Social housing cuts will affect landlords

GARY BAILEY, DIRECTOR, CHESHIRE MORTGAGE CORPORATION
GARY BAILEY, DIRECTOR, CHESHIRE MORTGAGE CORPORATION

Despite plans to build 150,000 affordable homes over the next four years, the chancellor’s announcement that social housing funding will be cut by more than 60% and new tenants will have to pay higher rents is likely to impact landlords and residents.

But the major banks are reluctant to lend on buy-to-let and the issue will be compounded by increasing numbers of low income families if the private rental sector is unable to shoulder the burden.

Shared ownership could be an option, but the extent to which this will grow depends on a few factors.

Less capital is likely to be spent on new government-funded properties, but potentially more in the private sector. Depending on their ability to borrow, landlords may choose to take advantage of rising rents and increased demand by investing in further properties.

Affordability will also be an issue, with the most likely candidates for shared ownership having a lower disposable income.

This might make them more likely to choose a rental property, but the fact that social housing rents will be hiked to about 80% of private sector rents means the difference between such a mortgage and rent will be lower than might have been the case in recent years.

Although everyone recognises the need for cuts, the government must create an environment in which shared ownership and lending can grow.

The alternative could be devastating and the public sector may be forced to find more funds to rectify a housing crisis.