Developers respond by either trying to over-compensate through the specification of the non-social element or they just pull the project completely.
Perhaps if councils tempered their requirements, working with developers, more projects would be viable and delivered. This would likely create the delivery of more social/affordable homes overall, along with the right specification of product, at the right price, for the demographic profile of that area.
So, rental protections are distinct from rent controls. Restrictive regulations, such as rent freezes, are unlikely to help tenants, landlords, investors, councils or indeed any interested party as over-regulation hits supply.
Sound regulation, however, helps both tenant and landlord. A balanced approach, therefore, is key.
Having a more candid relationship with government would benefit each side, hopefully easing anticipated tensions and allowing industry to get ahead of future regulation, alleviating uncertainty – that nemesis of (much needed) private capital.
The merits of independence
If we do end up with rent regulation, who should police it?
It is a statement of fact to say we have had 23 housing ministers since 1997. Stability this is not.
It is possible that the period of political instability may be coming to an end. We can but hope.
But it might not and, in any case, there is little to stop politicking getting in the way of solutions to the housing crisis in future.
What the sector might need is an independent regulator of rents. The Bank of England’s ownership of interest rates is a working template.
And I will hazard a guess that such independence, and depoliticisation, is something you, your clients and their scheme members – in other words the long-term funders of housing – might see as welcome.
If industry, government and local authorities can develop an open and cordial relationship, perhaps regulation can actually facilitate the certainty much sought by the real estate investment industry.
With a frank and open dialogue, a balanced framework can be achieved, benefitting tenant and landlord, and the authorities seeking to solve the shortage of housing throughout the UK.
Paul Richards is managing director of The Association of Real Estate Funds
