I’m sure, like me, you’ve sensed a slight shift in emphasis from the government over the past few weeks in terms of its appraisal of the importance of the private rental sector (PRS).
Certainly, we appear not to be in a situation whereby the entire ills of the housing market are being laid at the door of landlords, and given the recent research from RICS which outlines a long-term shortage in properties to rent over the next decade, then I wonder if we won’t see a more focused attempt at fixing this particular gap.
That said, I’m not so naïve as to think the government commitment to owner-occupation, in particular getting first-timers onto the ladder, will shift in favour of the PRS but I would like to see it being placed on a more level playing field. At least with the May/Hammond/Barwell axis in this government, I feel more confident the sector will be given a fairer hearing than under Cameron/Osborne/Lewis.
The RICS statistics – which suggested 1.8m more households will be seeking to rent rather than buy by 2025 – do underlie the shift the UK is making to more of a rental society. Owning one’s own home will remain an ambition for many but that shouldn’t mean we put every conceivable obstacle in the path of landlords in order that potential owners-occupiers might have a clearer run to purchasing. It does not work like this and, looking at the measures already in place, one can certainly question how effective this strategy has already been.
The question has been raised though, and it’s (once again) one of supply – this time where are those 1.8m households going to live if there is a PRS gap? Certainly, individual landlords have been actively discouraged, and while larger corporates are taking an even greater interest, it’s unlikely they’ll be able to deliver the supply required on their own?
Perhaps therefore, we do need to look again at private landlords’ and their curtailed ability to deliver this supply? How might they be encouraged to add to their portfolios?
Well, even considering that this is what the government wants, it’s a tricky one to put right. While there does appear to be a growing groundswell of support for the government to go back on its stamp duty changes in order to support landlords’ purchasing activity, we would be incredibly fortunate to see such a move in the Autumn Statement.
Never say never, but one suspects the government is going to want to let this particular policy play out for a little while longer. And because of this, it looks likely that we’ll see the purchase appetites of landlords’ continuing to be subdued for some time to come – the recent figures from the CML for August this year reveal that, of the £3bn borrowed, only a third was for purchasing and the rest, remortgaging.
Indeed, we are likely to see landlord purchase sentiment hit even harder by next year’s tax changes. In a very true sense, landlords are going to need to see some ‘big ticket’ state support/announcements/u-turns/activity in order to feel confident in adding to portfolios – and that’s before we even think about Brexit and what it may/may not mean for the overall UK housing market and its ability to be fit for purpose not just now but in a ‘out of EU’ future.
With everything changing in this regard, we are likely to see the status quo retained for the short-term future, but I wouldn’t rule out some sizeable changes in the months and years ahead, especially if the government is able to come to the conclusion that the private rental sector, and those who work within it, are not something to be punished but should actually be encouraged.
Bob Young is chief executive officer of Fleet Mortgages