UK’s target of 300,000 new homes per year requires private investor help
In 2019, the Conservative government pledged to build 300,000 new homes per year in the UK to keep up with housing demands. However, since then, the government has failed to keep up with this quota.
In fact, in 2021, the UK was shy of this target by almost 120,000, successfully completing construction of 181,810 homes. This is the biggest housing target shortfall since 2007.
Many people in the construction industry thought this target was unfeasible to begin with. However, due to the growing demand for homes to rent, this target is a necessity. If not enough new homes are built, we will see property prices continuing to skyrocket, more children growing up in unstable homes and a rise in homelessness.
The pandemic and Brexit and the subsequent delays and price hikes in construction materials have been partially responsible for preventing enough new homes from being built. However, even if these obstacles hadn’t existed, it’s unlikely the UK would be on target. The government’s resources can only be stretched so far – to reach 300,000 new homes per year would almost certainly mean cutting corners and delivering low quality housing.
The potential benefit of private investors
Private investors may be able to help the UK meet its target. By investing in more housing projects alongside the government’s current housing projects, the UK will have more of a chance of keeping up with demand.
Of course, private investors need to make sure that they’re building the right types of homes. The UK doesn’t need more luxury apartments or gated housing communities – it needs more basic homes that can be affordable to people renting or buying for the first time.
The ROI may not be as high on these basic properties (although there is still definitely room for profit). However, there is one major advantage – such homes are relatively cheap to build. Consequently, private investors don’t have to seek out quite as much funding to build these properties.
Where can private investors go to obtain funding?
There are a growing number of real estate funders out there helping with property investment in the UK. Such companies can provide full funding including land purchase, planning and construction.
Some of these real estate funding companies are also able to act as financial advisors and asset managers, helping you to get the best out of your investment. This makes it more of a partnership than simply relying on a lender and can be useful for those who may be new to real estate investment.
Sticking to the cause
It’s important that investors make a return while remembering the original cause – which is to help people in need of homes. Investors must make sure that they are selling homes to the right people. Ideally, this should include housing associations or first-time buyers.
Such properties shouldn’t be getting sold to investors looking to flip property or wealthy individuals looking for a cheap second home. It may seem tempting selling to these types of buyers – especially those who are willing to buy in cash fast – but it does nothing to help the housing crisis.