Politicians need to do more to stimulate much-needed growth in the private rental sector
Rome was not built in a day. Neither has it proved possible to re-build the private rental sector (PRS) in the five years since I first wrote an article speculating about what this might involve.
In the summer of 2008, I took myself off for a short break in Suffolk having just been through a painful restructuring of HTA brought about by the collapse of the housing bubble and the ensuing credit crunch. With the end of subsidised housing in sight, the banks and building societies bust, I was keen to explore how we might meet continuing demand for more and better homes.
Looking back, I got a lot right about what a re-born PRS might look like. But I completely underestimated the timescale involved in the task. The understanding gained by my practice in the intervening years is a virtual encyclopedia of object lessons, for politicians especially, about the damage that can be inflicted on an entire market segment and means of production by overzealous policymaking.
It’s tempting to forgive the Labour government’s reaction to Rachman’s excesses of the sixties, but in hindsight the annihilation of a long tradition of private renting proved to be a disaster.
There was a time when the ability for young workers to access well-managed private rooms was taken for granted, part of the culture and referred to in the literature of the day:
“There is a furnished little set of rooms in the Adelphi, Trot, which ought to suit you to a marvel…
… to be let furnished, with a view of the river, a singularly desirable, and compact set of chambers, forming a genteel residence for a young gentleman with immediate possession. Terms moderate, and could be taken for a month only, if required.” Charles Dickens, David Copperfield, 1850.
Of course, in building the Adelphi, the Adam brothers faced many of the difficulties being confronted by today’s entrepreneurs seeking to build for rent. But for sure, in the last 50 years, political hostility to the private rented sector has systematically undone the work they started in the late eighteenth century.
What I did not fully understand in the summer of 2008 was that just about every cog in the mechanism of private rented housing development had been systematically removed:
- Among institutional investors in the UK there was no recognised investment class to put money into
- The were almost no ‘investment grade’ management companies in the UK capable of guaranteeing investors a return for their equity
- There were no branded rental companies for renters to chose from - I coined ‘Easylet’, calling for the Stelios of private rent to come forward
- There were and are no design standards suited to PRS businesses, which work in some respects much as hotels do
- The planning system did and does not properly acknowledge the part played by PRS and there is no suitable use class for it
- By comparison with the United States there were no recognised building typologies suited to PRS business needs.
We have made much progress since and it looks as though we may be on the brink of some significant new developments at last. There has been government support following the Montague Review, especially from the GLA with the PRS Covenant and DCLG with the oversubscribed PRS fund.
But after the havoc that has been wreaked on the sector by politicians, I stand by the appeal in HTA’s ‘LetsBuildtoLet’ blog that politicians need to do more to repair the damage. The leading spokesmen from both sides still give the impression of being too hamstrung by their respective political legacies to really give PRS the support it needs if we are ever going to see it emerge at any scale.
Jack Dromey comes across as being hobbled by the left who still call for rent controls that would stop the whole movement dead in its tracks and kill new supply at one fell swoop. Mark Prisk belongs to a party that dare not depart from its Thatcherite dream of a property owning democracy and given the choice would rather risk a housing bubble.
Both should get closer to the young voters who want nothing less than to risk their savings in a nightmare of negative equity, and nothing more than to live independent economic lives in affordable high quality accommodation; like Holmes and Watson:
“We met next day as he had arranged, and inspected the rooms at No. 221B, Baker Street, of which he had spoken at our meeting. They consisted of a couple of comfortable bed-rooms and a single large airy sitting-room, cheerfully furnished, and illuminated by two broad windows.” Arthur Conan Doyle, A Study in Scarlet, 1887.
Ben Derbyshire is managing partner of HTA Design