Over the last few months the government has begun to take notice of some home truths. We simply don't have enough houses to meet demand; an ailing construction sector is holding back economic growth; and the growing number of private renting families remain stuck in expensive, unstable housing. Meanwhile, it seems like there's something in the news every day that shows just how far out of reach homeownership has become.
Some saw the possible solution to all of those problems in the concept of build-to-let: homes built to rent, not to sell. Big financial institutions are looking for investment opportunities, and letting out property is seen as a strong and safe investment option, so these institutions could finance building new homes to let. More new homes could relieve pressure across the whole housing market, but more specifically for private renters, many of whom are struggling with steep increases on already high rents, and the instability of short-term contracts.
The idea of build-to-let is attractive, and has been floating around policy circles for decades. But attractive as it sounds, examples of build-to-let on the ground are few and far between. Recently, Sir Adrian Montague was commissioned for a further review of the issue, and today he released his findings.
Montague's key recommendation is that councils should make greater use of existing flexibilities within the planning system to waive requirements for developers to build affordable housing, which developers often claim makes sites less viable. He also calls for more public land to be released for development, incentives to kick-start the first round of developments, and a task force to work towards some voluntary standards for the new homes.
Could this be the nudge that investors need to start investing in build-to-let homes? Only time will tell, and much of it will come down to local councils and whether they choose to negotiate with developers or offer up public land for private rented homes.
But one thing's for sure: it's certainly not a wholesale solution to our housing crisis. With 8.5 million people now renting privately, however successful institutional investment is, there are going to be a lot of people stuck renting for the long term who may not feel any of the benefits of build-to-let. We need real reform now to give those who face sky-high rents and live with constant threat of eviction or further rent rises some stability.
And what of the renters who aspire to own a home of their own? While the reality for many is renting, the long-term aspiration for most remains home ownership. If councils do waive affordable housing commitments and private rented homes are built in their place, this will mean fewer homes for low-cost home ownership for local people struggling to get on the property ladder in their local area.
With a big announcement on housing expected this autumn, the government has to come up with something bold to offer those young people who are working hard and saving towards a secure and affordable home.
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