The consultation document sets out the case for Build to Rent and in it the Government quote research from the British Property Federation which shows that 200,000 new homes could be created by the Build to Rent sector, which could also add 2,000 new Affordable Private Rent homes per annum. They also draw from the American market where the number of Build to Rent properties has increased substantially over the past 30 years.
The Government claims that Build to Rent can boost housing supply by using additional institutional investment (e.g pension funds, insurers and even charities) and that Build to Rent properties can be built faster because they can be absorbed by the market more quickly, and are more likely to use modern methods of construction for speed. Build to rent developers are also more likely to use areas of land that are less attractive to traditional housebuilders, such as town-centre sites, which can also help with regenerating tired and forgotten urban areas.
Summary of our response
Rocky road ahead
There are many challenges that need to be tackled for Build to Rent to become successful. There needs to be a stable political and financial environment to appeal to institutional investors. The current landscape of continual legislative change creates uncertainty and could be acting as a barrier to long-term investment. Secondly, issue with finding appropriate sites for development, availability of institutional funds and viability are preventing the rapid development of the Build to Rent market and may need national policy intervention.
Affordable Private Rent
We agree with the Government that eligibility and criteria for Affordable Private Rent should be decided between the developer and the local authority as they are best placed to understand local housing needs and demographics.
It's clear that the most successful Build to Rent Schemes have been in urban areas which have good transport links within walking distance. For similar reasons, we expect that Affordable Private Rent through Build to Rent will flourish in areas with good employment opportunities and lower land values.
Planning Authorities
We'd like to see the Government revise the National Planning Policy Framework to explicitly refer to Build to Rent as a form of housing which planning authorities should consider. Pressure should also be put on local authorities to free up land for rented housing and allow build to rent schemes to go ahead.
Three-year tenancies
The Government's proposal of a minimum three-year tenancy period for Build to Rent is sensible as it will encourage security of tenure and provide a stable home for families etc. We believe that tenants should be able to give a month's notice after having lived in the property for a minimum of six months, but that this term should increase so that the longer the tenant has lived there, the more notice they have to give the landlord (for example up to three months). This is important so that Build to Rents are not seen as restrictive and allow for renters to be able to relocate easily should their circumstances change, or should they need to change jobs etc.
Covenant vs Claw-back
The Government say that they have considered whether a minimum convenant period should be set, whereby Build to Rent properties must remain in the Private Rented Sector for set period of time. However, they consider that investors might be put off by this as they still need an exit route, particularly where the market from Build to Rent is not yet proven. Instead, they favour a claw-back clause, where a contribution would have to be made by the developer towards affordable housing in the area, should they remove the properties from the market.
We agree with the Governments claw-back scheme, and think that the amount of claw-back should be agree upon between the local authority and the applicant.
