Editor: Earlier this month, housing minister Esther McVey spoke at the RESI 2019 conference and announced to industry experts that “together we have to tackle this Great British housing building problem”.
It was her first industry address and one in which she focused heavily on “the dream of home ownership”. However, it was rather disappointing that while she listed the government initiatives to tackle undersupply and barriers to entry, such as the National Planning Policy Framework and Help to Buy, she failed to recognise the importance of the private rented sector (PRS).
While home ownership accounts for two thirds of the market, the shift in dynamics towards private renting should not be ignored. According to the Office for National Statistics, the number of households in the PRS in the UK increased 63% from 2.8 million in 2007 to 4.5 million in 2017.
The well-documented barriers to home ownership – affordability at the forefront – continue to drive growth in this sector and we expect private renting to evolve further. The rise of institutional interest and investment in the sector, along with other emerging capital sources, should continue to improve housing supply through build-to-rent schemes, while changes in government legislation should further professionalise the sector.
Tackling the housing problem in the UK has to be a co-ordinated, two-pronged approach, supporting the growth in private renting as well as underpinning the existing owner-occupied market. While many in the rented sector have aspirations of owning their own home, the rise in long-term renters must be taken into consideration by investors and politicians alike.
It was a missed opportunity by the housing minister to offer support to an industry witnessing one of the largest structural changes in more than 30 years.
Jonathan Pitt, build-to-rent expert, alternative markets team, BNP Paribas Real Estate