Low to middle income households are likely to be shut out of home ownership for a lifetime according to the latest report launched by Resolution Foundation ‘Making a rented House a Home: housing solutions for ‘generation rent’
The report contributed by Allsop Partner Paul Winstanley finds that the average low-to-middle income household putting aside 5 per cent of their disposable income each year would have taken 31 years to save a deposit in 2010, up from just eight years in 1983. In London in 2010, low-to-middle income households would have needed to save for 54 years compared with 24 years in the North of England.
Alongside cuts to social housing funding, the report argues that the private rented sector must adapt to accommodate the needs of ‘generation rent’. This requires large-scale investment and longer term, more secure contracts that allow for home improvements – a model more common in Europe and the US.
The report proposes a new approach to build-to-let development that could make institutional investment viable in the UK based on:
- Public sector landowners investing their land as an equity stake in the development, rather than selling it up front.
- Local authorities balancing the needs of the most vulnerable with those of local working people. This might include requesting lower, or no, affordable housing ( S106) requirements where the private rented development is targeted at low-to-middle income people, or enabling the S106 units to become market rent after a number of years.
- Investors retaining an option to sell some of the rental units after a fixed period of time if necessary to secure competitive returns on investment.
Rented homes being managed at scale by professional landlords who can provide tenants with a high quality service at the same time as keeping management costs down.
Some local authorities, including the London Borough of Barking and Dagenham, are leading the way in this area and demonstrating that by working in partnership this age old problem may be cracked.
Vidhya Alakeson, author of the report said: “Falling between the gaps in home-ownership and social housing, low-to-middle income households are finding themselves increasingly reliant on the private rented sector for housing support. Institutional investment not only brings the potential to deliver private rental homes at scale but also a product more in tune with tenants requirements for a long-term home.”
Paul Winstanley, Partner for Allsop comments “This report is a very significant piece of work highlighting the importance of ensuring adequate long term housing being made available to those on low to middle incomes . The report also emphasises the need to promote this tenant base as the potential foundation for a longer term institutional residential fund. We are very pleased to be working on this project with the Resolution Foundation and look forward to working with them over the next few months as they seek to pull the interests of stakeholders together to the satisfaction of tenants, developers, landowners, investors and Councils alike.”
Notes to editor
Allsop is an independent property consultancy with a market-leading reputation for high quality service, integrity and innovation. We are also well known as the UK’s largest and most successful auction house. Our success is built on over 100 years’ experience in commercial and residential property consultancy and sales.
Paul Winstanley is Partner for Allsop’s Residential Valuationi team. He has nearly 12 years valuation experience within the residential investment sector.
Paul is an experienced and highly regarded analyst who specialises in residential investment appraisal and valuation. He has particular expertise in computer modelling techniques for large-scale investment valuations and is a recognised authority in the UK on the valuation of residential properties subject to Home Reversion Plans (life tenancies). Other areas of specialism include residential Fund valuations, large scale portfolio valuations, ground rents and financial instruments linked to residential assets.
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