Montague defends recommendations for large-scale investment in PRS
Published by Max Salsbury for 24dash.com in Housing and also in Central Government
To Let Signs
The author of the Government's review of the private rented sector (PRS) yesterday defended his report before a committee of MPs.
Sir Adrian Montague has recommended large-scale investment in the PRS to help lower rents, extend tenancies, improve quality and help drive inward investment.
He has dismissed the need for rent caps or any regulatory change, insisting that institutional investment could improve stability for tenants through long-term lets, and that social housing providers could also play a key role in delivering market rented housing.
Montague's grilling comes a week after government figures showed the PRS had hit a new peak with 3.8 million households now renting – practically the same number as the social housing sector.
Montague said that local authority codes could be modified to help PRS developers acquire land often won by traditional house builders who have a wholly different financial model.
He added that developers could guarantee longer period tenure, which he felt wasn’t unreasonable.
Many institutions told Montague during the creation of his report that there was no difference to them in keeping PRS tenants in tenure for 10 or 30 years, which is the kind of security local councils need.
London-based Essential Living, the first institutionally backed developer focused solely on the PRS, has acquired two sites already and is in talks around several others. It plans to deliver more than 5,000 homes over the next decade.
During oral evidence before the CLG Select Committee, Montague said: “We probably have twice as many people renting as we did 20 or 30 years ago and they are staying longer in rented properties, partly because of the economic situation. But also because I think the way we are looking at rented properties is starting to change.
“A lot of growth has been driven by small landlords – only one percent of landlords own more than 10 properties… there is an opportunity for institutions to meet that demand and mobilise fresh sources of capital.
“In the review I didn’t suggest an enduring subsidy because this is an area where the market must stand on its own two feet. But I think it’s legitimate for the Government to give it a kick-start.
“We are faced with both a shortage of homes and a need to stimulate the economy. I think had there been a build-to-let fund (as envisaged in the review) that would have done most of the work. A guarantee scheme offering the opportunity to raise finance at cheap rates on the back of a government guarantee ought to have more impetus than the incentives I recommended.”