Positivity in the buy-to-let sector is at a record high, and the Government’s £1bn build-to-rent fund could help those renting privately and cause expansion within the sector.
However, one worry is that this growing property market could cause another housing bubble. This could lead to the private rental sector being relied upon to provide affordable housing. The policy could also affect needs at the bottom of the market.
One third of Britain is already too expensive for low-income working households looking to rent. Research has also shown that 1.76 million under-30s will be struggling in 2020, with a very competitive private rented homes market. The number of private renters in poverty has doubled over the last decade, and is now equivalent to the amount of social renters in poverty.
Thousands of Rental Homes to be Built This Year
The build-to-rent fund is designed to encourage institutional investors to create a greater, more improved private rented sector. Research carried out by the Resolution Foundation and Social Finance found that build-to-rent homes could be affordable for people who earn £22,000, and would also be a cheaper option than renting privately in many places.
Build-to-rent also comes with fixed-term tenancies of up to three years. These provide extra security for families that are often stuck in one-year or rolling contracts.
Sigma Capital Group and investor Gatehouse Bank are constructing over six thousand new private rented sector homes, which would help landlords cope with a possible increase in demand. Sites have been identified in Greater Manchester and Liverpool for around 2,000 houses, with other areas looking to benefit.
Business Secretary, Vince Cable, discussed the news: “The UK’s inward investment is booming, growing by 11% last year alone. We want to be even more ambitious and make sure that any new investment is spread right across the country – not just in London and the South East. By ensuring each region has access to good finance opportunities, UKTI’s Regeneration Investment Organisation will help all the UK’s regions fulfil their full potential, helping to build a stronger economy and a fairer society.”1
Graham Barnet, Sigma’s Chief Executive, as added: “We have developed an innovative joint venture model designed to deliver high quality homes in areas of the country where rental housing is in extremely short supply. Gatehouse has substantial knowledge of and expertise in the UK property market, and has shared our vision for this project. I am delighted that we are now working together to deliver the roll-out of our model, which has the potential to create one of the largest new-build privately rented residential portfolios in the UK.”1
Reviewing even further benefits, Gatehouse Bank Chairman, Fahed Boodai, also said: “Expanding into the residential market, particularly in the UK, is a significant milestone for Gatehouse Bank. We are seeking investment opportunities in mature and stable markets. This joint venture with Sigma breaks new ground in the UK residential sector and will help to deliver thousands of much needed, high quality new homes for rent across the country.”1