Brian Kilroy is business development manager at BLP Insurance
The Private Rented Sector (PRS) is a well assured model, particularly for developers and investors. There are an increasing number of schemes across the country currently in the negotiation phase and there is a real opportunity to bring more of these to fruition, particularly using institutional money. This has to be the way forward.
When we talk about PRS in terms of policy and strategy, we are all in agreement. Where all involved parties need to overcome their differing opinions is how these schemes will look and operate, both in terms of places to live and as vehicles for investment. Should design be approached for a type of tenant or asset class, or do we continue to pursue the specific build model which builders and the market are familiar and comfortable with? Housing is at the top of the agenda right now and a major concern across the country. With significant cross party support, local authorities, private developers and institutional investors all need to work together to meet the political, investor and tenant demand.
Ultimately, the why is more important than the what, and councils need to understand both the motivation and the benefits. It is crucial that all local authorities are aware of the merits of build-to-rent as a concept. The attractiveness of the revenue model for PRS should not be underestimated. By turning a surplus site into an income stream, which could essentially provide revenue to support services in the local area, there is a longer term benefit to local authorities. Revenue returns are far more attractive model than capital release. Against a tidal wave of regeneration, there is also a critical role for PRS in accelerating a sense of pace making in large scale redevelopment projects.
Discussions with local authorities need to be evidence based, highlighting clearly and transparently the benefits for all parties involved. With over 300 local authorities in England and the differing nature of every single project, there can be no one hard and fast rule. What is required is a set of minimum standards around management to help drive the asset forward. Mandatory registration of landlords is a clear example. Only by taking steps to remove the stigma that private rent is difficult to manage, can we hope to achieve a more even level playing field between PRS and owner-occupied units.
There is a real responsibility to build quality properties which are fit for purpose for the long-term. The last thing anyone wants is to have to knock down these properties in 25 years and face the housing shortfall from scratch again – this would be a complete failure. This is an exciting opportunity to innovate and to use new methods of construction, such as build-off-site, that are much quicker and more efficient. Questions about regulation and technical standards in the PRS need to take into account these design considerations. A careful balance must be struck so that regulation doesn’t stifle or constrain this opportunity for innovation.
Today renting is no longer a second rate choice: a quarter of Londoners are already living in the PRS and this figure is expected to overtake owner-occupied over the next decade. While the cogs are already turning, we need to address the outstanding issues as a collaborative partnership to keep the momentum going and create a credible and successful build-to-rent sector.