In November the Government published its national housing strategy which included plans to "encourage greater institutional investment" in privately rented properties. As part of the strategy the Government set up an independent review to look at what "barriers" there are that prevent such investment occurring.
Sir Adrian Montague, who was appointed to lead the independent review, has now launched a 'call for evidence' in a bid to gather industry views on other measures the Government has introduced to improve investment in the sector.
"The private rented sector has grown rapidly in recent years, and now houses 3.6 million households," Sir Adrian said in his 'call for evidence' document. (4-page / 143KB PDF)
"However, this growth has not contributed to overall housing supply. It remains the case that very little housing is built specifically for private rental. This is a consequence of the structure of the sector which is overwhelmingly dominated by small landlords who, quite naturally, lack the resources to underwrite the development of new housing. But it also points to an opportunity for larger scale investment targeted on new build housing for market rent," he said.
"I want to focus on two fundamental questions. Will the changes that the Government has introduced go far enough to generate significant new flows of investment? And, if not, what can be done to accelerate things?" Sir Adrian said in a statement.
In its housing review the Government said it wanted to support growth in the private rented sector in order that the sector could meet "continuing demand" for such properties.
"Demand for rented homes is high and in some areas rents are rising, affecting affordability. We want to address this by boosting overall housing supply and by supporting landlords to invest," the strategy said.
In the Chancellor's Budget last year the Government revised the stamp duty land tax arrangements for bulk purchases of homes from 5% to 1% in order to "help property management companies to take on larger portfolios". The change "addressed a long-standing tax distortion which previously favoured individual purchases [of homes] ahead of large-scale investment," the Government said in its housing strategy.
In addition the December-published Finance Bill detailed changes to the benefits companies can enjoy when electing to join the real estate investment trusts (REITs) scheme. REITs are tax-efficient property investment companies. They were first introduced in the UK in 2007.
Under the planned changes the 'entry charge' that companies must pay for joining the REITs scheme would be scrapped. Currently companies are charged 2% of the gross market value of properties involved in the tax-exempt business. Further proposed relaxations of the REITs scheme rules were also unveiled, including opening up the scheme to companies listed on non-regulated stock exchanges.
The Government has also backed Homes & Communities Agency-led schemes to encourage local authorities to develop sites specifically including privately rented homes.
Stakeholders have until 30 March to submit their views on the measures. Sir Adrian said he would aim to report on his findings and issue possible recommendations to the UK's Housing Minister, Grant Shapps, in June.