Nick Marr, co-founder of property classifieds site House Shop commented on the impact of the Lords’ report for landlords, the Private Rental Sector (PRS) and UK housing in general:
“The Lords’ report ‘Building More Homes’ clearly shows that we still have a long way to go if we are to successfully address the severe lack of supply in the UK housing market. The report found that even if we meet the Government’s pledge of 1 million new homes by 2020, house prices will still increase by 5-6 per cent per year, putting further pressure on affordability.
“This report could not have come at a better time, as the new Conservative government, lead by Theresa May, could indeed adopt and implement many of the bold recommendations made by Lord Hollick and the committee. George Osborne’s decision to give up on the budget surplus target as a result of the Brexit vote has, in the words of Lord Hollick, ‘abandoned the fiscal straightjacket of the previous government’, and could potentially give Local Authorities and Housing Associations the financial freedom to get involved in house-building again on a significant scale.
“Another interesting point to note from the report is the strong criticism of the Cameron government’s constant intervention in the PRS. The report is not very complimentary of the government’s attempts to curb the growth of the Buy To Let sector and heard the committee heard evidence from the Council of Mortgage Lenders who predict that the overall effect of these changes would be counter-productive and, in fact, “increase the cost and limit the availability of private rented sector homes”.
“In particular, the higher rate of Stamp Duty for second homes has been seen as a significant barrier to the development of a thriving Build To Rent sector. The committee heard during evidence that an estimated £30-50 bn worth of investment into the PRS could be available from institutional investors, but that the prospect of higher Stamp Duty charges and the fear of further changes to rules and regulations in the PRS have scared off large-scale investors.
The best thing that Theresa May’s government can do for the UK’s tenants and stakeholders in the private rental sector would be to reverse, or at least reduce, the higher Stamp Duty charge and to reassure both individual landlords and institutional investors that the UK PRS is a safe and secure place for their money, and that conditions will remain as they are for the foreseeable future.
“Another positive point for landlords from the report was that even if we meet the ambitious home building targets set out in the report, this would only have a ‘moderating’ effect on house prices and rents. Many of the landlords we speak to are concerned that attempts to boost supply would result in house prices and rents decreasing as a result of less demand, but, as this report shows, landlords should feel confident that they can sustain the value of their properties and their annual rental incomes for many years to come.”
Key points from the report:
- Lord Hollick and the committee state that a minimum of 300,000 new homes per year will need to be built for the foreseeable future to address the supply-demand imbalance in the housing market.
- The private sector alone cannot achieve this target and the report recommends that housing associations and local authorities must be freed to build substantial numbers of homes for rent and sale.
- The government’s focus on home-ownership has been too narrow and they now must address supply and investment in all areas of the market, including the private rental sector and social housing.
- The report is critical of the Cameron government’s attempts to curb the Buy To Let sector and suggest that Theresa May’s new government are perfectly positioned to reconsider these policies and adopt the bold recommendations made in the report.