Leading figures from the property industry met on Tuesday January 27 at the British Property Federation's (BPF) Annual Residential Conference in London to call for a radical shift to rental. With repossessions almost doubling and tens of thousands facing negative equity, the BPF believes a professionalised, branded rental sector, where big firms provide long term homes to rent, could be the answer to Britain's woes.
Current government policy is still focused heavily on ownership. However, many housing associations are facing real problems as shared ownership schemes are left vacant due to a lack of lending, with banks seeing such initiatives as 'sub prime' given the high proportion of repossessions.
The BPF called for changes to stamp duty, local housing allowance (LHA), and the planning system which it believes will help the rental market and encourage private companies to invest in a professional rental sector like that of the USA and Europe.
Speaking at the conference Sir Bob Kerslake, chief executive of The Homes and Communities Agency, gave his support for an institutionally backed private rented residential sector.
He said: "I am persuaded by the need for a relevant private rented sector, both in terms of the size, and quality (of accommodation) on offer. It should become more than a second choice offer for people who can't access social housing."
The BPF also wants to see changes made to the charging of stamp when buying multiple properties so that it is charged per purchase and not on the collective amount, this would greatly reduce costs for large investors buying a portfolio of properties which they could then professionally manage.
It also wants rental developments to be specially recognised through the planning system, given the different financing model they use to properties built for owner-occupation.
Ian Fletcher, BPF residential director, said: "Over the past decade the private rented sector has proven itself invaluable to Government objectives. It has facilitated the rapid expansion of higher education, housed those unable to find any other home, and supported the UK's flexible labour market.
The BPF is also calling for a return to the old payment method of direct payment of local housing allowance (LHA) to landlords. The government scrapped the old regime last April, risking the security of thousands of vulnerable people who may not be best .positioned to manage their own finances. The new system risks private landlords taking their properties out of the market for social security tenants.
Alan Aissbett the head of international law firm Pinsent Masons said: "This country has traditionally provided two options for home occupation, occupation at a sub-market and/or affordable rent or ownership (whether outright or shared with an ability to acquire outright). With the home ownership market currently broke there needs to be a viable alternative to satisfy demand.
"The Government can assist by stimulating a new rental sector which will truly yield mixed communities. The BPF proposals will go some way to encouraging investors into the rental sector. Assistance could also be provided by the public sector (such as local authorities) entering into partnerships with investors to secure developments for rent as well as developments for sale on surplus land."
Turning to the issue of Stamp Duty Duncan Owen, chief executive of Invista Real Estate Investment Management Ltd said: "To help the market Government needs to allow stamp duty to be calculated at the rate of the individual property regardless of whether it is acquired individually or collectively, not at the rate of the collective price."
But Jim Ward, director of Savills research with particular responsibility for residential development had a more straight forward solution to the UK's housing market ills. "The three things the government needs to do to aid the housing market are increase liquidity in mortgage markets, increase liquidity in mortgage markets, and increase liquidity in mortgage markets." He said.