BPF says planners should count private rented homes as affordable

Private rented housing should count as affordable homes under planning rules, a new report on the sector has said.

The British Property Federation, which represents property firms, said developments built to provide privately rented accommodation should be allowed to provide a smaller amount of social housing in order to make prices low enough to attract investors.

The report, a response to the government’s Rugg review of the private rented sector, called for a big expansion of the rented housing. It recommended that the additional homes be provided by large, professional landlords backed by institutional investors, such as pension funds.

The paper argued for tax breaks for big landlords. It said stamp duty land tax should be calculated on price of each home bought rather than the total amount paid when several homes are bought in one transaction. The report said this would level the playing field between small investors and big property firms.

It also said real estate investment trusts low tax vehicles, should be modified to encourage their use for residential property.

The report said the sector needed for a further £100bn of investment in the private rented sector over the next 15 years and added there was a need for privately rented housing amongst those who could not afford to buy.

They also wanted tax changes to incentivise landlords to provide longer term tenancies.

The report asked whether housing benefit, which pays the rent of some tenants, could also pay for repair and maintenance of homes. It said basing housing benefit on market rents would encourage the provision of poor quality accommodation in areas where the market is failing.

Ian Fletcher, director of commercial and residential at the BPF, said: “We’re in a ridiculous position where we have increasing demand yet house builders are stepping out of the market because they have nobody to sell to. If we had a corporate rental sector here as they do in Europe, it would not only mean continued investment and thousands of extra new homes, it would also ensure that the major house builders had someone to sell their stock to and that the public had the benefits of a branded rental sector.”

Abi Davies, head of policy at the Chartered Institute of Housing, thought attempting to redefine affordable housing would be "difficult" but that it was a good idea to look at how the tax system could help the private rented sector.