The deputy mayor of London, with special responsibility for housing, says the enthusiasm of buy to let investors can boost housebuilding volumes in the capital - but only if individuals choose not to become landlords.
Richard Blakeway is instead urging buy to let investors to be encouraged to put their money into pure investments, such as Real Estate Investment Trusts, rather than “cannibalising existing stock” by purchasing existing homes to let out.
Writing in City AM Blakeway says: “Why not invest through a vehicle – such as a Real Estate Investment Trust or a similar fund – rather than take on the hassle of being a landlord? ... It would offer flexibility, liquidity, and diversify risk away from the price of a specific home. ... In the long term, these vehicles could support the increased supply of homes, in contrast to the current fears that landlord activity may be inflating prices.”
He says REITs - which since their introduction in Britain have been seen largely as means of investing in commercial property - would be particularly suitable for ‘pension freedom’ investors.
“While there is no doubt that [current forms of] buy to let has supported many new build housing schemes, around two thirds of its growth has come from the secondary market. The mayor and governments have explored how the rental market could contribute more to net new supply, rather than cannibalising existing stock, with a purpose-built-for-rent offer emerging in London” he writes.
“This is essential for a city seeking to double housing supply.”