The manifesto criticises the current quality of some rental accommodation and recommends that institutional investment could improve standards in the sector.

The manifesto reads: “A large and accessible private rented sector is essential to a successful world city and provides good housing options for many who seek flexibility and mobility in London’s service-driven labour market. But despite many improvements too many landlords still provide poor value for money, inadequate maintenance and poor management.

“We will work with pension funds and institutional investors to encourage them to invest in private rented housing which would increase the supply of new homes and lead to improved, more professional housing management. This will include considering how the planning system could encourage such investment.”

This comes amid a widening affordability gap for potential homeowners, with mortgage lending down 70% compared with a year a go. First Direct recently announced it would no longer be offering mortgages.

Welcome the focus

Ian Fletcher, residential director at the BPF, said: “We welcome the focus the London Mayoral election has had on the private rented sector in the capital and this support for a build-to-let sector. It is clear from the current market conditions that many people will still not be able to afford to buy, even if prices continue to fall. The professional rented sector has a key role to play in fulfilling the capital’s housing needs, and those across the UK.”

Andrew Pratt, managing director of residential, at Grainger plc, the largest quoted residential property owner and manager in the UK, said: “The mayor’s housing manifesto shows a positive understanding of the current market and his willingness to work with the property industry to help solve the housing crisis that could be the catalyst in delivering the housing that Londoners deserve. The key element of the housing situation will be supply. There is sure to be a large amount of people needing rental accommodation as fixed-rate mortgage periods end and as home purchase is more difficult to finance. Despite significant structural barriers to institutional investment there are investors that are keen to invest. These barriers can be removed by encouraging build-to-let projects specifically designed for the rented sector, solutions for which urgently need to be further explored.”

UNITE

Mark Allan, chief executive of UNITE Group, said: “There are institutions that understand the rented residential sector and are keen to invest, but it is still an emerging sector. The UK residential market has been dominated by owner-occupiers and is consequently very fragmented. In addition there have been significant structural barriers to institutional investment for many years. In order to encourage investment these barriers need to be removed by encouraging build-to-let projects, because you can design and build something different for rent than for resale. There are also hurdles around the perceptions and culture of living in rented accommodation – the ingrained view is that everyone in the UK aspires to own their own home and renting is only a secondary option. There’s a very different culture in other countries and we could learn from them by recognising people who rent because they want to rather than because they can’t afford to buy.”

Jennet Siebrits, head of residential research for CBRE Residential, said: “Build-to-let investors should not be deterred by a weaker housing market. The availability of funding may decrease because of the impact of the credit crunch, but this should not hamper cash-rich investors. Build-to-let represents a potentially large, untapped market that could be filled by institutional investors. The private rental sector has been buoyed by social and economic changes and, although owner occupation is the tenure of choice, increasing numbers of young professionals are renting for longer.”

Yolande Barnes, director of research at Savills, concluded: “London has for a long time had a much larger private rented sector than the rest of the UK and this has been an important source of accommodation for many households in the capital, especially for the younger and more footloose. The big challenge for London is in ensuring that new areas, mostly to the east of the City, where newly built housing will provide most of the homes, are at least as attractive to potential occupants as the established locations in the West. To achieve this, a wide variety of accommodation types and tenures will need to be created in fantastic streetscapes. Build-to-let landlords with an ability to contribute to, and fund, this variety, as well as the ongoing ability to manage both properties and places, will be an important component of London’s built future.”®Å½