The government has announced a raft of new planning measures designed to get Britain building – but will the private rented sector benefit?
Even if investment in new housing increases, low landlord confidence could mean that very little of the new supply will become available to tenants, who already face fierce competition for rented homes.
What is the government planning?
Under the proposals, planning committees will have to follow national standards aimed at streamlining decision-making. They will also be able to set their own planning fees, helping them cover the cost of managing applications.
Development Corporations will also be beefed up so that they can deliver large-scale projects, like the 12 new towns that are planned to be under construction by the next election.
According to politicians, the plan will help deliver their target of 1.5 million new homes in five years – as well as critical national infrastructure projects.
But not everyone is convinced. Berkeley, one of the UK’s biggest housebuilders, has warned that regulations on developers – like the recently updated Building Safety Levy – will slow investment.
However, the company also said it was “hugely encouraged by the change in mindset over planning.” And the industry as a whole seems to be more positive – a survey by Shawbrook found that 59% of developers believe it will be easy to hit the government’s target of 1.5 million homes.
If builders build, who’s buying?
New homes won’t help with the supply shortage in the private rented sector unless landlords invest in them – and at the moment, it doesn’t appear that they are doing that.
Property data firm TwentyCi found that 17.2% of homes listed for sale this year were previously in the private rented sector, up from 11.7% last year. And research from Reapit, released earlier this year, found that only 11.9% of properties sold by landlords are being sold to other landlords. TwentyCi says more than 110,000 rented homes were sold to owner-occupiers in 2024.
Those stats won’t tell the full story – some formerly owner-occupied properties and new-builds will be bought by landlords. But even if the net loss is smaller, any loss means that the supply of rented homes is falling behind demand.
Sector experts have put the fall in private rented sector investment down to several factors, including higher interest rates making mortgages more expensive, tax increases, and fears around other key proposed legislation – the Renters’ Rights Bill.
Letting agents will play a key role in steadying the ship and helping landlords to feel comfortable investing again. Helping them understand their new obligations under the Renters’ Rights Bill and plan their investments in a tax-efficient way (perhaps by owning through a limited company, as record numbers of landlords are now doing) could help the private rented sector to grow with the rest of the housing sector.
