According to the British Property Federation, the number of rental units which were under construction or with planning permission rose 200% over the past year. Outside London, the figure was an astonishing 400%.
So-called ‘build to rent developments’ are large scale developments built solely for the purpose of renting out to residential or commercial tenants. To date, it is estimated that £15 billion has been invested in these schemes. Potentially, there could be another £50 billion in the pipeline.
The drawback for investors is the stamp duty land tax regime, which imposes an additional 3% duty on buy to let properties. The BPF is lobbying the government to give an exemption to the build to rent sector. Critics would argue that encouraging the rental market will only make property ownership an even more unachievable dream for the country’s “generation rent”, who are priced out of home ownership.
The government’s committed pledge to ‘keeping the country building’ will no doubt have a part to play in conversations at Downing Street regarding stamp duty plans ahead of the Chancellor’s autumn statement. Any incentives Philip Hammond announces in his first statement will give an indication as to the direction the current government wishes the housing market to take in the coming years. Watch this space!