Originally posted on June 13 on Inside Edge 2, my blog for Inside Housing
What should we do if we really want to reverse the decline in home ownership?
That’s the question posed in a new book published by centre right think tank Civitas (downloadable here). The answers are interesting and surprising, not just because of where it sits on the political spectrum, but also because the author is a longstanding evangelist for the home owning society and opponent of ‘Marxist’ housing advocates.
Peter Saunders wrote a seminal book called A Nation of Home Owners in 1990 that made a passionate argument for the expansion of home ownership as the choice of most people and as a force for good in promoting community cohesion and civic participation.
As such, you might have thought he’d be completely in tune with David Cameron, George Osborne and Brandon Lewis and their policies to satisfy the 86 per cent of us who want to be home owners.
How did we end up with a housing system dependent on at least 1.5 million small-scale private landlords offering millions of tenants little or no security and costing billions in housing benefit?
You couldn’t do much better if you set out to design the worst possible way of housing the nation in general and young people in particular. But the changes that now seem set in stone – a private rented sector that’s grown so fast it is now bigger than the social sector and home ownership shrinking back to the levels last seen in the 1980s – have happened in the space of one generation.
The Rent Trap, a new book by Samir Jeraj and Rosie Walker, is the best attempt I’ve yet read to explain how and why this has happened to a general audience. The subtitle – How We Fell Into It And How We Get Out Of It – reflects an even more ambitious aim.
Originally posted on November 30 on Inside Edge 2, my blog for Inside Housing
Part 1 of this blog looked at the apparent winners and the big losers from George Osborne’s announcements last week. But there is one more group lurking on the edges of the playground, ostracised by virtually everyone. What happened to George’s well-heeled former chums should be a warning to everyone else.
Buy-to-let landlords and second home owners thought they had worked hard, done the right thing, bought a house and then another (and another). Contrary to what everyone said about them driving up house prices and destroying local communities, they thought they were providing desperately needed homes and helping pay for local services. They thought the Conservatives were on their side after they blocked a Labour tax rise on second homes in 2010 and kept buy to let out of European mortgage regulation in 2013.
They thought George was ‘one of us’. After all, he made £450,000 profit on his taxpayer-funded second home and rents out his main home for £10,000 a month while he lives in Downing Street. And they voted Conservative in May when those horrible Labour oiks planned rent regulation and a mansion tax.
Their thanks for all this? Sand kicked in their faces with cuts in tax relief in July and the Chinese Burn of hikes in stamp duty and capital gains tax in November. The fate of these entrepreneurs and investors turned enemies of aspiration should be a warning for all those who are currently part of the Osborne in-crowd.
Was this the week when the dream of home ownership in Britain was finally killed off by the greed of buy to let?
All this week the Daily Mail is telling its readers ‘How to Join the Buy to Let Boom’ and offering them a chance to ‘secure your family’s future’ by winning a ‘£260k buy to let house’. Here’s the top half of Monday’s front page (courtesy of @DawnHFoster):
So buy to let landlords made £177 billion from rising house prices over the last five years – and that does not include rental income.
A series of linked stories in the Financial Times this morning make clear who the beneficiaries of booming property market have been since 2009, when interest rates fell to a record low. In addition to buy to letters, they are home owners in London (prices up by £563 billion in the last five years) and in Conservative constituencies outside the capital (prices up eight times faster than in Labour seats). Even social landlords get in on the act, with a 20 per cent increase in the value of their stock since 2009.
Yet all the research by Savills and impressive FT data visualisation beg some far bigger questions about what it calls the politics of British housing. Why has this happened? If those are the winners, who are the losers?
George Osborne has spent so long outsourcing responsibility for the housing market to Mark Carney that it’s easy to forget the Bank of England’s actual brief.
Far from controlling house prices, or tackling affordability or making the market less dysfunctional, the Bank’s Financial Policy Committee (FPC) ‘is charged with a primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system’ and a secondary objective ‘to support the economic policy of the government’.
So the measures the FPC announced today on high loan to income (LTI) mortgages and a slightly strengthened stress test on lending are about preventing future house prices from increasing household debt to a level that poses risks to the financial system rather than tackling current price levels and affordability.
-> Read the rest of this post on Inside Edge, my blog for Inside Housing