Builders should be allowed to construct property developments free from the quota of affordable housing, a report has recommended.
Waiving the affordable homes quota would allow developers to build more properties for let to boost the private rental market, the government-commissioned report found.
However, critics believe this would make it even tougher for people to get onto the property ladder.
Sir Adrian Montague, chairman of London-headquartered private equity group 3i, carried out the review which called for councils to consider using powers to waive the requirement to build homes for those on lower incomes to buy. Instead they should increase the number of homes built to let, he said.
The review said: “Whilst desirability of affordable housing should not be ruled out, it should be weighed against the benefits already built into market rent developments, in the context of an accurate assessment of the economics of building homes to rent.
“In many cases, it will be appropriate for authorities to waive affordable housing requirements in relation to schemes for private rental, or to the private rental component of larger schemes also including an owner-occupier component.”
A task force should be created to encourage build-to-let investment and the release of unused publicly-owned land for development, the review said.
Sir Adrian said: “It’s clear we must encourage investment in the private rented sector, which has gone through a period of rapid growth and is now relied upon by millions of people.
“My review shows that the rental housing sector offers potential investment opportunities of interest to institutional investors.”
Grant Shapps, the housing minister, said the report could be a “blueprint” to expand the sector.
Shapps said: “We’re determined to encourage greater investment in the build-to-let market and boost the country’s private rented sector, which plays an integral role in meeting the nation’s housing needs and aspirations.
“In the past it’s often been seen as the Cinderella of the housing market, but when over three million people rely on this sector for their home, this is clearly no longer the case.”
FirstRungNow.com managing director Helen Adams said: “It is very important that when house builders develop a plot they have an obligation to supply housing that is affordable for younger people and those who are less well-off in the area.
“In many areas the only way onto the property ladder is through shared ownership or shared equity schemes. If anything, the government should be looking to increase affordable housing.”
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