Housing as an infrastructure investment
The UK has significant problems with the affordability of housing. This has consequences for the wider economy in terms of:
- household disposable income
- lack of labour mobility and
- declining productivity.
However, historically, housing has not been fully integrated into the government’s national infrastructure plans. Instead, housing investment has been the domain of individual private investors, with owner-occupiers or buy-to-let investors acquiring existing or new housing. House builders are typically financed by short-term equity and seek to sell as soon as they have finished building.
But, more recently, institutional investors have increased their activity in the private rented sector (PRS), especially in build-to-rent (BTR), using longer-term financing arrangements and holding the assets for rental income rather than selling for capital gain. This section considers these developments, and especially whether BTR could be considered in a similar way to other long-term infrastructure investments that generate long-term income streams, such as energy investments.
The section begins by assessing the housing market as it currently stands. It then illustrates how recent developments have changed the landscape of the industry. The BTR sector and government policies are then discussed. Finally, the section considers housing in the context of the wider economy.