UK property: Tax breaks for build-to-rent sector demanded

UK property: Tax breaks for build-to-rent sector demanded

British Property Federation calls on Chancellor Phillip Hammond to allow more build-to-rent developments to assist the government in meeting housing targets.

Summary:

  • New tax measures should be introduced to encourage more development in the build-to-rent sector, according to the British Property Federation
  • There’s been a 200% rise in build-to-rent units with planning permission or under development in the last 12 months, but the growing demand for purpose-built rental accommodation means more supply is needed
  • Last month Housing Minister Gavin Barwell announced that the build-to-rent sector could now form part of the government’s target of building 200,000 new starter homes by 2020

Greater tax freedoms are needed to encourage more development in the UK’s build-to-rent sector.

That’s the message to Chancellor Phillip Hammond from the British Property Federation (BPF), who believe more needs to be done to meet growing demand for purpose-built rental accommodation.

Latest figures from the BPF show that, over the last 12 months, there’s been a 200% rise in the number of build-to-rent units granted planning permission, currently under construction or completed. However, in key rental markets such as Manchester, around 4,000 new build-to-rent units are needed each year, but just 1,417 annual units are set for delivery over the next eight years.

To drive more development in build-to-rent, the BPF is calling on Mr Hammond to consider changes to stamp duty surcharges on additional homes in his upcoming Autumn Statement, and also to introduce more tailored planning policy specifically for the sector.

“Build-to-rent has been one of the good news stories of the housing market over the past few years and it is great to see quality rental homes now coming on to the market at scale,” says Melanie Leech, BPF chief executive. “The truth is the sector could be delivering so much more, however, if it can find the opportunities and maintain confidence to invest.”

Last month new Housing Minister Gavin Barwell suggested that the build-to-rent sector could also play a part in the government achieving its target of building 200,000 new starter homes by 2020, further underlining the government’s support for a new, better regulated product in the rental market.

With volatility in several investment markets post-Brexit, the build-to-rent sector will be largely resistant to market turbulence created by the result of the referendum, making it the kind of stable, income-generating and long-term asset many investors are currently looking to add to their portfolios.

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