Telford & Wrekin Council is planning to build
550 homes for the private rental sector on its flagship Southwater
development over the next three years, it was reported this week.
The council said it was seizing "a significant commercial
opportunity" that would provide "valuable new income" through rents
and the government's New Homes Bonus.
Telford & Wrekin is a stock transfer authority which owns no
social housing, but, interestingly, may soon become a landlord
providing housing at market rents. Interestingly, the news story
emphasises the business case for providing these homes, but does
not say where they fit in the council's housing strategy which
emphasises the shortage of affordable homes in the borough.
Nevertheless, Telford and Wrekin join a growing number of councils
looking to stimulate new developments for market rent in their
areas, reflecting a growing demand from households on moderate
incomes who might formerly have looked to buy. Oddly, this is often
described as a growing demand for "private" renting, but it isn't;
it is a demand for rented housing from people who can afford to pay
market rents. Demand for market renting would be a better
Private renting implies a private landlord and the current
shorthold tenancies which are designed to make landlording work as
a business by making it easy to get possession when they need to.
The private rented sector is also rife with restrictive tenancy
conditions long limiting tenants' rights to redecorate, improve or
adapt their homes.
Many tenants accept insecurity and restrictive conditions only
because they have no alternative. If renting is to become a longer
term choice for a growing number, tenancies more appropriate to
longer term occupation need to be made available.
It is debatable whether granting longer tenancies is such a big
disincentive to private investment in the sector; some evidence
suggests that some institutional investors, such as pension funds,
may be relatively comfortable with a longer term investment even if
they cannot cash in their asset at short notice.
But there are also good arguments for social landlords getting
more involved in the provision of market housing because they are
able to provide the security and, just as importantly,
accountability, that longer term tenants expect and deserve.
Housing associations looking ahead to a world without grant are
already moving into this space. Councils ought to be thinking about
doing the same.