More purpose-built homes are to be provided for tenants following the government agency Homes England’s announcement that it is putting further funds into the Real Estate Investment Trust to invest in much-needed new builds in the private rental sector. The PRS Real Estate Investment Trust raised £250 million when it was floated in May 2017 and has a target of raising £1 billion in five years through its shares as well as government backing. The plan is to offer different types of homes which will appeal to people at different stages of their lives and so it does not rely on only one demographic group being attracted to its properties.
This is welcome news because the demand for rental property is soaring and the supply of suitable housing is not keeping pace. Also, many properties for rent are older buildings which are often not particularly energy-efficient. These will be hit by the new energy-efficient rulings which come into effect in April. This will mean properties with a low rating below E cannot be lawfully rented out, unless they are registered for exemption.
These properties being built through Home England’s REIT are expected to be high-quality and ideal for long-term tenants looking for decent housing in good locations. However, these properties are still going to be hard to come by and are likely to command high rents. So what can be done to ensure all rental properties are up to scratch. By supporting and funding this REIT, the government is acknowledging the great need for such rental properties in the UK.
However, instead of encouraging private and corporate landlords to invest, the government has imposed new taxes and stamp duty for owners of second homes, including landlords, of course. As well as investing in new builds, a quicker solution could be to encourage further investment in the sector by private landlords and their existing properties. The government could also help tenants who find it difficult to raise the deposit needed to move into a new rental property or who are unable to take up jobs because they cannot afford the rent in a particular area.
More people, including Generation Rent and older people who are downsizing or releasing equity to supplement their pension, are looking for quality rental properties. The government and local authorities could work with private and corporate landlords to find a solution which meets their needs today, rather than make tenants wait for purpose-built properties to be ready.
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