BPF report calls for shake-up of buy-to-let: UK Property Shop News

The country's biggest property developers believe that a branded rental sector could offer ministers and home builders a lifeline in bringing vital investment into housing.

The report from the British Property Federation (BPF), 'The Future of Renting', is a response to a government review of rental, and report calls for a radical reshaping of the housing market that would ease the burden by ensuring renewed investment to see new properties come forward, saving thousands of jobs.

"We're in a ridiculous position where we have increasing demand yet house builders are stepping out of the market because they have nobody to sell to," explains Ian Fletcher, residential director at the BPF. "If we had a corporate rental sector here as they do in Europe, it would not only mean continued investment and thousands of extra new homes, it would also ensure that the major house builders had someone to sell their stock to and that the public had the benefits of a branded rental sector."

With buy-to-let expansion killed off by the credit crunch, developers want a housing sector to mirror the commercial property market which could see long term lets and thousands of new family homes built by institutions, like pension funds.

It would help the wider market by increasing supply and ensuring the same level of choice that consumers have in every service industry apart from housing. The BPF wants the government to incentivise big investment by:

* Widening the definition of affordable housing to allow developers to build market rentals.
* Giving special planning treatment for rental-only developments.
* Cutting unfair stamp duty rules that unfairly penalise large investors.
* Refining the REITs (real estate investment trust) structure to open it up to housing, as originally intended.

The government's review of the private rented sector is being undertaken by Dr Julie Rugg, from York University. But with house prices freefalling and transactions having dropped by a third over the last year, the public needs action now.

Liz Peace, chief executive, said: "Caroline Flint has shown acute awareness of the situation and is clearly keen to work with the industry. The government has a great opportunity here, because councils already have the powers to do what is needed. "The expansion of buy-to-let is dead for the time being and the only place we will find the kind of cash we need to build new homes is with the large, long term investors. Rental is up to 40 per cent cheaper than ownership, but if ministers don't take action, we could see rents rise by a third and cost the same as mortgages. The focus here has to be on the big issue, ensuring that tens of thousands of households of people are able to have a home, without any need for public spending.

Ian Fletcher adds: "Councils have it within their power to offer planning treatment to encourage corporate rental development. Over the past decade, the extra number of students, migrants and young professionals seeking housing has far outstripped demand and since 2000, private rental has housed more people than ownership and social housing combined. A corporate rental sector, offering branded confidence and the kind of quantity of new homes we need, makes perfect sense for all sides."