Member Article

The UK Needs and Extra 1.1m rental properties

“The number of people renting homes in the private sector has nearly doubled in the last decade, jumping from 2.5 million in 2002 to 4.8 million today.

A new report from estate agency Savills and the property portal Rightmove, ‘Rental Britain’, predicts that one in five households could be in private rental accommodation by 2016.

That would require an additional 1.1 million rental homes.

The report forecasts that a £200bn investment will be needed, but says that only £50bn of this is expected to come from buy-to let-funding.

It says the gap would be filled by institutional investment in new-build rental accommodation, but the report says that this needs to be recognised by the planning system.“

Qatari Diar along with Delancy are planning to rent up to 1400 homes in the Olympic Village in a deal worth over £557M, however they did not actually build the properties they will be renting.

The JMH Group, have a build to let model which they have been implementing in London for the past 5 years, typically they build anywhere from 10 to 100 flats in locations in London which have good transport links into the city, once they are built they are rented, retained and managed by the Group. The JMH Group plans on investing over £50m in Build to Let schemes in London in the coming years.

Marin Jakisic, chairman of the group said “Its obvious what is happening in London, the population is growing, no one can buy because there is no lending, fewer developers are building new property, and rental property is in short supply. The Savills report today suggests this gap is going to be filled by institutional investment, however the institutions in this country are just too nervous to get into Build to Let, for a variety of valid reasons”.

This is widely reflected in the report by Savills, which has highlighted the need for another 1.1 million new rental homes.

Irfan Hussain, managing director of the group said “The planning system, especially in London is far too restrictive, every council wants to hammer the developer. The councils are totally out of touch with the market, they want you to build commercial property in places where there is no need for it, they want you to build more family accommodation where demand is from single people and couples, they want more and more social housing which is putting off would be developers from building. And then you have things like the code for sustainable homes which hinder developers even further.

Developers need to be freed from the shackles of onerous section 106 agreements, which only seem to be getting worse at the moment and the code for sustainable homes which is not only putting off developers from building but adding to their cost resulting in new housing being even more expensive whether to build or to let.

What we need is recognition from the government that the market has changed, there is a demand for more rental housing, and that their onerous 106 agreements along with the code for sustainable homes, is making new housing more expensive for the end user.

With this level of demand for new housing, there is no doubt, there needs to be a new planning classification for “Build to Let”, where there are more favorable terms for the developer so that this acute need for housing is actually delivered.”

The report by Savills makes a compelling case for investment into build to let schemes should the government relax rules for a planning classification of this kind and estimates that rental paid to private landlords will go from £48bn a year in the UK to £70bn in the next 5 years.

This was posted in Bdaily's Members' News section by JMH Group .