COMMENT | PRS needs to focus more on families

Comments (11)

David Smith-Milne PlaceFirstOn your commute home from work this evening, remember this: behind one out of every five front doors you pass will be a family, couple or individual renting their house privately, writes David Smith-Milne of PlaceFirst.

Behind another one will be a family, couple or individual renting their home socially. The other three will be lucky enough to own theirs. In the UK, 20% of all households now rent their home privately.

Just 15 years ago, your commute would have been very different.  Just one out of every 10 front doors would have been a private renter, three would have been social renters and the rest would be home owners.

So, here’s a question: is this massive shift in the landscape of our housing market one driven by changing patterns of household formation? Is it driven by changing lifestyle choices? Are our technology-enabled, globalised lives creating opportunities for us all to live differently and more flexibly than our parents did? Or is it really about something else?

There is absolutely no denying that some of the growth of the private rental sector can be attributed to transitioning lifestyle patterns, especially among young professionals.  Behaviours have shifted; graduates and those at the start of their careers are undoubtedly more flexible than ever and not being tied to a mortgage or one place is an important part of that. Migration has increased massively. Divorce rates have also risen. But if you really distil the data and unpick what is actually driving most of the real and underlying demand for privately rented accommodation, there’s one clear conclusion: lack of choice.

Today’s Generation Rent is, in the main, renting not because it wants to, but because it has to. And today’s Generation Rent does not quite look the way you think it might. Far from being a swarming mass of young trendy urbanites and professionals, it is made up largely of families with children. In the last 10 years alone, more than one million more families with children have taken up tenure in the private rented sector to meet their housing needs. Families with kids now represent by far the biggest sub-sector of this growing market.

So why then is all the development focus on city centre apartment blocks? And if families are the principal driver of demand across the PRS sector, why do most of our city centres – which are seeing nearly all the growth of specialist PRS apartment blocks – continue to lack any of the very basic infrastructure, such as swings, roundabouts, football pitches, let alone schools, that allow families to settle and put down roots in a neighbourhood?

There is a message in this that is difficult for a lot of us, including the government, to take on board: families are renting now more than ever before not through choice, but because they are trapped in a housing market that is failing them. We have a dysfunctional housing market where ownership is now substantially beyond the reach of many. PRS growth is a direct outcome of a housing market which throughout the noughties we now know could only work with mortgage instruments that were so distorted that they nearly brought down capitalism across the globe.

You would think that with such exponential levels of growth in this sub-sector that we would see a sharp surge in market activity aimed at families, but we haven’t. You would think that the government might try to intervene, to enable or facilitate a market-led response. The government might argue that it has, but in reality, build-to-rent funding, subsidised bond instruments and a glut of home ownership incentive instruments aimed at first time buyers have done little more than mask over the core and underlying issue: wages for most people have grown at a rate that has been persistently slower than house prices.

If the PRS sector is to genuinely form a part of this country’s long-term housing model and play a role in addressing our housing crisis, those involved in it need to get much better at planning, delivering and managing it. Indeed, if the sector is here to stay, then everyone involved needs to get more serious, do their homework and start delivering actual value for those who need it the most. Perhaps this means less excitement about how tall the next PRS apartment block or how funky the residents’ party room might be, and more emphasis on how we can create places and real homes that provide stability, security and a long-term choice for those who have been let down by us all in one way or another over the last 20 years.

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  • David Smith-Milne is managing director at PlaceFirst

Your Comments

That depends where you drive on your way home. If its Ancoats, you’re looking more like 6/5 homes are PRS

By PrincipalConsultant

“Today’s Generation Rent is, in the main, renting not because it wants to, but because it has to”.

I don’t understand this at all. Also contradicts what a certain other Property developer claims about “generation Y” “choosing to rent”. Buying is accessible and unless somebody only intends to be somewhere for a short period for work or similar, far, far more sensible.

By Dave

Seems to me that you have hit the nail right in the centre of the head!

By John Webster

Quite simple: living costs (including rent) make it difficult for the average person to save enough for a deposit. I’m in the higher tax bracket and have only just got enough together myself.

By Bank of Mumandad

Manchester and Salford’s housing strategy (declared or otherwise) has for some time now targeted high density apartment schemes within the ring road (Mancunian Way, Trinity Way and Great Ancoats Street). Most recent schemes incorporate 3 bed flats and communal garden areas that would (and do) support families with young children. There are also small pockets of housing such as Splash’s hoUSe and McCaul’s Point in New Islington that support the family market.

However, the focus for family houses is clearly outside the ring road and in particular East Manchester where the injection of new housing seeks to rejuvenate the struggling settlements of Bradford and Miles Platting.

There seems little political appetite for the infrastructure that would be needed to support family housing in the city core. Better to use new housing to improve the existing infrastructure in our outlying neighbourhoods (parks, schools etc.).

It is early days with PRS, and what we are seeing is our institutions targeting the ‘low hanging fruit’ of the city centre apartment market. But give it time. Demand will shift and our volume house builders will twig that there is money to be made away from the outright sale market. Also, after a long dormant period, our RSL’s are starting to gear up to change their development models and explore the PRS model.

By Dave McCall

Bank of mum and dad – with respect that’s utter nonsense – I managed it as did several others, all without bank of mum and dad and all with the same “living costs” beforehand. Seems some people just like to say they can’t get on the ladder and then make absolutely zero attempt to. That’s a very different situation to not being able to.

By Dave

Mostly a function of land value, plot ratios and financing options. The basic infrastructure for families is lacking in the city centres. The Council are happy with the higher densities as it means more rateable income down the line.

By Neil at Eastland

Did you now.

Last 2/3 years? Or in the good times when land was cheap and mortgage money filled the air?

By Bank of Mumandad

Houses are still cheap in certain parts of Manchester. These areas tend to be unpleasant and with very poor facilities.

By Elephant

@Bank of MumandDad – earlier this year.

By Dave

Good for you. In my experience, most people, especially those with children, don’t have enough to put away every month to buy anytime soon. Those I know under 35 who’ve bought their first have had help from mum n dad.

And yes, most of GM is incredibly undesirable.

By Bank of Mumandad

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