Developers call for land to be set aside in UK for Build to Rent
A group of developers and real estate investors have revealed a three point action plan which they say could see more than 250,000 extra homes built for rent.
Called the Better Renting campaign, they have written to the housing minister saying that Build to Rent, where corporates build clusters of homes that are rented and not sold, could help the government deliver its pledge to build a million homes by 2020.
The letter claims that traditional house builders are at full capacity and that support for corporate landlords could bring £50 billion of new money into the sector.
The letter asks ministers to set aside an agreed proportion of public land for Build to Rent development. Councils and public land owners could generate long term rental income from buildings or land, allowing them to fund under pressure public services.
The group also calls on the Chancellor George Osborne not to apply an additional 3% stamp duty charge to professional Build to Rent developments. Last December, he promised to only apply this to buy to let investors, but subsequently reversed this pledge. The group claims the move will dampen investor appetite to build more homes. It could deter further investment which could build more than 250,000 new homes.
Finally, the campaign’s letter calls for recognition of Discount Market Rent (DMR) homes as an accepted form of affordable housing. This would allow developers to create subsidised rental homes as part of their development commitments, following successful use of the policy in the London boroughs of Ealing, Greenwich and Brent. A nationwide recognition would deliver more affordable housing.
Signatories to the letter include Grainger Plc, Essential Living, LaSalle Investment Management, HUB, Fizzy Living, Real Star, Hermes Investment Management as well as Mishcon de Reya, a leading city law firm.
‘Until we face up to the fact that promoting home ownership at all costs will lead us nowhere, Britain will not overcome its housing shortage. The housing minister has been very supportive of Build to Rent, but what’s crucial is that the prime minister and chancellor recognise the contribution this could make to helping them keep their promises on building a million homes by 2020,’ said Martin Bellinger, chief operating officer at Essential Living.
According to Helen Gordon, chief executive at Grainger Plc, pointed out that the form wants to invest in the Build to Rent sector. ‘Our vision is for a better rental market, underpinned by good value for money for our customers, supporting economic growth and housing supply,’ she said.
‘We are looking to invest hundreds of millions of pounds into new rental homes, designed specifically for the renting, which we will directly manage for many years to come. It is important that the Government does all it can to allow us and companies like us to build more homes,’ she added.
Chris Taylor, head of private markets at Hermes Investment Management, explained that experience from the United States, Germany and Holland demonstrates the potential capacity for a vibrant Build to Rent market in the UK and he said this could easily reach £75 billion, given Government support.
‘Crucially, this investment will typically be long term institutional programmes committed to providing institutional quality and professionally maintained, purpose built rental blocks. Designating sites as suitable for Build to Rent in local plans, as well as identifying public land sites, will greatly assist new supply,’ he pointed out.
Andrew Stanford, UK residential fund manager at La Salle Investment Management, believes that there is a once in a generation opportunity to harness a large portion of potential investment and direct it at housing built solely for rent. ‘Ministers should consider the long term benefits of proactively supporting Build to Rent to deliver homes right now and for the next generation,’ he added.
There is a need for a professional Build to Rent sector to meet the increasing demand for good quality rental homes according to Susan Freeman, partner at Mishon De Reya.
‘The government should be actively encouraging further investment in Build to Rent development to boost the number of new homes available as rental is an important part of the solution to the housing crisis,’ she said.