Slowdown in market rental development

Market rental development by housing associations, particularly in the south, has slowed almost to a halt over the past three years, a survey by Inside Housing has revealed.A combination of high land values, stable rents and increased competition from the buy-to-let sector are all factors making the sector more crowded.The knock-on effects of problems in a particular sector of the economy are also shown in the survey. In Reading, the meltdown of WorldCom has helped push rents down by up to 20 per cent.Community Housing Association – which has built up a portfolio of 110 homes under its Citystyle Living banner in London - has no more schemes in development.‘We had plans for more schemes, but found that they worked better as shared ownership,' said chief executive Mick Sweeney.‘We are interested in doing more market renting but the opportunity must be right.'Community's involvement has proved highly successful, with a current value of £16 million against debt of just £8 million. And the properties have yielded surpluses - covenanted back to the group - of almost £1 million over three years.Atlantic and Oriel housing Associations which both work in the Eastleigh and Southampton areas, and Cherwell in Oxfordshire and Berkshire have also cut back on expansion.Barry Neaves finance director at Atlantic, said the association was marking time because of a lack of opportunities, though it is still dedicated to expand when it can. Further north, Home Group subsidiary Paramount is continuing to grow, Derwent in the east Midlands has expansion plans, and the Joseph Rowntree Foundation is carrying out appraisals for two more schemes as part of its city centre apartments for single people at affordable rents programme. Most other development is small scale.Meanwhile, buy to let by individuals has continued to grow rapidly - almost a quarter of a million homes have been bought since the sector took off in the late 1990s. But JRF's much promoted vision of a new corporate market rent sector waits on the findings of economist Kate Barker's review of housing supply, and Treasury decisions.In their submissions to the inquiry both the British Property Federation and the Royal Institution of Chartered Surveyors said the interest by financial institutions in the private rented sector would need to be through arm's-length, tax transparent trusts – and changes to stamp duty and VAT.The BPF is also making a bid for changes to allow the private sector to provide keyworker homes in competition with housing associations without using grants.‘With some relatively inexpensive changes to tax policy and a clearer steer from planning policy, plus the correct vehicle, significant sums of institutional investment in key worker housing could become a relatively quick-win reality,' A BPF spokesperson said.