With homeownership shrinking and social housing investment about to be cut, what happens to private renting will be a key issue after the election.
As if to show that life goes on no matter who wins today consultation ended last week on a Treasury consultation paper on investment in the private rented sector closed last week and the responses will be sitting waiting for new ministers in their in-boxes.
The crucial question is supply: can investment in the private rented sector be the new source of finance that will make up for cuts in the affordable housing budget and continuing stagnation in the mortgage market?
Yes, say the Property Industry Alliance, Council of Mortgage Lenders and Association of Real Estate Funds, but not if things stay as they are. Access to debt for ‘is likely to constrain growth in buy to let for the forseeable future’. The few institutional funds that have invested over the last decade are coming to the end of their lives. And housebuilders remain dependent on off-plan purchases who are not around any more. Meanwhile, housing need, population and new households all keep rising.
They say the main obstacles to growth are scale (crucial to make sizeable investments and make management efficient), investment costs (which are higher than for individuals) and tax efficient vehicles.
And they argue that: ‘Political commitment supported by a modest investment in tax terms could help to deliver transformational change to the PRS and the markets for both new and existing housing.’
The problems could be addressed by better use of government land holdings and changes to the tax system such as cutting the higher rate of stamp duty on bulk purchases and VAT - in return for helping to meet current and future housing needs.
How the new government will respond remains to be seen. ‘A modest investment in tax terms’ might ring alarm bells at the Treasury, which has been traditionally resistant in any case to tax incentives to help investment.
And considerable political uncertainty also remains. The Labour government appeared to be on a twin track of improving incentives for institutional investment and improving rights and conditions for tenants.
But Conservative policy documents have been light on detail on private renting. The manifesto did not mention the sector. Last year’s housing green paper promised a review of how the sector can play an enhanced role which would include looking again at the regulation introduced by Labour to eliminate duplication and contradiction.
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