25th
Feb 2022
The latest research on behalf of an industry trade body highlights the urgent need for at least 230,000 new build to rent homes per year, to stand any chance of achieving the government housing targets.
The business consultancy Capital Economics responsible for the analysis of the housing market which is based around the 340,000 new build homes each year to achieve the government’s UK target set for 2028
The consultancy firm warns that if the average ten year rate of growth of owner occupied and social housing properties remains the same, then the BTL new builds/supply has to increase by around 227,000 per year to help achieve the government target and counter the forecasted 1.8 million new households by 2032.
The firm notes that “even if the other [housing] tenures doubled their rate of growth, 105,000 homes for private rental would be needed each year, which is well above current rates of growth.”
Current government figures show that over the past five years PRS housing has fallen by more than a quarter million – 260,000.
The majority of 15-24 year olds when ‘flying the nest’ head to university or just simply branch out on their own, the industry body states that demand for rented homes is always going to increase and it predicts this age group will ‘grow’ by 866,000 by the end of 2030.
From its own modelling Capital Economics’ says that if the government fails to change its policies and punitive taxing of landlords, private renting housing stock will fall by over half a million – 540,000 - in the next ten years.
The analysis’ report claims that if the government has any chance of meeting its housing targets then it must ‘incentivise’ further investment from BTL landlords.
A spokesperson for the industry body says: “The report highlights in stark detail the supply crisis now engulfing the sector. For all the efforts to support homeownership, the private rented sector has a vitally important role to play in helping the Government to achieve its housing objectives.
“Without urgent action, the increasing number of people looking for affordable housing will be the ones to struggle as they face less choice and higher rents as supply dries up.”
The managing economist for Capital Economics Andrew Evans, also adds: “The private rented sector, which is predominantly supported by private individual investors, has a key role to play in addressing housing need in the UK.
“However, the stock of homes for private rent has fallen in recent years, driven partly by a series of policy changes. Without further changes, that supply could fall by over half a million more over the next decade.
“Even with increased provision of affordable housing and higher rates of owner occupation, both of which are important, our research shows that significant additional investment is needed by landlords in the private rented sector. “
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