Property bodies seek to reclassify rent
Sections of the property industry have called for councils to allow market rent to be treated as ‘affordable’ through the use of section 106 agreements in order to attract investment.
The radical plan was part of a joint response from the British Property Federation, the Association of Real Estate Funds and the Investment Property Forum to the Montague Review into the barriers for institutional investors in the private rented sector.
The bodies claimed that allowing homes that are rented for a minimum of 10 years to be classed as ‘affordable’ in some developments would help attract investment by increasing potential yields available to funders. The proposal is part of a wider effort to encourage large-scale build-to-let schemes to attract investors.
‘There’s interest from institutional investors in the sector as long as there are sufficient yields and scale,’ said Robin Goodchild, a director at LaSalle Investment Management and chair of the residential special interest at the IPF. ‘The build-to-let idea could meet both of those issues.’
Ian Fletcher, director of policy at the BPF, said the suggestion was designed to increase the overall supply of homes through bringing in more backers, rather than dilute the supply of affordable housing. He added that the solution would only need to be applied in circumstances where developments would otherwise not be viable.
‘It wouldn’t require any formal national policy,’ he explained. ‘It would be about educating local authorities about a different model.’