Ryan Prince, CEO at Realstar Living, has renewed calls for a change in the planning system, to support the development of dedicated private rented sector homes. Until such change happens, he insists the economics of development means not enough homes for rent will get built.
Prince says the private rented sector could probably add around 500,000 homes right away, and if rents were in the range of up to £1,000 per month, they would be full immediately. “So, why don’t we have it today? The answer is planning policy.”
Writing in Property Week magazine, he argues: “At present, the planning system is geared towards ‘private for sale’ (expensive) or ‘affordable’ (council housing for those in dire need). There is nothing of note for the independents in the middle.”
These “independents”, also called the “squeezed middle” by affordable home developer Pocket, are people in regular jobs, who in London can typically be earning between £25,000 and £45,000 a year. Working on the rule of thumb that no-one should be paying more than one third of their gross income in rent means, says Prince, a practical maximum of £1,000 rent per month.
With rental home builders such as Realstar fighting for development sites against housebuilders constructing for sale, there is little opportunity to buy land at a price that makes financial sense to build for these mid market renters.
Prince says his company does have one 225 unit apartment block in Stockwell, south London, that fits this description of “indy” housing. The block is full, at rents of around £250 per week. But he says he was only able to win the site “because of a quirk of history” that meant it had a sui generis flexible planning use – meaning no housebuilders could grab it.
The solution, says Prince, is for London’s next mayor to amend the planning system, either creating a definitive new use class for rental housing, or varying the current rules. He also wants to rename rental homes as “indy housing”, in place of PRS.