Corporate rentals -the next housing scam

Sat Dec 18 17:04:12 GMT 2010



            Having wrung the last penny out of the supply of houses for sale, pushed up house prices
 till no-one can afford, and  numbers sold drop off a cliff, the same criminals are now switching tactics.   The rental sector  is now to be  manipulated till it's yields are sqeezed dry.
The same criminals , the corporate housebuiders obligingly inflated the market for the mortgage lenders. They packaged  then sold on the mortgages as 'assets' then thebubble burst.  
What is thenew scam? -read on - a new kind of asset - rented portfolios are to be traded. 
The common theme is that both selling overpriced houses and  renting out rackrented houses  at  ever growing rates ensures control of a resource necessary to human life, is kept in the hands of the monopolist corporations who can then exploit the house less. 
The escape clause is hidden in the deliberately obscure phrase, 'bespoke units'
This is in fact self build houses which are hugely popular in Grmany and France and also here- perhaps becuase they cost 50% of spec built houses.
I am  campaigning to promote self build as the way forward in UK,  The 'experts' have just discovered that self build is the  biggest supplier of ne whoues in UK , but this would not suit the  corporate sector and the Homes and Community Agency since at half price the  mortgage market would also reduce by 50%.
James         

    
			Rental boom drives demand for 'build to let' investments
				
					With the dream of homeownership fading – the average age of a first-time buyer is now 37 - more people than ever opt to rent
		
				
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					                        	        	        	            Julia Kollewe
				        
			guardian.co.uk,			
																		
				            Friday 17 December 2010 16.33 GMT	        	        
         
		
			Article history
	
			
								  Developers aim to capitalise on the demand for 
homes to rent, as homeownership becomes onerous. Photograph Christopher 
Furlong/Getty Images
									
	
	An Englishman's home is his castle and the housing market has long reflected people's desire to own their home. Property
 prices have come close to becoming a national obsession and it is hard 
to imagine TV schedules without the plethora of shows about buying, 
doing up and selling bricks and mortar.But things are beginning 
to change as a number of powerful factors suggest that Britain is 
increasingly becoming a nation of renters.Last year saw the 
lowest number of new houses built in Britain since 1924, and many 
would-be-buyers are still struggling to get a mortgage. With the dream 
of home ownership fading – the average age of a first-time buyer is now 
37 – more people than ever opt to rent.The market shows the 
trend. The average monthly cost of renting a home rose in November to a 
record £692, the tenth month in a row when they have gone up, according 
to a survey by LSL property index this week."It is more 
acceptable to rent now in London and in the big provincial cities," says
 Neil Gardiner, residential property manager at Aviva Investors. "We're 
drifting towards Europe and other parts of the world where people are 
waiting longer before settling down."The growth in single-person 
households and the forecast rise in the population from 60 to 70 million
 over the next two decades will send demand for rented properties 
soaring. But Britain still has a long way to go – two-thirds of 
households are owner-occupiers while in Germany, a similar proportion 
are renter-occupied."We are going to become more and more 
continental European in our attitude," predicts Debbie Taylor, director 
of development and residential consulting at BNP Paribas Real Estate.
 "We need to look very closely at the continental European model. 
France, Italy and Germany don't have speculative building. They build 
their own bespoke units or rent."Traditionally, the UK rental 
market has been dominated by small buy-to-let landlords, who have bought
 one and two-bed apartments from housebuilders. Now, with rents rising 
and house prices falling, big institutional investors and some 
developers are entering the market to build mass rental homes – creating
 a new "build-to-let" sector.To alleviate the UK's chronic 
housing shortage, the Homes and Communities Agency, the housing quango, 
agreed in September to back Berkeley Group to build homes for private rent in the first deal of its kind.The
 housebuilder is to construct 555 homes in London and southern England 
over the next two years which will be owned and managed by a private 
rental fund set up by Berkeley. The deal could form a model for future 
development schemes, although Steve Turner of the Home Builders 
Federation is sceptical."The business model is based on buying 
land, building and selling homes and reinvesting the money to buy new 
land. It's not really in the business model for housebuilders to become 
long-term owners," he says. But he welcomes the fact that institutional 
investors are coming in to help reduce the shortage of houses, which 
approaches 1m homes. "We've got a huge housing crisis."Some 
experts believe the shortage of affordable housing across the country 
could get worse, following the government's spending review. An average 
26,000 fewer homes were built each year between 1997 and 2009, according
 to the Department for Communities and Local Government, the lowest 
peacetime house-building rates since 1924. As a result, 5 million people
 are now stuck on social housing waiting lists and 250,000 social homes 
are overcrowded, according to the government. "Clearly this system is 
broken and needs a radical overhaul," communities minister Andrew 
Stunell admitted last month.The spending review included a number
 of changes to social housing, including increasing social rents to 80% 
of market rents to allow 150,000 homes to be built over the next four 
years, introducing fixed-term tenancies for new tenants, and slashing 
the budget for building affordable homes from £8.4bn to £4.5bn.Creating an asset classThe
 HCA launched its private rented sector initiative in May 2009 to 
encourage institutional investors into the market. "The original 
intention was to attract institutional investors such as pension funds 
who put money in a fund that buys homes. The return goes to the 
investment fund and re-invested," explains Robert Davies of the HCA. "We
 want to create a new asset class. What we'd like to see is as much 
investment in the housing supply as possible through this route to 
mirror what you see in Europe and the US."The agency is working 
with Aviva as well as a joint venture between Aegon Asset Management and
 property development firm Terrace Hill to create private rental 
investment funds.  Jones Lang LaSalle's investment management division 
is also setting up a similar fund.Aviva, the insurance group, is 
in the process of creating an investment fund to buy and rent out 
new-build homes and is seeking to team up with a developer. "We could 
well look at acquiring finished blocks or working with developers to 
build them," says Gardiner.Aviva Investors wants to fund the 
construction of purpose-built blocks of 100 or more rental flats, 
targeting professionals, in the south-east. The fund is to be launched 
early next year.At BNP Paribas Real Estate, Debbie Taylor and 
Chris Carter Keall, senior director of fund management, are also setting
 up a private rented sector fund that is expected to launch at the end 
of 2011 or start of 2012."The possible yields of 5% to 7% make 
this a very attractive investment avenue if the hurdles can be removed,"
 says Taylor. Encouraging funds to enter this market would create a new 
investment class providing secure income streams and funding for 
developments.Most of the private rental schemes focus on London 
and the south-east where the housing shortage is most acute, partly 
driven by migration from Europe, though Gardiner says Aviva might 
introduce its scheme in other parts of the country.But he adds: 
"It is unlikely that the banks will provide either the terms or the 
volume of lending for residential purchases that they did up until 2007,
 in the foreseeable future. That is why institutional investment in the 
rented sector has become more critical, to increase the amount of rental
 stock for those that cannot easily get on the housing ladder."Rental yieldsThe
 private rented sector has grown by 1.1 million households in the past 
decade and is now worth £500bn, dwarfing the value of the commercial 
property sector, according to property consultancy CB Richard Ellis.A
 combination of stable rents and lower capital values has pushed yields 
out. Over the last five years, residential property has generated an 
average return of 6.8%, well ahead of commercial property at 1.8%.Iain
 Hutchinson's London Rental Housing Company is trying to provide housing
 for the growing "sandwich" class of working families who cannot get 
into social housing or onto the housing ladder. It is taking the 
"no-frills airline approach" and building robust three-bed affordable 
flats and renting them out at £300 a week – below market rents and under
 the housing benefit threshold.Hutchinson warns that if the 
housing crisis is not tackled decisively, we could see severe 
"disharmony" in coming years. "There's going to be a lot more people in 
overcrowded housing, a lot more street crime – it's going to be quite 
unpleasant."

						
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