Defining a new use class for build-to-rent developments would essentially standardise how homes for private rent are dealt with by local authorities during the planning process.
However, providing a separate planning definition for these schemes comes with pros and cons that have, until now, left it on the sidelines.
On the pro side, defining a new use class for build-to-lets would:
- differentiate build-to-let schemes from housing for sale, and provide a specification in UK planning guidance for affordable commitments;
- increase the viability of rental schemes by not forcing developers to compete with those that are building housing for sale; and
- allow build-to-let schemes to be written into local authority housing targets.
On the con side, defining a new use class would:
- prevent sites from being broken up and sold for sale as a last resort, which is a key requirement for new residential investors wanting to ensure an exit strategy;
- have the potential to lower development value, by limiting the use of residential blocks;
- deter future investment into the sector through over-regulation.
Possible alternatives to defining a new use class exist and local authorities can already use existing flexibilities in the planning system to enable private rental developments;
- rental covenants guarantee
renting for a specified number of years. This has been adopted by the Greater London Authority and used in the first schemes in London; - tenure blind, pepper-potted affordable rental housing has also been used in schemes in lieu of affordable housing. This was used in Essential Living’s Creekside Wharf in Greenwich, SE10.
In 2012’s Montague Review, it emerged that it was not just developers that did not want a separate use class. Government did not want to enforce more planning regulations alongside its localism agenda, while local councils also worried about half-finished rental blocks that could not be sold into the for-sale market if things went wrong littering the landscape.
