In the news recently we have been told that the UK Government must find 1.8 million new rental homes. New figures released have shown that there has been a large decrease in the number of properties available on the rental market. We know that since the change in stamp duty there has been a decrease in the sale of buy-to-let properties. Figures suggest that the majority of landlords are not planning to purchase any more properties to increase their portfolios in 2016, or in fact the next few years. This leaves us with a deficit as the Government predict we will need 1.8 million new homes by 2025 to keep up with the demand.
Renting or buying?
The fact that house prices are forever rising and becoming unaffordable for many young families and first time buyers, it is predicted that more people will turn to renting. There has been a dramatic increase in rental properties since 2001, with only 2.3 million back then, to 5.4 million in 2014. This year the Government made changes to the stamp duty threshold which has reduced the number of people investing in rental properties. If this trend carries on then by the time we reach 2025 there could be a housing crisis. There is a further issue for landlords in the future as they will loose the right to deduct the mortgage interest from their tax bill. All leading to a less encouraging prospect for potential landlords.
How to find more houses?
There is a growing idea amongst professionals that the new Prime Minister should reverse the stamp duty changes that were put into action in April. This in theory will address the housing supply issues that we are currently facing. The experts are suggesting that in addition to this the Government should bring in a new build-to-rent sector to build more houses which are specifically for the rental market. It is suggested that local councils should allow brown field sites to be developed to allow for rental properties to be built.
Helen Gordon the Chief Executive of Grainger plc said to RICS, ‘Build-to-rent can help the Government in five simple ways: increasing housing supply, delivering more quickly than other traditional house-building models, through creating new jobs and contributing to town centre regeneration, by providing a better deal to customers including more stability and by supporting greater flexibility in the labour market.’
Grainger plc are planning to invest more than £1 billion by the year 2020 in long term rental housing or high quality.
Jeremy Blackburn the RICS Head of UK Policy said ‘Our latest figures show that there has been a 15% decline in house sales to first time buyers over recent months. That tells us that for all the rhetoric, David Cameron and George Osbourne’s Starter Homes Strategy failed to get off the ground.’
Whichever way you look at it, Britain needs to find more houses in the coming years to fill the demand on the rental market. Just how that is going to happens seems up for debate at the moment, but we know that they don’t have long to come up with a solution.