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Is build-to-let the answer to the UK’s housing crisis?

Sir Adrian Montague’s long-awaited review of the private rented sector was published today. It suggests that institutional investors could fund large-scale building of private housing for rent – as one way of tackling the UK’s chronic housing shortage. The report recommends a variety of ways for speeding up the timescale of delivery for private rented homes, including providing a number of ‘targeted incentives’ to encourage build-to-let. It also proposes that councils should be asked to consider relaxing Section 106 requirements, something which could lead to developers building fewer affordable homes to make projects more viable when banks are reluctant to lend money. There is little doubt that current excessive regulations are hampering economic growth. The question is - do we really need more properties for private rent? 80 per cent of Britons aspire to buy a property, not rent one. Changing our culture so that renting is the preferred option would surely require a long term attitude shift we don’t have time for. It seems clear that some modest incentives could potentially unlock a huge amount of new investment. But first time buyers struggling to get on the ladder should not have to suffer as a result of this. And with 1.8 million UK families waiting for an affordable home to live in, the poorest members of society shouldn’t have to suffer either. Any proposals really need to meet the housing needs of the whole community. Despite two of the UK’s largest housebuilders, Persimmon and Bovis, releasing encouraging figures over the past few days –the overall picture remains bleak. Housebuilding fell by 10 per cent in the year to June compared to the previous year. This included a 4 per cent decrease in private home ‘starts’ and a much larger decrease of 28 per cent in social housing ‘starts’. Earlier this week, UK think tank Policy Exchange called for high-value council properties in expensive postcodes to be sold off as they became vacant to raise funds to build more homes in cheaper areas. The report claimed this could boost our ailing economy by £4.5 billion a year and create between 80,000 and 170,000 new social homes annually – which would be music to the ears of our nation’s housebuilders. Housing Minister Grant Shapps declared this a ‘blindingly obvious’ solution. But does moving people on lower incomes out of expensive areas they have lived in for years constitute ‘social cleansing’? The Notting Hill Carnival takes place this weekend, a hugely popular event held in an area which is famous for its diverse, multi-cultural community but nevertheless is one of the most expensive places to buy property in the capital. This is what London is all about - and many would argue we shouldn’t tamper with it. So, what is the answer to Britain’s ever-worsening housing shortage? The severe mortgage finance famine still lies at the heart of the issue.  It doesn’t matter how many ex-council properties there are available to buy if no one can get a mortgage – and with this situation showing no signs of improving, maybe more private rented homes are indeed the answer. The debate rumbles on. Lucy Ball, Account Director - Property PR, Four Communications

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