Liam Booth-Smith is the chief executive of the think tank Localis.
The number of homes bought by people aged 25 to 44 with a mortgage has dropped by over 1.6 million in just over a decade. Over the same period the number of homes owned outright by people aged over sixty-five increased by over 1.4 million. What we are witnessing is the accelerated decline of the home-owning democracy and this should trouble us because it is an inheritance worth preserving. In spite of Prime Ministerial rhetoric and a government white paper, I’m still moved to ask; is this Conservative government bold enough to tackle our housing problem?
Now it would be unfair to malign Theresa May for struggling to solve an issue that has plagued governments of all colours for decades, but housing, and in particular the reported end of the home-owning democracy, is perhaps the most interesting example of the present-day Tory crisis of confidence. Home ownership has often been a portent of Conservative voting intention, and thus it would make sense to want to extend the franchise to more and more people. Putting to one side any political advantage, for most of us owning our own home is an important life achievement. The most recent English Housing Survey finds 80 per cent of those aged 16-24 who privately rent expect to own their home in the future. If the home-owning democracy is coming to an end, no one has told Britain’s young people.
A fair criticism of focusing on ownership is that it ignores those who rent. However, saving the home-owning democracy need not come at the expense of those who live, and whose home may only ever be, in the private rental sector either. In fact its preservation is dependent on a private rental sector that is safer, more secure and which chews into less of renters’ incomes each month. This necessitates regulation which better reflects the size of the sector and the circumstances of private renters.
Saving the home-owning democracy however, demands a collective sacrifice. Homeowners have to accept new homes will be built in their area. Their home may lose value, it may rise in value, but that value will be fictional if no-one has the financial capacity to buy it. Developers’ construction models will need to adjust. As labour and material shortages bite, modern methods such as off-site construction will become a necessity rather than a speculative investment. Financiers will need to be more creative in mortgage products.
People are living longer and earn their income in different ways: the market should catch up with that. This means being more innovative in the ways we encourage deposit-saving and being honest about the connection between property and pensions.
A recent poll by YouGov found that just four percent of 18-24 year-olds believed the Conservative Party was best for housing. Theresa May tried to address this by bringing housing to the foreground of her party conference, but the content got lost in the splutter.
Today Localis launches a new report entitled Disrupting The Housing Market which makes a range of recommendations to central and local government that will enable planning to work more efficiently, reward the best and most truly innovative developers and ensure consumers get a better deal in a market which too often is blind to their experiences.
Developers won’t necessarily be in favour of change but for its own sake this Conservative government needs to disrupt the housing market and fast.