The vast majority of private-rented homes in this country are managed by individual landlords.
But Sir Adrian’s report highlights the "real potential" for investment in large-scale development of homes built specifically for private rent by professional organisations.
The report finds that a combination of recent tax changes and wider market conditions have cleared the way for this sector to grow.
Shapps said: "We’re determined to encourage greater investment in the build-to-let market and boost the country’s Private Rented Sector, which plays an integral role in meeting the nation’s housing needs and aspirations. In the past it’s often been seen as the Cinderella of the housing market, but when over three million people rely on this sector for their home, this is clearly no longer the case.
"A major part of this is to attract and encourage new players to the market, while at the same time avoiding the excessive regulation that would force up rents and reduce choice for tenants.
"Sir Adrian Montague’s findings offer both a blueprint for achieving this goal, and for setting the standards of accommodation that people should expect. I will be considering his recommendations very carefully."
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