Changes to the UK tax system could help encourage more companies and organisations into the business of being professional residential landlords. This, and the construction of properly designed, well-managed rental apartment blocks could go some way to encouraging the growth of the sector in a more professional way, benefiting both tenants and landlords.
Those are some of the key suggestions from insurance and investment company Legal and General, which recently produced a report entitled Let’s House Britain. A review of the current situation in the UK housing market, it came up with a ten point plan to address the housing shortage.
Legal & General sees the private rented sector as a key plank in the drive to improve housing in Britain. It notes the fundamental problems – prices have doubled in real terms since the 1990s, almost a decade after the legislation obliging them to do so, less than half of local authorities have prepared a Local Plan detailing where they will permit the construction of new homes. While recognising there is a housing shortage, it notes that older people who want to downsize are just as poorly served in the current market, as those wanting to get their first home.
The ten steps Legal & General calls for are:
1) build more – we need lots more homes to be built
2) planning needs to be reformed, with local authorities being more interventionist and forward thinking
3) more smaller homes would suit downsizers, singles and the divorced – not everyone wants a home with a garden
4) more flexibility on funding formats is needed, to help affordability. What about longer mortgages and rent to buy schemes being extended?
5) more social housing is needed, as currently too much of the government input into this sector is simply paid to private landlords as rent
6) equity release needs to be expanded and positively endorsed as an option
7) incentives could be used to help retired people downsize – and to encourage the construction of more suitable homes
8) prepare borrowers for the inevitable interest rate rise
9) encourage the growth of a larger private rented sector, with purpose built blocks that deliver inclusive additional lifestyle services
10) professionalise private rented by reforming the tax system and copying what works well in other countries