Starter Homes plan could 'kill off' emerging build to rent sector

Proposals to require all 'reasonably-sized sites' to include a proportion of discounted Starter Homes threaten to 'kill off' the emerging build to rent sector 'before it gets going', a property industry lobby group has warned.

East Village: high profile build to rent scheme now provides 1,439 rental homes in London (picture by diamond geezer, Flickr)
East Village: high profile build to rent scheme now provides 1,439 rental homes in London (picture by diamond geezer, Flickr)

Giving evidence yesterday on the first day of the Housing and Planning Bill’s committee stage, Ian Fletcher, director of policy at the British Property Federation, warned over the impact of the bill’s provisions on Starter Homes on so-called build to rent developments, which are designed and built specifically for renting, offering longer tenancies.

The Housing and Planning Bill includes a new duty for local planning authorities to ensure that Starter Homes are delivered on all "reasonably-sized sites".

But Fletcher warned: "A site-specific requirement for Starter Homes does not really work with build to rent and could kill off that sector before it gets going."

He explained: "The reason a site-specific requirement for Starter Homes does not work for build to rent is that the institutions that invest in that sort of accommodation do so for 10, 20 or 30 years and want to have control over the development to ensure it remains a quality place to live. If you have a specific requirement for some Starter Homes, they lose control of their investment."

Fletcher added that the build to rent sector mainly seeks to build at scale and investors are "adamant that they will not invest in broken blocks; they want to keep control of their products".

He said: "Many of them are introducing new concepts to the private rented sector in the UK in terms of branding and so on, and once you lose control of a part of your development you cannot get that back and you do not know where it will go. An individual may buy a Starter Home and sell it after five years into the buy-to-let market, so you cannot keep control of that development."

Speaking during the same evidence session, housebuilders welcomed proposed powers to give automatic permission in principle for new homes.

Andrew Whitaker, planning director at the Home Builders Federation, told MPs that in "many, many" cases, applicants are required to discuss the principle of development at length, even where a site has been allocated in a local plan.

He said: "I think what this will do is ensure that local authorities, when allocating sites, do a lot more due diligence about whether they are committed to bringing that site forward for development."

Brian Berry, chief executive of the Federation of Master Builders, said: "I think it is particularly attractive to small builders, because getting the permission in principle at the beginning gives them the confidence actually to bring the application forward. It also means they are not having to spend large sums of money on providing technical details at the first stage."

Earlier this week, planning minister Brandon Lewis said that, while it is the government's intention for all 'reasonably-sized' schemes to include a proportion of Starter Homes for first-time buyers, it will be for councils to negotiate with developers the mix of affordable homes for rent and Starter Homes contained within section 106 deals.


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