Other recommendations include reviewing stalled developments to see if they can be made available to rent instead of sell, to set up a task force to encourage and support builds for the private sector and develop voluntary standards for landlords.
Speaking on Radio Four this morning Grant Shapps said: “We spend an awful lot of money on affordable and social housing with £20bn being spent on this particular part of the programme in this Parliament. So the question is, what else can we do?”
He added: “If the costs of building are so high, no buildings get built, it’s of no benefit to anyone.”
Shapps welcomed the report by Sir Adrian Montague, saying it offered, “a blueprint” for encouraging more institutional investment into the privately-owned rental sector.
The report, Review of the barriers to institutional investment in private rented homes highlights the “real potential” for investment in large-scale development of homes built specifically for private rent by professional organisations.
The private rented sector constitutes £3.6m households up from 2m in the early 1980s. With 232,000 extra houses needed each year to 2033, government figures suggest £1 invested in housing generates a further £2.60 in the supply chain.
The report, written by a member of the Housing Finance Group Sir Adrian Montague, and commissioned as part of the government’s Housing Strategy launched in November 2011, finds that a combination of recent tax changes and wider market conditions have cleared the way for this sector to grow.
Shapps said: “A major part of this is to attract and encourage new players to the market, while at the same time avoiding the excessive regulation that would force up rents and reduce choice for tenants.”
Joe Docherty, social housing provider Home Group deputy chief executive, said: “Waiving section 106 obligations presents a real threat to the future of affordable housing in this country at a time when demand is at its greatest. It is essential that we re-energise house building in the UK but it cannot be at the expense of the people who most need a safe and secure roof over their families’ heads.”
Ian Potter, managing director of the Association of Residential Letting Agents (ARLA) said: “Any increase in supply will help address the issues of ever increasing rents as it is a supply and demand driven market. However any institutional investment will look for a reasonable rate of return to satisfy the demands for a return for the pension or insurance fund, whose investors are the general public. PriceWaterhouseCoopers recently released a report which indicated that until 2025, buy-to-let landlords can expect a better return on other investments and this would be a concern for institutions looking for effective investment vehicles.”
