Housing is again at the centre of the political debate. We all agree that there aren’t enough new houses being delivered and more houses are essential to meet demand and boost the economy, but still the numbers are low. In England and Scotland the number of housing completions has been increasing, but numbers are still well below the pre-recession peak, and numbers will have to be much higher if the massive pent up demand is to prevent another round of excessive house price inflation. Further to that, some young people seem to be almost giving up on the dream of owning their own home and seem to be increasingly resigned to accepting that they may not ever become property owners. Press coverage this week declared the arrival of ‘generation rent’ with the number of young people saving for a deposit for a house having fallen by another 6%. At the same time, failure to deliver new homes is driving up demand and prices on a scale not dissimilar to the peaks of the mid 2000s.
So is owning a home becoming a ‘pipe dream’ for average wage earners, and what can be done to deflate what may quickly become yet another house inflation bubble. Well, building new private houses for sale is of course an urgent matter and something that is badly needed, but housebuilders will only release new houses in controlled numbers at the sites they are developing. No new site will suddenly bring hundreds of new homes onto the market. Building up numbers that way is of course critical, but we won’t see a massive rise in housebuilding through housing for sale alone. Nor will there be lots of new houses for rent coming through the traditional public sector channels. Councils and housing associations will face challenges accessing the capital that might see numbers rise in any substantial way, so how do we deliver more homes quickly.
Well, one obvious solution that is attracting increased attention is the private rented sector. Most big cities in the UK have significant shortages in private rented housing. What could make a real difference – and quickly, to delivering new homes would be to fast track the private rented sector. Once a developer secures funds for a private rented development, there’s nothing to stop it building out the whole scheme – unlike what happens with big sites of homes for sale. There are some good examples of developers pressing ahead with proposals for major new developments in some cities, but the numbers are still comparatively low. So how do we drive numbers up?
Well, at the most recent Scottish Property Federation Conference, a (fairly) new Private Rented Sector ‘Champion’ was on hand from Homes for Scotland to outline exactly how the private rented sector (PRS) could speed up delivery. Development ‘heavyweight’ Gerry More is the champion of a new drive to raise awareness of, and help deliver, more opportunities for the private rented sector in Scotland. In an initiative that has Scottish Government support, More is determined to make the most of his role and the opportunity. Given that the PRS is underdeveloped in Scotland and the UK, there should be opportunities. The champion has been looking towards the student accommodation sector for lessons in how to drive forward a model that will deliver real numbers. Whatever the arguments about the relative merits of different models of ownership in housing, there can be little doubt that the PRS seems to be an idea that’s time has come. Large scale new developments can be advances in sufficient numbers to make a meaningful dent in the estimated need of over 450,000 new homes in Scotland by 2035, and hopefully within a relatively short timescale. That has to be good news for choice in the housing market, good news for jobs and good news for meeting housing numbers. Whilst not a ‘silver bullet’, there can be little doubt that Gerry More’s time should be well spent and whatever the background noise of the current General Election, private renting will play a much higher profile role in meeting our future housing needs.