An interesting news item on Landlord Today picks up on a topic mentioned a couple of times by Ben Reeve Lewis – Councils entering the private rented section.
This is Newham Council who, the article states, are planning on buying up large areas of poor quality rented accommodation in the borough (possibly using compulsory purchase orders) and taking over as the tenants landlords.
They would then be able to improve the properties, and offer longer more secure terms to tenants, getting the benefit of higher rents and over time increased property values.
How will they do this?
The authority wants to set up an investment vehicle to buy up poor-quality private rented sector properties. It could also use cash from institutional investors, including the council’s own pension fund. Currently, although local councils are having to make budget cuts, borrowing is cheap.
Interestingly their plans involve renting to employed people rather than just to lower income families on benefits. Mayer Sir Robin Wales in a recent interview said
“We want to purchase property in the private sector and run our own private rented sector. That way we can have longer tenure. That is a big issue for me.”
It will be interesting to see if these plans come to anything. If so it will be a busy year for Newham next year as they will also have the Olympic Games to deal with, much of which will take place in their boundaries.
I love this idea, it is so in keeping with the discussions I am hearing in councils lately. Discussions that would have been unthinkable even 2 years ago.
Councils are changing in their relationship to housing in their area. This really is a ‘watch this space’ development, mark my words.
A good friend who worked in Newham homelessness for years told me that they tried floating this idea a few years back and got slapped down but not this time. Although I have to say the esecution of it wont be as simple as the idea – but that is bold plans for you
And I read today that Notting Hill Housing Trust have raised £120 million by playing the bond market. http://bit.ly/nuKqq2 you see, the public housing sector is learning to play the private sector’s game. This is just the start
And here, the chief exec of Orbit Housing suggests councils and housnig assoications joining forces internationally, which makes perfect sense http://www.guardian.co.uk/housing-network/2011/aug/05/housing-sector-international-services