The Government’s build to rent policy has been criticised by letting agents, who have called it a “ludicrous” intervention in the industry.1
A study of more than 250 letting agents, by Leeds firm Morgans and software supplier LetMC, has revealed disapproval in the Government’s plans.
The Government are encouraging institutions such as insurers, and pension funds to invest in whole developments, and large parts of schemes of house building, which would be established as private letting units, and would not be put on the sales market.
Build to rent is being supported by a £1 billion fund that was announced in the Budget. Already, there are a number of backers who have confirmed their plans to enter the industry, including social landlords, Berkeley Homes, and Prudential.1
Housing minister Mark Prisk has claimed that the Government have to get involved because the housing market is dysfunctional. He also says that more large-scale and experienced institutional investors are essential in order for the market to mature, and compared the necessity to Europe.
Morgans’ Jonathan Morgan says that this tactic is heavy handed and is not what the letting industry needs.1
Morgan says: “We have reached out to letting agents across the country with our survey, and 98% of the respondents felt that the Government has not consulted effectively with them about proposed changes to the industry.
“It’s ludicrous to suggest that the housing market is different from any other market; it comes down to supply and demand, so is the Government now going to intervene in every industry where there is a short-term imbalance?”
He says that build to rent is a flawed plan because “fundamentally, people in the UK want to buy, not rent long-term.”
He continues: “All the research and evidence points to the fact that UK renters still ultimately want to buy, and so comparisons with Europe are facile.
“Swiss and Germans grow up expecting to rent as their parents did before them. However, with most lenders in those countries always having required around a 40% deposit, the option to buy has always been a distant dream for most.
“British people on the other hand, have owned property for generations and it will take a lot more than institutional investment in built to rent to turn Britain into a nation of renters.
“Mortgage availability is improving and it will continue to do so, giving more renters the ability to buy their first home. The notion that people in the UK want to rent permanently is just wrong.
“We are already witnessing an increase in sales transactions; the market will adjust.”1