Supplementary Memorandum by the Joseph
Rowntree Foundation
My colleagues at the Joseph Rowntree Foundation
have made a submission to your inquiry into Rented Housing and
I thought I would add one or two supplementary comments.
First, as the Chair of the Westminster Housing
Commission, I enclose a copy of our recent report,[25]
looking at the problems facing central London. Many of the issues
have wider application.
You will see that both social housing and the
private rented sector get chapters of their own. Some of the points
in these may be of particular interest to members of your Inquiry.
The second issue on which I wanted to add some
supplementary points to those in the JRF submission relates to
the phenomenon of Buy-to-Let: the wall of investment into the
rented sector through (mostly new) private investors deserves
special mention. The Council of Mortgage Lenders suggest that
some £70 billion has flowed into private rented over the
last six years—far more than the housing associations have
borrowed from the private sector over the last twenty years. And
it seems that from its bottom line of 9% of the nation's housing,
the PRS is now up to 12% of the total. This is a remarkable turnaround
in the fortunes of a sector that has been in decline for decades.
My anxieties are that this may not be entirely
a good news story. Since those purchasing properties in order
to let them are not commissioning new development, the phenomenon
has meant increased demand without a comparable increase in supply.
More buyers chasing the same number of properties pushes up prices.
And it seems that this is the principal reason for the sharp decline
in numbers of first-time buyers which I understand to be at the
lowest percentage rate of new purchases since records began.
Coupled with this trend is the shift from the
building of family houses to the construction of high density
apartments. This may have some environmental advantages but there
may be some social consequences. I note that 80% of new residential
building down the Thames Gateway is in one and two bedroom flats.
And yet there is huge demand from families with children who are
looking for houses: the Thames Gateway could provide opportunities
for family living for many of those working in London, as well
as for singles. Indeed, it appears that increasing numbers of
buy-to-let flats are now standing empty. This is two for city
centres in the north of England as much as in London's Docklands.
No one has precise figures but everyone comments on the issue.
It may result from a glut of properties now that the backlog of
demand from those able to pay market rents who need small apartments
is satisfied; or it may result from some investors deliberately
refraining from letting their properties because the purchase
is geared simply to the potential capital gains.
I think these are slightly disturbing reports,
not yet the subject of academic research from the Joseph Rowntree
Foundation but worth the Inquiry pondering.
27 November 2006
25 Not printed. Back
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