By Steve Roulstone

The Montague report which reviews the manner in which the Private Rented Section is viewed by the Institutional Investment market has been released and is available for download from the Department for Communities and Local Government. The basic idea of the report was to look at why Investors do not look upon the Private Rental sector in the same way that they do Commercial property investment.

 The report is a weighty 28 pages of Summary and evaluation, but holds many good ideas and could just see the way forward for our sector as we struggle to meet the demands of a modern mobile work force. It is in three sections and is going to take at least two posts to comment upon, in this first post, I have selected highlights from the Background and Evidence sections in this post. I will follow this up by looking at the Barriers, Conclusions and Recommendations.

 Growth.

 I am a total advocate for the building industry (Housing) being the vehicle for leading the way out of recession. This is why I am always looking at new build and activity and look to the property sales figures of a guidance for where financially we currently sit. It is therefore nice to see clear figures quoted to support my theory. For every £1m spent, 12 jobs are created or supported and for every £1 invested in construction, £2.60 is generated elsewhere in the supply chain. The supporting sources are listed in the report.

 Local or distant Management.

 It struck me quickly when looking at the Evidence that a market exists, that there was a need to build in assured maintenance. I agree whole heartedly, that any long term scheme should include an organised plan for both maintaining of and maintenance on the property concerned. My immediate thought was to ensure the properties are managed locally and not by some distant organisation, to ensure both a distribution of the Management structure and workload through local contractors rather than the majority of the expenditure remaining in London.

 Across the Country.

 To do this, as the report recognises, there needs to be many differing schemes, which, in order to maximise the effect across the Country, as highlighted above, needs to be spread across the country and not concentrating again in the area that generates ever increasing rent levels; London. It is important in arriving at any conclusion that promotes and encourages Investor growth in Private rented property, that the whole Country sees the benefits.

 Wardens.

 Unsurprisingly, the wish to see Wardens or a Management presence in specific developments is a nice idea, but one that is only reflected for affordability, through the size of the initial development. As an Agent who Manages whole sites on behalf of one owner, exactly the type of site referred to in the report or that would be developed as a result of Investors becoming involved, there is a recognisable limit to the size of what are acceptable sizes of development so as not to have to large an impact on the local market, both by type of property available and by long term effect on local suburbs. In short, there are places that high rise buildings fit in and areas where they do not! Wardens suit large buildings but would cost too much for more localised schemes offering between 20 and 40 units.

 Long Term Agreements.

 I think it is a good idea to generate an agreement that sits well for longer than the current popular Assured Short Term agreement, but by the same token, I see no need to do this by changing the AST. As case of ‘It ain’t broke, don’t fix it!’ But a document built around the normal lease as exists for purchasing leasehold property would be ideal. This could still give the Tenant of this shorter term lease the protection afforded to the leaseholder, whilst reflecting the short term usage and the interests of the Freeholder as well.

 Block Management.

 It is suggested that Management of such buildings would tie in nicely with the current Block Management style and again as this is one of the services we offer I can comment and could not agree more. This would be ideal providing that local Companies were sought for provision of services, instead of the properties being managed from afar. Why do I feel this is important? Because we have grown our business on the dissatisfaction of leaseholders whose representative never visit sites or more importantly, cannot be visited because their offices are in London, Birmingham or Manchester.

 There are some great ideas in this report and I look forward to commenting on the conclusions but if there is one point of caution it is that consideration has to be made as to the spread of housing, which is needed throughout the Country as well as provision of service, which, to avoid complaints about schemes failing to deliver and being unapproachable, need to be sourced close to the buildings concerned.

 More to follow!

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