UK must invest in build to let

A man in a hard hat looking at blueprints

Today the UK Government released a report on the UK’s private rental sector which hints at affordable social housing being scrapped in favour of private rental properties which would stand a better probability of attracting private capital.

The review which has been compiled by Sir Adrian Montague, chairman of private equity group 3i, was asked by ministers to suggest ways in which to address the UK's housing crisis, and in particular the deficit in the private rental sector.

For areas that have high demand for private rented housing, property developers would have land made accessible to them on the basis that a certain amount of the properties are to be let out and not made available for purchase. The review also suggests that new homes built for the sole purpose of the rental sector should have a fixed timeframe where they remain rental properties. This timeframe should be anywhere between 10 and 20 years.

The report also recommends that local councils re-examine existing building developments that have stalled to see if it would be feasible for buy to let landlords to purchase a portion of these and make them available to let.

A code of standards practice has also been suggested so that new rental tenants would know exactly the standard to expect of the property they are renting.

The report has been warmly welcomed by the British Property Federation, who say:

[these proposals] could unleash unprecedented investment in house building from pension funds, insurance companies and REITs [real estate investment trusts].

British Property Federation Chief Executive Liz Peace commented:

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.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.