In a report for the government, Sir Adrian Montague has stated the need for the UK private rental sector to grow in order to reduce the current housing shortage. According to the article on the BBC website, he was asked to look at ways of addressing this shortage, and feels houses built for rent within the private sector could be funded by institutional investors.
This idea has already been criticized by Labour who are concerned such housing may not take into account the needs of low income households. However housing minister Grant Shapps thinks the idea is an interesting one, especially as the UK is somewhat unusual in not already having housing funded by institutional investors looking to gain long-term rental income.
The Montague report includes several recommendations designed to speed up the building of privately rented homes. Some of the suggestions include asking councils to review stalled development sites to see whether any of the homes that were originally planned could be rented out rather than sold. Other ideas include making available buildings and public sector land for housing development, and targeting areas where housing demand is high through making land available to developers, provided a certain proportion of rental homes are built.
In addition the Montague report is asking local councils to look at relaxing existing requirements in order to enable developers to build affordable social homes as well as private housing. However this particular suggestion hasn’t found favor with the Labour Party who doesn’t want to see requirements for affordable housing watered down. Homeless charity Shelter also feels the report could have done more to address the needs of those people already living in privately rented homes, and who are paying high rents without being protected against further rises or the risk of eviction.
The British Property Federation is hopeful these recommendations in the Montague report could lead to extra investment into the housing industry from REITs, pension funds and insurance companies. They see this as being the way forward for developing a long-term private rental sector specifically designed to give renters something a little different compared to current rental property.