Action needed to tackle supply crisis
As the national press reminds us daily, the cost-of-living crisis is likely to be the UK’s dominant political issue of the year. Industry and households alike have been hit by the impact of inflation, and the private rented sector (PRS) is no exception.
Compounding this issue are the ongoing supply and demand issues affecting all housing tenures across the country. If you need reminding, this House of Commons Research Briefing, entitled ‘Tackling the under-supply of housing in England’, demonstrates the stark reality facing the nation in this area.
Why pundits should pay attention to the PRS supply crisis
Although there is widespread acknowledgement of the depth of the problem, many media commentators continue to overlook the extent of the crisis in the PRS and the role that it plays in meeting housing need. The PRS plays a pivotal role in the delivery of housing to individuals and families across the country, Yet, too often, it is viewed as the poor relation of housing tenures. So, what’s the current state of play, and is a new approach by government a possibility later this year?
In short, the answer is that it seems unlikely we’ll see anything ground-breaking anytime soon. This is deeply disappointing given the scale of the problem.
According to research published by consultancy Capital Economics (commissioned by the NRLA) the private rented sector requires 230,000 new homes a year across the UK just to meet government housing targets. The same research reveals the stark fact that the supply of privately rented housing has fallen by almost 260,000 over the past five years.
These figures simply cannot be ignored by policymakers and pundits.
Yet there is a tendency on the part of many to concentrate on the shortage of affordable housing for purchase, or on the lack of social housing across the UK. Yet with a likely 1.8 million new households set to emerge over the next decade, there is a need for greater supply across all housing tenures, and the private rented sector shouldn’t be overlooked in any wider push to address this crisis.
The Government may say it wants to turn ‘generation rent’ into ‘generation buy’, but the rhetoric needs to be backed up by clear actions.
With the well-documented long-term failure of successive governments to address the supply crisis, this is a picture which is likely to get worse before it gets better. Yet criticism of the Government’s approach will only take us so far. Practical solutions are required if the PRS housing logjam is to be dealt with effectively.
So what is the answer?
First off, the Government must introduce pro-growth policies which will encourage the kind of investment the private rented sector desperately needs.
A combination of an increased rate of new builds; the switching of commercial property to residential use; the switching of stock from short term holiday to long term lets and bringing empty homes back into use will have a hugely beneficial impact on the sector.
We believe scrapping the stamp duty levy on the purchase of additional properties represents a huge step towards achieving greater supply in the PRS. The Capital Economics research cited above suggests that a further 900,000 homes could be made available over the next decade if this policy were to be introduced.
In parallel, the Government must switch-tack and stop demonising the PRS and those landlords who invest to provide much needed homes. The time of landlord-bashing rhetoric and tax-policies hostile to good business cannot continue. If solutions are to be found to the housing crisis it will take co-operation and encouragement, not artificial divisions driving by adversarial rhetoric.
Adopting this approach to the supply and demand crisis is not only advisable, but necessary. As supply continues to worsen, the NRLA will be doing its bit to press for changes which will have a positive impact.
