Affordable housing provision should be waived to boost private rented housing says Government commissioned report

The report (28-page / 272KB PDF) by Sir Adrian Montague summarises the results of a review of the barriers to institutional investment in private rented homes.

The report states that housing land prices tend to be fixed according to the price that can be achieved by selling the housing to the owner-occupied market and the result is that developers wishing to build housing for the rental market will therefore compete for land with those building for the owner occupied market.

The result, according to the report, is that "land values based on rental tenure...will often not be strong enough to support the imposition of extensive affordable housing obligations".  

"In many cases, it will be appropriate for authorities to waive affordable housing requirements in relation to schemes for private rental, or to the private rental component of larger schemes also including an owner occupier component," it said.

"Any strategy to boost the number of new rental homes should not come at the expense of new affordable housing" said Mike Jones of the Local Government Association in response to the report.

However the National Housing Federation, which represents housing associations, welcomed the report “We absolutely support the Montague report’s call for reform of, and more investment in, private (market) rented housing. It will be a crucial part of the solution to help tackle the country’s desperate housing shortage," said David Orr, chief executive of the NHF.

The report also states that the Government should provide practical support and guidance on the use of planning tools such as planning conditions to ensure that new homes remain in the rental sector for a fixed period of years.

"A term of 10-21 years seems a sensible benchmark for authorities to aim at. Whatever the period selected, this should mean that land values used in calculating developers’ and investors’ business plans would reflect the land values based on rental tenure rather than theoretical valuations based on sale," the report said.