The private rented sector has started to pick up some of the slack of the undersupply crisis harming the housing market, but many landlords in high demand areas are asking for rent tenants cannot afford to pay and in low demand areas small scale investors find themselves with hard-to-let properties. A new type of approach is needed in 2013.
Clearly, house builders and government alike are struggling to deliver a sustainable market, while empty houses continue to blight communities across the region. Building more homes, at affordable prices, with improved access to finance, is the step that everyone knows we must take.
However, the logjam in the housing supply chain, coupled with growing demand caused by rising levels of household formation, means that more must be done. To do this, the market must start to innovate.
One innovation that will characterise the housing sector in 2013 will be the rapid growth in institutional interest in the private rented market.
For London and the South East, the term institutional is relatively easy to define. It means serious investors – annuity funds, private equity, debt providers and to a lesser extent the bond markets – working in partnership with major contractor-developer organisations and large established private landlords.
Their investments will be in high demand proven markets, providing housing choice to young, working professionals priced out of home ownership in need of good quality privately rented housing.
For the North West and in particular those areas outside of the successful urban centres the term institutional is likely to mean something different altogether.
Whilst the need for high quality and affordable property will still prevail, low levels of traditional investor appetite in markets that remain unproven or challenged – basically anywhere outside of central Manchester, Liverpool and North Cheshire – will see institutions having to be forged together from local government, the Government's housing agency the Homes & Communities Agency and, more enlightened social landlords.
However, as is often the case where such partnership innovation is required, the stimulus for the formation of such structures is unlikely to come from within the sector itself.
We saw this in the early 1990s, where new, bold and innovative organisations helped to bring public and latterly private organisations together to spawn a generation city centre and urban development and living.
In 2013, we will also start to see similarly fresh and innovative partnerships emerge.
- Martin Ellerby, associate director of Manchester-based specialist empty homes developer PlaceFirst