Chancellor George Osborne allocated a £200 million investment fund for the build-to-rent sector in his Autumn Statement, but under fiscal measures announced in the Budget 2013 speech, the chancellor of the exchequer has confirmed that this will be increased five-fold.
The government will now promote and facilitate the construction of affordable homes for the private rented sector with the provision of a £1 billion pot. This significant boost reveals that the coalition is serious about tackling problems motivated by high demand.
Banks and other mortgage providers were forced to impose more strict lending conditions following the credit crunch, since providing loans to people who could not afford repayments was a main motivator behind the financial crisis.
As a result, a growing number of first-time buyers were unable to make their initial step onto the property ladder. Requirements for large deposits, usually 20 to 25 per cent, at a time when British budgets were being stretched, took its toll considerably on the housing market.
More new households instead turned to renting property, and as such, demand on landlords and lettings agents surged significantly. As a result of shrinking supply, would-be tenants experienced growing difficulty finding suitable accommodation, and were being charged more.
Under-development has been a significant issue, especially as the population continued to grow, and issues were magnified in the rental sector following this change of dynamics. Promoting the construction of more flats and houses is therefore vital.
The government's build-to-rent pot will encourage more building firms to start projects, since it will alleviate some of the financial burden and risk.
Mr Osborne also confirmed that the coalition would further support and enable an increased property stock by reducing red tape imposed on those who want to convert unused retail spaces into residential housing.
British Property Federation (BPF) chief executive Liz Peace said: "Retail to residential conversions could be an important step in breathing life into our high streets, and we would very much encourage a flexible approach."