The Government’s cuts to social housing may cause “carnage” in the private rental market, according to Precise Mortgages.
Chancellor George Osborne today announced in his comprehensive spending review that while the terms for existing social housing tenants and their rent will remain unchanged, new tenants will be offered rents at around 80 per cent of the market rent.
The chancellor forecasts this will allow the building of up to 150,000 new affordable homes over four years.
Precise Mortgages managing director Alan Cleary (pictured) says: “Now that the Government has effectively handed social housing to the private sector, we are destined for carnage if lending continues at the current rate.
“The private rental sector needs to be thriving if it is expected to cope with the massive rise in demand. At the moment, lending in the buy-to-let market is down 80 per cent on its peak and there is little sign of it clawing back any lost ground. Only a handful of lenders are interested in servicing it and that is nowhere near enough to meet the oncoming tsunami of demand.
“The Government should have considered this when it planned its cuts to social housing. It must provide incentives for lenders to lend and for professional landlords, who are in the market for the long term, to invest further in the sector. If the Government fails to provide some safety-net for the private rental sector we could be heading for a housing disaster.”