UK Cities urgently need more good quality private-rented homes
Date: 16/06/2008The Government has been focusing too much attention on home ownership and not enough on driving up the number - and standards - of homes for rent to meet growing demand, according to new research from the Centre for Cities, out today.
The Centre for Cities warns that in today's economic climate, it's becoming clear that home ownership - either fully-owned, or via shared equity schemes - can put financially vulnerable people at risk of repossession. Meanwhile your average twenty-something, for whom buying is often not an option, is finding it increasingly difficult to find good quality, affordable homes to rent.
With long waiting lists for social housing, and buying a property out of reach for most young people, the numbers seeking to rent are predicted to swell:
- By 2021 it is estimated that the UK could have over 3 million renters - 1.2 million more than in 2001
- At current rates of house building, by 2021 at least one in five new houses will need to be homes for rent to meet demand.
Currently, only 12% of households in the UK privately rent compared to Switzerland and Germany where two thirds and a half of all households rent respectively. To drive up the numbers and the quality of homes for private rent, today's study calls for:
- Cities to work more closely with developers, landlords and tenants - advising investors and property developers on what homes are needed and where, to avoid an over-supply of unsuitable and unwanted buy-to-let properties. In Leeds city centre 30 per cent of apartments stand empty.
- The Government to encourage more large domestic and international investors, such as pension funds and insurance companies, to invest in homes for rent...
- by re-thinking the requirement for new private rented developments to contain 30-50% social housing.
- by creating a level playing field, removing the current fiscal disincentives that benefit buy-to-let landlords over professional investors. This would help the Government to deliver far more houses - and give local residents more choice when deciding where to live, and when to buy.
Dermot Finch, Director of the Centre for Cities said:
"The Government is focusing too much on home ownership, and not enough on homes for rent. Demand for rented housing is increasing all the time - but supply isn't keeping up. Unless this changes, the young and job movers will have difficulties finding somewhere decent to live.
"To fix this, Caroline Flint and the new Homes & Communities Agency should encourage more institutional investment in high-quality, private-rented housing. This will help deliver the Government's ambitious target of 3 million new homes by 2020 - and give young people better housing choices, before they are ready to buy."
Welcoming the report, Mark Allan, Chief Executive of UNITE Group said:
"The monograph takes an innovative view of the future of the Private Rented Sector offering solutions which will raise the profile and reputation of the sector that could significantly contribute to increasing supply and raising standards within the UK housing market.
"For the private rented sector to become recognised as a serious player within the housing agenda, the sector needs to break out of its existing mould and learn from other customer facing businesses. The sector needs to focus on delivering a product and service that is geared and marketed to their customers needs. Being customer focused and demand driven is a precursor to attracting institutional investment, one of the primary opportunities for future growth. Parallels exist within the student accommodation market, such as UNITE Group, where investors have acknowledged the resilience of the market, the professional management structures in place and the growth in long-term rental returns."
For more information, please contact:
Rosamund Taylor, Centre for Cities
Tel: 0207 803 4316
Mobile: 07876 175 426
r.taylor@centreforcities.org
Notes to editors:
The Future of the Private Rented Sector is available upon request, and for download at www.centreforcities.org/privaterentedsector, from the 16 June. The book was edited by Peter Bill, Editor of Estates Gazette, Paul Hackett of the Smith Institute, and Catherine Glossop, Analyst at the Centre for Cities. Chapters were contributed by:
Peter Bill, Editor of Estates Gazette
Catherine Glossop, Analyst at the Centre for Cities
Ricky Taylor, Principal Research Adviser at the National Housing and Planning Advice Unit
Adam Sampson, Chief Executive and Caroline Davey, Deputy Director of Policy and Campaigns at Shelter
Ian Potter, Operations Manager at the association of Residential Letting Agents
Mark Long, Head of Research and Strategy at Invista
Mark Allan, Chief Executive of Unite Group
Liz Peace, Chief Executive at the British Property Federation
Lord Richard Best OBE, Former Chief Executive of the Joseph Rowntree Foundation
The Future of the Private Rented Sector was produced with the support of The UNITE Group plc (http://www.unite-group.co.uk).
The UNITE Group, the UK's largest provider of student accommodation is a key stakeholder in the review of the private rented sector. UNITE Group are interested in applying the successful model of the student accommodation sector, to the wider Private Rented Sector. Their vision is of increasing the supply of new, purpose built and serviced housing stock for those who chose to rent as a lifestyle choice.
UNITE Group has recently extended its business model, pioneering a new housing proposition for graduates and young professionals, namely Livocity.
Livocity (http://www.livocity.co.uk/) offers professionally managed rented accommodation for graduates and young professionals priced out of the housing market. The all inclusive offering with an on-site management team, based on the concept of creating a place that makes living really easy offers customers, a branded and trusted landlord, with flexible tenancy terms and no upfront deposits required. Disused hostels have been converted into modern apartments - fully furnished, built to a high standard and in prime locations for ease of commute. The properties have in-built community facilities and are professionally managed. Livocity's was launched in October 2007, with the opening of their first property near Regents Park. Three further properties in Highgate, Camden and Fulham are due to open in Spring 2009.
1 This is based on the very latest Hometrack analysis
2 Hometrack analysis
3 Evans, A and Hartwich, O (2005) Bigger Better Faster More: Why some countries plan better than others
4 Communities and Local Government Committee Eighth Report, The Supply of Rented Housing
5 Presently, institutional investors are penalised in terms of both higher levels of stamp duty than individual investors due to their larger lot sizes, and inability to reclaim VAT on repairs. A large investor will pay 4 per cent stamp duty for a pool of residential assets compared to 1 per cent for single assets under £250,000 (GLA, 2008).
