The government should take a stake in the rental market to fix the affordable housing crisis, according to Aneisha Beveridge, head of research at Hamptons International.
Speaking to financial website This is Money, Beveridge said the government’s involvement could take the form of buying homes from housebuilders and renting them out until interest rates fall and the market picks up.
She said: “Given how few homes are likely to get built this year, we think there’s an opportunity for the government to take a stake in the rental market… a bit like Norway’s sovereign wealth fund, but investing in homes rather than oil.”
Beveridge told This is Money that such a fund could buy new homes from both private developers and housing associations and rent them to tenants.
“Consequently, it should encourage housebuilding,” she said, adding that “a big investment in the rental market would put downward pressure on rents relatively quickly”.
According to Beveridge, the policy could target younger generations “who find themselves at the sharpest end of the housing crisis and in some cases improve their ability to save up for a deposit to buy”.
Despite her suggested radical solution to the affordability crisis, Beveridge has painted an optimistic picture of the housing market for the year ahead.
In Hamptons’ latest Housing Market Metrics report, she observed that 2023 would go down as being “subdued”, although “green shoots appeared as the year progressed”.
She said: “Confidence among house hunters began to return, prompted by falling mortgage rates and greater economic stability. Consequently, the housing market is entering the new year on a much firmer footing than it was 12 months ago.
“Although confidence could still be vulnerable to economic shocks and global events, we expect to see more prospective buyers enter the market this year, many of whom sat tight in 2023.
“This might start to shift the power back into the hands of those selling and should also begin to put a floor under prices, limiting the chance of further falls.”
Comments (1)
‘…affordable housing crisis’
This is created by the housebuilders, who sit on their landbanks until the economic climate is right for them to build, and then sell at inflated prices.
If the lady from Hamptons is referring to the lack of affordable rental housing, the answer is for government to fund more social housing for that segment of the market, and the private sector to invest in Build to Rent, for everyone else.
What is missing from the housing discussion is the demographic change, seeing younger generations more interested in renting, than buying [much like most of Europe]. They want the flexibility and none of the responsibility of owning a property until much later in life. They have also seen how leasehold has destroyed those who thought they were getting on the housing ladder at a lower cost, only to find they are stuck with a property they will never own, but can’t sell, and are paying huge service charges #NationalLeaseholdCampaign.
Our economy is propped up by home ownership, and if the big developers decide to not build [as they are now doing], the economy suffers. So, change the focus. Build for the rapidly evolving rental market.
The developers won’t see the explosive profits associated with ‘ownership’, and lenders will see a drop in business, but it would see more rental property, which should lead to lower rents [in due course]. As for the government [taxpayer!] having a stake in it, they have provided early funding for the PRS Property REIT, which appears to be going well. It’s a drop in the ocean, but a start.