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BPF criticises Govt failure to support billions of pounds in new housing investment

The government is failing to grasp the opportunity offered by the Homes and Communities Agency’s plans to encourage pension funds to build large scale private rented developments.

The HCA, the government’s housing super agency with a three-year budget of £18bn, has been working with investors to secure billions of pounds of additional housing investment.

In June, the HCA received expressions of interests from over 60 firms including Aviva, Legal and General, ING and Grainger, the UK’s leading private landlord.

Speaking at the RESI conference in Newport today, HCA chief Sir Bob Kerslake said that the Agency was keen to progress the initiative and was prepared to offer site-by-site assistance and access to new housing and land via its Kick Start and Public Land initiatives.

Kerslake also said that the issue of rental support was still on the table but that it would be provided on a site-by-site basis. He was, however, unable to offer any indication of wider financial support from Government at this stage.

The HCA’s Private Rented Sector Initiative wants to raise between £1bn and £2bn. But despite the massive interest from the property industry, the government has so far failed to provide the sort of financial support that would help overcome the nervousness of potential investors. The BPF has criticised ministers’ reluctance to make any financial commitments, even though comparatively tiny sums could spark massive new investment into the beleaguered housing and construction sectors, creating thousands of new jobs.

Liz Peace, chief executive of the British Property Federation, said:

“While we very much welcome what Sir Bob has said today and commend the HCA for introducing some new ideas, these will not in themselves lead to sustained institutional investment in private renting. We need proper ministerial support if we are to make greater in-roads into the massive housing shortage in the country.

“Certainly there is no lack of interest from the institutions - or will from the HCA - but pension fund allocation managers are rightly nervous of investing in this initiative when central government is so timid in its public support. The real pity is that there is a severe shortage of finance for building at present and no end to people in need of a home. Build-to-let could unlock substantial sums to invest in housing with just a little more overt and tangible support from government.”

Bill Hughes, chief executive of Legal and General Property, said: “There is a widely held view that this is the sweet spot now for an institutional involvement in the residential market,' said Hughes. 'Institutional investors can attract capital in large volumes and the Homes and Communities Agency must be given credit for generating such interest in the sector. However now that the genie has been let out of the bottle there must be some tangible progress made this year.”

Andrew Pratt, residential managing director Grainger Plc, said:

“Giving developers kickstart funding or land as an equity contribution to progress currently unviable schemes would obviously be a huge help for development projects But to make the professional rented sector a long-term reality, investors will need to see the model de-risked through rent guarantees in the early years of homes. Grainger is seeing a positive growth in demand for quality rental products and we hope that policy makers can begin to reflect on the fact that it is now or never for developing a large-scale sustainable rental market.”

Contact the BPF on 020 7828 0111

For more information and all PR and media queries, please contact Andrew Teacher, Head of Media, on 020 7802 0113 or 07968 12 45 45 or ateacher@bpf.org.uk, or James Anderson on 07784 376888 (Trade press) janderson@bpf.org.uk