FINWIRE®

The BPF is holding its residential conference in London today with speakers including Government advisors, companies and Adam Sampson, from housing charity Shelter.

A professional rented sector is where large property managers run domestic lets in a similar fashion to offices, with professional management and economies of scale enabling longer-term lets and a greater level of confidence from consumers.

Policy makers have long ignored the professional rented sector as a serious solution to the housing crisis, focusing instead on building more homes to buy.

But with mortgage lenders more reticent to lend, there is no credit for people to buy.

And with a million more are now at risk of repossession over the next 18 months, according to the FSA, a workable alternative to ownership is desperately sought.

Even if 240,000 new homes were built this year, it is unlikely that 240,000 people could afford them, as the affordability gap remains.

It is sure to be an item near the top of Caroline Flint’s agenda since becoming housing minister a fortnight ago.

Many hope the minister will seek to modernise Government thinking and seek to ulock the potential that a professional rented sector has to offer.

Discussion taking place today between the politicians, officials and businessmen representing the industry will look at how and why Government can encourage big institutions to invest in large scale housing for rent.

The fall in mortgage lending and rise in repossessions has created even greater demand for rented accommodation, which has risen 25% above ownership since 2000.

House builders meanwhile, have struggled to maintain output, let alone increase it in line with Government targets of 240,000 per annum.

Last week, the housing minister outlined the planned review of the rental sector, to be led by Julie Rugg at York University, which was warmly received by all sides.

For more information, stats or quotes, please contact Andrew Teacher, BPF media manager, on 07968 124545 / ateacher@bpf.org.uk

Nick Ritblat, former BPF president and strategic adviser to Deloitte, said:

“We welcome the Government’s decision to set up the Rugg review.

"The rented sector, whether professionally or privately owned, has the potential to make a huge contribution not just to the supply of housing, but also to the returns on institutional savings portfolios.

"Housing has been the best performing asset class in the UK on every measure for the last 30 years, and probably since World War II (although not all records stretch back that far).

"Far from being just a politically inspired exercise in social engineering, this initiative has the potential to stand on its own two feet as a reliable long term financial investment.”

Ian Fletcher, BPF director for residential policy, said:

“By commissioning Julie Rugg to review the professional rental sector, the government has shown a commitment to addressing our concerns over the barriers faced by investors and the problems encountered by tenants.

"We are grateful that this review will focus on the bigger picture and not get bogged down, at least yet, in particular policy hobby-horses.”

Adam Sampson, chief executive of Shelter, said:

"Shelter has worked hard with ministers and other stakeholders to push for improvements in private rental, adding greater transparency to how deposits are handled and ensuring that tenants can have greater confidence in their landlords.

However, with affordability still such a huge barrier to ownership, we need the government to investigate new ways to increase overall housing supply and develop a fit for purpose private rented sector.

Greater investment by institutions could increase security of tenure and ensure a professional rented sector provides a stable and decent housing option."

Rupert Dickinson, chairman of the BPF’s residential committee and chief executive of Grainger Plc, said:

“Ministers need to wake up to the reality that no matter how many new homes we build, there will continue to be a huge affordability gap between what people earn and can afford to spend on a house.

"Institutions can provide the long-term tenancies and levels of service that tenants benefit from abroad, and it’s time that we took the professional rented sector seriously as a viable alternative to ownership.”

Nick Jopling, executive director for residential at CBRE, said:

“With the current slowdown in the housing market and continued demand for quality homes, we find ourselves in a particularly positive environment.

“The development of a large scale build-to-let sector could be the seedcorn to attract institutional investment into the sector; the industry should grasp this opportunity with both hands.”

Mark Allan, chief executive of The UNITE Group said:

"The BPF has rightly called the professional rented sector the ‘Cinderella’ of UK housing. But let’s remember that Cinderella did get to the ball – albeit late.

“A framework is now required that encourages corporate landlords who will increase supply, guarantee standards, maintain their properties and work with the government to build communities.

“ It is also important to remember that a strong professional rented sector is about more than just catering for those who rent because they can’t afford to buy.

“UNITE has a wealth of experience in delivering well managed and high quality accommodation for an expanding sector of the population that rents out of choice, not out of necessity – students and graduates."

Anthony Lee, director in affordable housing at Atisreal, says:

"Housing associations across the UK now find themselves at the cross-roads between their traditional role as landlords of last resort and providers of choice, with many building and selling private housing for sale.

“In the rush to develop, however, many have overlooked the opportunities that the private rented sector could unleash - not just for their own balance sheets, but for the communities in which they work.

“The provision of high quality, private rented homes by landlords that potential tenants can trust could prove to be the next big thing for UK RSLs.

“They have unrivalled access to asset-backed funding that they could use to bring about a substantial increase in provision of private rented stock."

Government is currently also considering the regulatory regime for agents, an issue which is also being considered by the RICS’ inspired Carsberg Review.

Roger Southam, chief executive of property management firm Chainbow, said:

“Managing agents are handling billions of pounds of individuals’ money through service charge, yet there is no requirement for them to have any qualifications or professional affiliations.

“The only legislation we do have is aimed solely at landlords, with nothing highlighting the roles of the managing agent.