Exclusive: Homes for rent plan to tackle city crisis in housing

COUNCILS in Yorkshire are looking to invest millions of pounds in a pioneering project to build new houses for rent as a way of helping families squeezed out of home ownership and give a boost to the region’s economy.

David Green
David Green

The Leeds City Region is asking for a £16m loan from a Government agency to part fund a project aimed at helping families struggling to get on the housing ladder.

The money would be used to build homes, in partnership with a private developer, which would in turn be let by a management agent.

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Once built and let to tenants, the scheme – covering a number of sites – could be sold as a going concern to a property investor or pension fund and the money re-invested.

The houses would be aimed at salaried workers who do not qualify for affordable or social housing but are unable to secure mortgages as banks and building societies demand higher deposits in the wake of the credit crunch.

There is a shortage of decent quality private sector rented housing in Yorkshire, with investors and developers unable or unwilling to take the risk of building new homes for rent before they are sure there is a market.

The Leeds City Region has asked for £16m from a £200m fund, managed by the Homes and Communities Agency.

David Green, leader of Bradford Council and chairman of the city region’s housing and regeneration board said: “Our proposals will help stimulate much needed new homes for young people and families unable to afford home ownership, whilst supporting new construction jobs and long term investment in housing.

“HCA funding would enable developments across the City Region to go ahead.”

The Leeds City Region hopes that by successfully building and letting a scheme it will encourage private sector investors to follow its example.

The project would also support the construction industry, which represents around six per cent of the region’s economy, as it would focus on the building of new homes rather than buying up properties that are already available.

House-building in the Leeds City Region has halved from the 14,000 per year before the credit crunch to around 7,000 per year now, even though there is land with planning permission for more than 60,000 homes.

Figures published earlier this month suggested someone in their 20s would need a deposit of around £35,000 to buy the typical first time buyer home costing £175,000.

No sites have yet been chosen for the Leeds City Region scheme although they will need to be in areas considered attractive to private investors.

Where the land is owned by councils they might offer it for nothing in return for a share of the proceeds of the scheme.

Councils in the Leeds City Region are in the process of putting together a £400m fund to help grow the economy and private rented housing is being considered as one of the areas where money could be invested.

A spokesman for the PricedOut group which campaigns on behalf of families that cannot afford to buy houses, warned there was a lack of confidence in renting homes. “We desperately need to build more homes, but given the vast majority of people would like to own their own home, building rented property isn’t giving people what they want.

“Private tenants are getting a raw deal from the private rented sector. Until we see tenants’ rights improve, we can’t support a plan that forces even more families into renting,” he said.