BPF: Build-to-let market will encourage housebuilders back

The government needs to promote a build-to-let market to encourage developers back into the housing market, according to a report by the British Property Federation (BPF).

The Future of Renting report, which will be handed to housing minister Caroline Flint at its annual conference today, states that a professional rental sector, which is funded by institutions, could provide the capital for a build-to-let sector and help reduce the current risks of development.

“We’re in a ridiculous position where we have increasing demand yet housebuilders are stepping out of the market because they have nobody to sell to,” said BPF residential director Ian Fletcher.

“If we had a corporate rental sector here as they do in Europe, it would not only mean continued investment and thousands of extra news homes, it would also ensure that major housebuilders had someone to sell their stock to and that the public had the benefits of a branded rental sector.”

The report, which follows on from the government's Rugg Review of the private rented sector, points out that ways to encourage a build-to-let market include:

• Widening the definition of affordable housing to allow developers to build market rentals.
• Give special planning treatment for rental-only developments.
• Cut unfair stamp duty rules that unfairly penalise large investors.
• Refine the REITs (real estate investment trusts) structure to open up to housing, as originally intended.