Government Review Recommends Changes to Favour Private Rented Sector

The proposals are likely to be included in Sir Adrian Montague’s review of the private rented sector, which is expected to be published next month. They include pushing councils to change their housing strategies to promote new private rented developments – waiving affordable housing commitments to do so. It will also recommend the government offers loans, rather than grants, to support large-scale new build PRS schemes – a possible threat to grant funding for affordable homes.

The independent review is also set to recommend the government sets up a specialist housing task force, run by a senior figure from the private sector, to bring forward more public land for private rented sector schemes.

Sir Adrian’s review was commissioned by housing minister Grant Shapps to find ways of encouraging institutional investment in rental properties and feed into the government’s housing strategy.

The news has provoked concern it could be a threat to the affordable housing sector.

Rod Cahill, chief executive of 21,000-home Catalyst Housing, warned: ‘Any money that is used for loans [to support PRS developments] is money that is not available for affordable housing – and it is the affordable programme that has been cut by 67 per cent.’

Mr Cahill added that it is crucial that the government looks at ways of addressing the current housing crisis by increasing the supply of new homes – but that focusing those attempts on the private rented sector would be a mistake.

‘I don’t think that you can possibly say that private renting is a substitute for affordable housing [in housing strategies],’ he added. ‘Private renting is a market solution. The growth problem isn’t in private rented housing – the [growth] problem is owner-occupation and the affordable housing sub-market sector.’

Brighton mayor Bill Randall revealed the proposals in his column for Inside Housing this week. In it he stated that he understands that one of the major strands emerging from the review is that ‘changes should be made to the planning system to change the balance between housing tenures in favour of the PRS’.

He added that the review team is likely to conclude that institutional investors have little interest in development but want to get their hands on large-scale schemes that ‘offer economies of scale’ – a change from the current norm of pepper-potted PRS homes snapped up largely by buy-to-let investors.

The Montague review follows in the footsteps of previous failed attempts to tempt institutions to invest in the private rented sector on a large scale. The Homes and Communities Agency launched a private rented sector initiative in 2009 but it met with limited interest and has since been dropped.

The government is likely to respond to the Montague review in the autumn.

 

Source: Inside Housing