Large-scale institutional investment in the private rented sector has long been an ambition of housing policy. So should we take our hats off to Sir Adrian Montague for suggesting some practical ways forward to achieve the objective? Or might there also be some dangers in his proposals, particularly for so-called “vulnerable” groups?
Let’s take young people as an example. Research suggests that as the prospect of home ownership recedes, the private rented sector will face far greater demands from the under-30 demographic. As demand grows, the sector will become more socially divided as different groups compete for the available stock. By 2020, a “three-tier” system is likely: those at the top who can afford to pay, a “squeezed middle” who might struggle, and a bottom rung who risk being excluded.
If you were an institutional investor keen to realise your return, which group would you target? Would you opt for the safe bet or the most vulnerable? No worries, though; the social rented sector will take on those unable to compete in the private sector, won't it? Well, not if there’s no new social housing supply, it won't.
The research predicts that the number of young people able to get in to social housing will have dropped by 360,000 by the year 2020. The whole housing system requires fundamental reform, and incentives to encourage investment in the private rented sector will achieve little if they simply substitute for investment in other housing tenures. And this is where the Montague proposals can start to look a little shaky. Kick-starting construction by using public subsidy (land) for private sector housing is not necessarily a bad thing in the current economic context. But Montague also suggests relaxing the planning agreements that have ensured that a proportion of the new homes built are affordable. For years, this has been a major source of new social housing supply, especially in pressurised areas.
So all in all… mightn't the effect be simply to shift subsidy from those who need it most to those who have more political clout?
Read more about: affordable housing, Housing, Montague, Social housing, Young people
Housing problems may not fit into the purist’s definition of careers information but it certainly affects the people who the most vulnerable in society.