Councils urged to build homes for private rent
Local councils should set targets for building homes for the private rented sector, says new report
Local councils should focus on building homes for the private rented sector instead of favouring homeownership, according to a new report.
City law firm Addleshaw Goddard and the British Property Foundation said councils should earmark land for private rented housing and set housing development targets to encourage pension funds and other institutions to invest in the sector.
Marnix Elsenaar, a partner at Addleshaw Goddard, said: “It’s vital councils recognise both the need for a institutional private rented sector and that it’s not the same as buy-to-let, while ministers should update planning guidance to make building for rent economically viable.”
The report, Making Renting Viable, said ministers should update planning guidance to make building for rent economically viable.
The private rented sector has doubled in size in the past decade but less than 1pc of the UK’s private rented housing stock is owned by institutions, compared with 13pc in the US and 17pc in Germany, according to data provider IPD.
But institutions are becoming bigger players in the sector. London major Boris Johnson announced a rental-led development scheme in south London last August funded by M3 Capital Partners, a manager of US pension fund money.
The study follows a recent report from estate agents Knight Frank that said a sixth of the UK’s population currently lives in private rented housing and the number of households renting from landlords is set to grow from 4m in 2010 to 5.3m by the end of 2018.
Mr Elsenaar said: “Residential property was seen as more difficult than renting out a commercial office block, but the landscape has changed.
“Institutions want reliable, long-term returns and they see a good degree of income growth in the private rented sector.”
Article courtesy of the Telegraph