing the current state of the sector.

Shelter said the report "offered nothing for the millions of people already in the sector, paying sky-high rents and living under constant threat of eviction or further rent rises".

Mr Shapps said the government was already spending "an awful lot of money on building affordable homes for rent and on social housing, even in these austere times".

He said the government would be spending almost £20bn in the current parliament.

"So the question is, what else can we do?" he said.

'Unleash investment'

The Local Government Association said the private rented sector had a key role to play in providing new homes, and that councils were keen to support the sector in providing good quality homes.

Chief Executive of the National Housing Federation, David Orr: "We're not building enough new homes"

But Mike Jones, from the LGA, said the government needed "to address the lack of liquidity in the finance market and limited availability of mortgages".

It said these were the obstacles standing in the way of a resurgence in new house building.

The vast majority of private-rented homes in this country are currently managed by individual landlords.

But the British Property Federation (BPF) believes the Montague recommendations "could unleash unprecedented investment in house building from pension funds, insurance companies and REITs [real estate investment trusts]".

"Encouraging institutions into building homes for rent has for some time been seen as the holy grail in enabling a long-term, private rented sector which is designed and built to let and offers renters something a bit different in the marketplace," said chief executive Liz Peace.


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  • rate this

    Comment number 666.

    The private sector is not the solution its the problem.
    The basic needs of any society should not be in the hands of people who only want to make profit, just look at, Gas. Electricity, Public Transport, NHS, all in dire straits.
    Time to put the basic needs back in the hands of the public with a none for profit attitude.

  • rate this

    Comment number 293.

    #265 While the English persist in the obsession of house ownership they will always be at an economic disadvantage. There's nothing wrong with a nationally controlled (through local authorities in particular) rental scheme - what most people want is a home,and some stability. Local authorities once had housing set aside for essential incoming workers, a feature for attracting new businesses.

  • rate this

    Comment number 187.

    Building more houses isnt the first answer. Making use of existing buildings should be tackled first. There are thousands of empty properties left to the elements all over the country. Even some of the old factory mills in the Northwest can be modernised into flats.

  • rate this

    Comment number 186.

    People do not want to spend their entire life's earnings on rent. They want to buy, so they have a place to live in their old age and pass on to their children.

    What happens when the occupants of these rental properties are too old to work? They are left to the mercy of the state, paid for by taxpayers.

    This is not the solution. We need to tax second properties and lower mortgage deposits.

  • rate this

    Comment number 139.

    Sorry I think we're missing the point here. Surely I work to get paid to save up for a house to buy, not simply to pay bills,rent, and live hand to mouth otherwise what would be the point in that? That's what most of us were taught when we were younger surely?


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