Government urged to dramatically increase the availability of social housing

Government urged to dramatically increase the availability of social housing

Dorian Gonsalves, Director of Commercial and Franchising at Belvoir! is urging the Government to protect the 'forgotten sector' of rental market social housing for rent to relieve pressure on the Private Rental Sector (PRS) and provide security for thousands of tenants.

Dorian says: “Throughout 2015 the Government and Bank of England made it very clear that they were determined to curb large, bubble like house price rises. This was done by restricting the amount of lending to people to 4.5 times their income and limiting growth in Buy to Let (BTL) purchases through tax rises and stamp duty hikes. However, there is already a housing shortage, and if landlords continue to have second thoughts about buying properties in 2016 this will further reduce the number of rental properties that are desperately needed. Increased Government interference in the Buy to Let (BTL) market will put a real squeeze on the supply of property in the rental market in 2016 and beyond.

During 2015 there was a complete move in emphasis away from renting, and a drive towards raising the number of properties available for home ownership. Increased pressure may drive up rents in some areas, although Belvoir's rental analysis to date has shown that even in areas where supply is lower than demand, rents can only rise in line with wage increases and what people can afford. We are forecasting modest average rental increases of 3%, but should the shortage of property available to rent reach crisis point rents are likely to rise further.


Dorian continued: “Belvoir's rental index analysis leads us to predict that 2016 is likely to be a similar year economically to 2015.  The British Chambers of Commerce has forecast total earnings growth to be 4.0% in 2016 and 4.5% in 2017. The Centre of Economics and Business Research (CEBR) predict that inflation will stay below 2% through to 2017.

I am concerned that Government schemes such as Help to Buy are very useful for those tenants who want to buy a property but will not help the thousands of tenants across the country who choose not to buy or are not in a position to buy. Reasons for this may include poor credit ratings, employment, divorce or a simple lack confidence in the property sales market.  These thousands of tenants now seem to be a forgotten sector of the housing market.

The Government seems purely focused on driving home ownership; which in turn will fuel house price growth. However, details have not been released of how many new homes will be built specifically for rent in the social housing sector. The sales market seems to be almost 'frozen' with fewer and fewer new instructions coming to market. An influx of new properties and new buyers, many of which could be subsidised, will probably free up the market and increase the number of transactions.  

We predict a rise in house prices of at least 5% in 2016 and this acceleration is likely to continue for the next four to five years. Some analysts are predicting a 50% rise in house prices over the next decade. In my view, whipping the public up into a home-buying frenzy is not very sensible, as prices rise when the population feels they need to acquire a 'must have' commodity. If the opposite happens and prices stagnate, builders will not build.

With net immigration currently at over 300k, over 1.5m people on council waiting lists, population forecasts as high as 85 million by 2050 and 10 million people already renting it is clear that much more social housing is required. The Government has pledged 400,000 new builds in the next five years, but it is likely that 200,000 of these will be in and around London and locations won't be ideal due to lack of building land at sensible prices. The remaining 200k will be spread across the other 1000 or so towns and cities across the UK, so there will probably be just 200 new affordable properties in each town or city.

As an investment landlord myself, I have done some number crunching and am convinced that BTL is still profitable. This may not be the case for very highly geared landlords in low yield areas, but it certainly is for most of the areas that Belvoir operates in, which are usually landlords with one to three properties, and accidental landlords.

The private rental sector has always existed to provide a choice for those people who need flexibility and is a good solution for people who do not wish to commit to purchasing a property. Providing social housing for rent has never been the responsibility of the private landlord, but clearly in the past 12 months this distinction has been blurred. Successive governments have failed to build sufficient social housing for rent and Belvoir is calling for this shortfall to be redressed. We hope that during 2016 the Government will focus on providing increased social housing for rent and that private landlords will no longer be expected to bridge this immense gap.”

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Latest Comments

Oliver Conway
Oliver Conway 18 May 2017

Making a neat inventory is a good idea, but if the seller is not willing to provide it, can the buyer demand it?

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Bertrand
Bertrand 17 May 2017

First step to nationalisation of the private rented sector IMHO. Nanny state poking their noses into things yet again. I object, as a decent landlord, sometimes having to deal with some pretty awful tenants,...

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Izzy
Izzy 16 May 2017

This is such a great a post. I love the detail you've gone into. It's a very useful article for helping those who are looking at deciding which sector they would like to go into! When I first started investing...

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paul burnham
paul burnham 30 Apr 2017

Jeremy Corbyn's pledge that a Labour government would build 500,000 new council houses must electrify the general election campaign. Reliance on markets and the profit motive has brought huge housing-related...

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CommercialTrust
CommercialTrust 28 Apr 2017

Sadiq Khan?s announcement of an online database of landlords and letting agents who have been convicted of housing offences, appears on face value to be a variation of the already implemented Database

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warren
warren 26 Apr 2017

You're very welcome Mary! Glad you enjoyed them :)

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Mary Ward
Mary Ward 26 Apr 2017

Thank you for the wonderful ideas. First impressions can make or break a deal. It's sadly that many homeowners drop the kerb to create an off-street parking space.

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Tony Gimple
Tony Gimple 14 Apr 2017

I'm not at all surprised that so many landlords are still confused about what the tax changes really mean and how it will affect them. In particular, the blind rush to incorporation is leaving landlords...

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MH
MH 13 Apr 2017

You are right that the bank holidays are going to be spoiled in looking for the properties. But people who want to sell their property and looking for the better relocation, they can get benefits of this...

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bnellyb
bnellyb 08 Apr 2017

There will be an exodus of private landlords over the next 5 years as tax changes take effect, private landlords provide an important service to the rental market, why do housing associations and councils...

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Fred Cassman
Fred Cassman 07 Apr 2017

"Make it look like you are at home": often people forget this and share on facebook their location!

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jared townsend
jared townsend 05 Apr 2017

It'll be interesting to see how & if the Government's asset sale regarding mortgages helps

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