Looking back on a turbulent 2016 for the property sector, Paul Staley, director at SDL Group, shares his thoughts on how the market can bounce back during 2017, with PRS leading the way.
“There’s little doubt that 2016, with all its upheavals, proved to be a turbulent year for the property sector. Brexit, Trump and a powerful Autumn Statement all contributed to a challenging year across the board.
“However, as we move towards a new calendar year, it’s far from all doom and gloom. The impending changes and legislations announced by the Chancellor did indeed ruffle feathers in some quarters, but it’s the ambiguity surrounding a strategy to implement these that concerns me the most.
“The government now has a key responsibility to support these changes, ensure the correct legislation is implemented which isn’t over burdensome to the sector, whilst dealing with the real problems of rogue landlords and unscrupulous letting agents. With more investment, public and private, moving into the Private Rental and Build to Rent sectors the market is crying out for stability during uncertain times.
“Perhaps the most encouraging news delivered during the Autumn Statement is that Build to Rent providers will have access to the £2.3 billion Housing Infrastructure Fund to help support the “get Britain building” mandate. This fund will undoubtedly help provide a variety of options for investors, but let’s check the small print as is this really new money, or just the re-hashing and packaging of past promises and schemes?
“The continued uncertainty of the bond markets will see investors move towards more fluid, reliable investments, which consistently yields a return on investment. One of those options are Private Rental Schemes (PRS), which the government no longer considers to be a separate entity and is now a viable avenue to help drive housing growth.
“With a government focus on helping the vulnerable still top of the agenda, PRS has added another strand to the property sector alongside the open market and affordable housing.
Schemes such as ‘Right to Buy’ have kept tenants in properties longer than anticipated, and although beneficial for the individual, this has kept Housing Association homes from those who need them most.
“The challenge in 2017 lies in making PRS more desirable for those looking to climb the property ladder, which in turn would help free up the affordable housing stock. This starts with finding the right price for land, in the right locations, and then managing the schemes in a more effective way so its enticing for both tenants and Build to Rent investors.
“Local authorities are understandably under pressure to deliver on the land front, but many simply don’t have the right resource in place to get planning applications through quickly enough. The government does, however, see value in this by rolling out a strategic housing plan across councils to help streamline the process and kick-start more builds.
“There are also growing requests to make Build 2 Rent a new asset class to help bring schemes into fruition. I remain sceptical of this as there are pro’s and con’s to both arguments and I think the Government needs to undertake further research opinion before embarking down this route.
“As the property sector reflects on the past 12 months, it’s more important than ever that we do all we can to help the market thrive once again in 2017. PRS plays a key role in this and now is the time to drive this forward.”