Developers of homes for rent should not be required to provide affordable housing on their sites, a government-backed review urged this week.
The review by Sir Adrian Montague, a non-executive director of Skanska and chair of private equity firm 3i, also said that stalled sites could be reviewed to see whether they should be used for homes for rent rather than for sale.
It also said the government should share development risk in the short term to encourage built-to-let schemes to start, that it should work with London councils and the Greater London Authority to identify sites where there is demand for rented homes, and make them available to developers on condition that a proportion of the homes will be rented.
Housing minister Grant Shapps said the government wanted to attract new firms into the market and avoid excessive regulation. He said: “Sir Adrian Montague’s findings offer both a blueprint for achieving this goal, and for setting the standards of accommodation that people should expect. I will be considering his recommendations very carefully.”
Sir Adrian Montague said: “My review shows that the rental housing sector offers potential investment opportunities of interest to institutional investors. But real momentum has been inhibited by constraints affecting the supply of stock, the treatment of rented housing schemes under the planning system and the need to create confidence among investors. The recommendations in today’s report are designed to challenge this, and remove the barriers that prevent the kind of investment that our private rented sector needs.”
National Housing Federation chief executive David Orr supported extra investment in privately rented homes but said growth of the sector “shouldn’t be at the expense of affordable homes” as 1.8m households are on council waiting lists.
Andrew Telfer, CEO of Willmott Dixon’s development division Regen, said: “We welcome the report and firmly believe that the development of purpose built and professionally operated private rented homes can be made viable in the UK.
“Unquestionably, planning can play a key role in getting these schemes off the ground, for example, the insistence of substantial ‘affordable’ homes within a development can render it unviable. This is not about moving away from ‘affordable’ housing, but finding new and exciting ways to create homes that allow many more young people to rent affordably.”
The Chartered Institute of Housing said there must be guarantees that privately rented homes built instead of affordable homes will remain rented in the long term. It also said the changes to planning should be trialled for a limited period and reviewed. It added that planning agreements were “a very important mechanism for providing new affordable homes and should not be easily discarded”.
The review is the latest development from the government as it tries to tackle the crisis engulfing the housing sector:
- Last week communities secretary Eric Pickles unveiled a team of experts who will renegotiate section 106 agreements to restart stalled developments. At the same time the department for communities and local government launched a consultation proposing that developers could ask councils to renegotiate section 106 deals agreed before April 2010. At present these agreements cannot be negotiated for five years if a council has refused a request from the developer to revisit them. DCLG estimated that there are more than 1,400 housing schemes of more than 10 housing units with planning permission that are stalled.
- Also this week DCLG announced that designer Sir Terence Conran would judge a competition to design new neighbourhoods. People will submit designs for new housing in their neighbourhoods as part of a bid to encourage them to agree to housebuilding in their area. The competition will be launched at a summit in the autumn.
- Meanwhile, housebuilding figures released today show the number of new homes for private sale reached their highest level for over a year in July after bouncing back from a poor June. But statistics released by warranty body NHBC showed private sector registrations were down 10% in the three months from May to July this year to 21,574, compared with the same period a year earlier. Registrations of public sector homes dropped 42% over the same period to 7,377.
