Sir Adrian Montague: private rental market needs boosting

A new report by Sir Adrian Montague today calls for institutional investors to fund the construction of large-scale private housing projects for rent.

by Michael Northcott
Last Updated: 19 Aug 2013

The shortage of housing in the UK has been a government issue since Adam was a lad. But with the population continuing to grow rapidly, and the credit crunch meaning fewer people are able to buy, the rental sector has seen massive growth in recent years. Today, a government-commissioned report by Sir Adrian Montague recommends that the ‘affordable housing’ quota currently required of builders should be scrapped in favour of growing the private rental market. Montague believes that construction firms should be able to charge whatever they like for their houses and that selling most properties to private landlords is the way to go.

Montague is chairman of private equity firm 3i, so it should come as no surprise that his findings come down on the side of institutional investors. He and some of his boardroom pals stand to make a lot of money indeed if the recommendations are taken forward. But the government’s housing minister Grant Shapps is right behind the report, describing it as a ‘blueprint’ for the expansion of the sector. Looks like it will probably go ahead in that case, barring any messy coalition U-turns…

Critics argue that abandoning ‘affordable homes’ quotas will mean thousands of families are locked out of the property ladder altogether because of rising prices. But it is worth noting that property ownership is a peculiarly British preoccupation – in mainland Europe it is the norm to rent rather than to have a mortgage. Nonetheless, the ‘property owning democracy’ boom of the last 30 years stands to be drastically curtailed if the report ends up as government policy…

On the upside, Montague also predicts that removing quotas would create a surge in homes building, boosting the construction sector and providing employment across the UK. Since it would all be privately driven, the money would not have to come from the government coffers and the growth would be organic. The report also looks at ways of getting redundant publicly owned land and buildings made available for development, so brownfield or derelict sites that blight their locales would be sorted out, too.

This could end up being an area of cross-party consensus: Labour want new homes built and Conservatives need a surge of private sector productivity to offset the impact of their austerity plans. Could a bill even be passed without any sniping…?

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