Private Rented Sector’s role in tackling UK’s housing problem
Jonathan Pitt BNP Paribas Real Estate’s BTR expert comments: Earlier this month the Housing Minister, Esther McVey presented at the RESI 2019 conference and announced to industry specialists and experts that “Together we have to tackle this Great British housing building problem”.
It was her first industry address and one in which she focussed heavily on “the dream of home ownership”. However it was rather disappointing that whilst 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.
Whilst home ownership, which accounts for almost two thirds of the market, continues to play a key role in the UK housing sector, the shift in dynamics, towards private renting, should not be ignored. According to the Office for National Statistics, the number of households in the private rented sector 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 anticipate private renting to evolve further. The rise of institutional interest and investment into the sector, along with other emerging capital sources, should continue to improve housing supply through build-to-rent schemes, whilst changes in government legislation should further professionalise the sector.
Tackling the housing problem in the UK has to be a coordinated two-pronged approach, supporting the growth in private renting whilst underpinning the existing owner-occupied market. Whilst many in the rented sector continue to 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 over 30 years.