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Housing Minister Grant Shapps described the report by Sir Adrian Montague as being ‘a blueprint’ for encouraging more institutional investment into the sector. Currently the vast majority of private rented homes in the UK are managed by individual landlords but the report highlights the potential for investment in large scale development of homes built specifically for private rent by professional organisations. The report finds that a combination of recent tax changes and wider market conditions have cleared the way for this sector to grow. Sir Adrian's report makes a series of recommendations to speed up the timescale for building the private rented homes needed to meet existing and growing demand. 

These include councils using flexibilities in the planning system to plan for and enable developments of privately rented homes where they can meet local need. This could include waiving affordable housing requirements on new developments of homes specifically for private rent, or reviewing stalled sites to see whether some of the new homes planned could be made available to rent rather than sell. It also recommends that a task force is set up to encourage and support build to let investment from the private sector, and to develop voluntary standards that future landlords would meet and tenants could expect. He also said that the government should look to provide a number of targeted incentives to encourage the development of build to let business models, which could include sharing development risk in the short term to get spades in the ground and building started and it should allocate some of the redundant, formerly used public sector land and buildings being released for house building to build to let development, and publish data on how this is done. 

Finally, the report says that the government should work with councils and the Greater London Authority to identify a number of sites where there is good demand for rental housing and make them available to developers on the grounds that a proportion of the homes built be let out to tenants Sir Adrian's review was commissioned as part of the Government's Housing Strategy last November and the government is expected to issue a formal response later this year but today Shapps said the government is determined to encourage greater investment in the build to let market and boost the country's Private Rented Sector (PRS). ‘In the past PRS has 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. 

A major part of this is to attract and encourage new players to the market, while at the same time avoiding the excessive regulation that would force up rents and reduce choice for tenants,’ said Shapps. ‘Sir Adrian Montague's findings offer both a blueprint for achieving this goal, and for setting the standards of accommodation that people should expect. I will be considering his recommendations very carefully,’ he added. Sir Adrian Montague said there needs to be change as the PRS 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. But real momentum has been inhibited by constraints affecting the supply of stock, the treatment of rented housing schemes under the planning system and the need to create confidence among investors,’ he explained. ‘The recommendations in today's report are designed to challenge this, and remove the barriers that prevent the kind of investment that our private rented sector needs,’ he added. The British Property Federation (BPF) today urged the government to accept the findings of the Montague Review. 

With house building at a post war low despite increased demand, and figures from the Office of National Statistics showing UK GDP held back by a weak construction industry, the BPF believes the recommendations in the Montague Review could unleash unprecedented investment in house building from pension funds, insurance companies and REITs. ‘If we are to make headway in housing the nation and boost growth we must look at other ways of getting homes built. Encouraging institutions into building homes for rent has for some time been seen as the holy grail in enabling a long term private rented sector which is designed and built to let and offers renters something a bit different in the marketplace. 

The recommendations in the Montague Review will help address the barriers cited by the institutions and provide an inclusive model, which housing associations, home builders, property managers and construction firms can all participate in,’ said Liz Peace, chief executive of the British Property Federation. ‘Today is not the end of the journey, however, but the start of one. Myths about local authorities being forced to do this or that are just myths. Local councils and the communities they represent are in the box seat on this issue.

 If they want more housing to support their sons and daughters and grandchildren then an institutional private rented sector is an option they should consider,’ she explained. ‘Some councils are tremendously supportive, but we need more to consider this option and to think about the differences between this and the traditional house building model, and perhaps get on board as partners. The Review is offering councils help for those that want and need it, and seeking to provide peace of mind through clearer guidance on how such developments can be treated for planning purposes, and on how they are designed and managed,’ she added.