The U.K. should take steps to encourage large-scale investment in build-to-rent housing to meet soaring demand, a government-commissioned report said.
Proposals published today by 3i Group Plc Chairman Adrian Montague said local councils should use flexibility in the planning system to enable developments of privately rented homes, including the waiving of rules requiring a quota of affordable homes for low-paid workers in every new development. Disused buildings and government land should be released for build-to-let developments, he said.
“My review shows that the rental housing sector offers potential investment opportunities,” Montague said in an e-mailed statement. “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.”
Housing Minister Grant Shapps, responding to Montague’s report, said the government is 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.” He said the government would set out its detailed response to the recommendations later this year.
Companies that might benefit include Grainger Plc, the U.K.’s largest publicly traded residential landlord, and homebuilder Berkeley Group Holdings Plc, which has an affiliate that buys and manages new rental homes.
Asked to justify removing the requirement to build affordable homes, Shapps told BBC Radio 4’s “Today” program that nearly 20 billion pounds ($32 billion) will have been spent on providing such housing over the five years to 2015.
“The question is what else can we do to get these developments moving,” the minister said. “If the costs of building are so high that you end up with no development, no regeneration, no community benefits overall, then, actually, you’ve set the bar so high that it’s disadvantageous to everyone.”
The opposition Labour Party said it welcomed many of the proposals, though not those on affordable housing.
“As rents hit a record high in July, many families are already paying the price of the Tory-led government’s failure to build enough affordable homes,” Labour’s housing spokesman, Jack Dromey, said in an e-mailed statement. “The government should be acting to address this problem, not looking for ways to water down existing legislation which could make the problem worse.”
The chief executive officer of housing charity Shelter, Campbell Robb, said the Montague report has “missed a trick” in failing to address the needs of people already renting property who are “paying sky-high rents and living under constant threat of eviction or further rent rises.” He made his comments in a statement on Shelter’s website.