'Buy to let' is out and 'Build to let' is the future say Grainger

Landlord Expert
By Landlord Expert May 9, 2012 10:39

 

As projections for the average age of first-time buyers enter the early 40s, the private rental market is set to grow, and the government is looking for ways to encourage new construction to support this.

With homebuilders traditionally shying away from the business of holding onto their new creations, a new movement is afoot to try and encourage institutional ownership in UK properties. Currently, 90 per cent of UK private rental landlords are individuals, with UK institutional investment by companies such as pension funds in housing estimated at less than £4.5billion - a tiny proportion of the estimated £840billion total value of the private rental sector.

The government-backed Montague Review was launched in February and sought to examine what barriers exist to greater institutional investment in the sector, and ways it can be encouraged to help meet the rapidly increasing demand. It denotes serious attention to 'build-to-let' as an extra piece in the puzzle of the UK's housing problem.

Greater corporate involvement in the London sector should be a good thing. Beyond the greater firepower aimed at expanding the housing stock, it will also be more practical to get corporate landlords to adhere to better and more consistent standards of behaviour - a sorely needed improvement in a city where everyone knows someone who has fallen victim to an unscrupulous rentier.

Yet why stop here? With so much capital in the buy-to-let world, why not incentivise individuals too into the business of building new homes? With such enormous pent-up value in their property holdings, even a tiny take up of a new 'build-to-let' framework could give the London housing supply the extra boost it so badly needs.

 

Landlord Expert
By Landlord Expert May 9, 2012 10:39

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