The new Housing Minister, Gavin Barwell, has backed the private rental sector in his first major speech.
Barwell, who was appointed as Housing Minister in July, used his speech at the RESI Conference to shift Government policy away from a focus on homeownership.
He insisted: “We need to build more homes of every single type and not focus on one single tenure.”
He also suggested that the Government is considering abandoning its pledge to build 200,000 Starter Homes by 2020, due to a shift towards supporting the private rental sector.
The Government’s Starter Homes policy involved building homes for first time buyers, sold at a discounted rate of 20%. However, Barwell explained that such policies, which encourage homeownership and increase the level of demand, could affect the amount of homes built to rent.
Housing Minister Backs the Private Rental Sector in First Major Speech
He said: “There’s a little bit of a tension between the overall supply objective and measures specifically to help people onto the housing ladder.”
Barwell indicated that affordable rental homes could now be included in the Starter Homes target.
He added: “The way you make housing in this country more affordable to rent and buy is you build more homes. There is still a role for the Government doing specific things to help people onto the first rung, but this can’t be at the exclusion of all else.”
In the past, Government policy has largely focused on homeownership, at the expense of private rental sector development.
Additionally, buy-to-let landlords are now facing an additional 3% Stamp Duty charge when they purchase a rental property.
Barwell commented: “A growing number of families and young professionals are choosing the [private rental sector], and while homeownership is still the goal for the majority, many will rent for some years before they buy.
“I’m very clear that our ambitions will never be achieved without a significant boost in institutional investment to the [private rental sector], to ensure more choice and quality for people living in rented accommodation.”
Adam Challis, the Head of Residential Research at JLL, describes the Starter Homes policy as “a big distraction”, adding: “This is welcome news, as it signals this Government’s desire to support housing across all tenures.
“The private rented sector is the fastest growing tenure, but had been overlooked under old policy. This is the first step in putting that right.”
Barwell also gave his backing for build-to-rent schemes, highlighting one by Essential Living in north London and another by Pocket Living in south London, which uses modular techniques.
He said: “Recent growth in the bespoke rental market has been impressive, but this progress must be expanded.”
London’s Deputy Mayor for Housing, James Murray, also expressed his backing for the private rental sector, while defending his 50% affordable housing target.
He said: “If we’re going to increase supply and have affordable [housing] within that, you need to use every route of delivery, and if build-to-rent can deliver at scale and speed, then we should support that.”
Is the Government’s change of focus good news for landlords?