Cllrs Ayesha Azad and Mark Pengelly are Members of the Executive on Woking Borough Council.
“There is in this country a deeply ingrained desire for home ownership. The Government believe that this spirit should be fostered. It reflects the wishes of the people, ensures the wide spread of wealth through society, encourages a personal desire to improve and modernise our own home, enables parents to accrue wealth for their children, and stimulates the attitudes of independence and self-reliance that are the bedrock of a free society.”
These were the words of Michael Heseltine in 1981 regarding the Right to Buy.
The Right to Buy became one of the most successful policies of the Thatcher Government, ushering in a new era of home ownership. By 1991, more than 1 million homes had been sold to the tenants who occupied them.
But while the Right to Buy was revolutionary for its time, it no longer provides the solution to our current housing needs. Not only have unscrupulous individuals abused the system in some cases, but it has also helped to bring about a precipitous fall in council housing stock. From 5.2 million dwellings in 1991, the number of council properties declined to just 2.2 million by 2014, according to the Office for National Statistics. This decline has hampered attempts to solve the wider housing crisis.
A deeply ingrained desire for home ownership still exists in our country. Despite the issues associated with the Right to Buy, we believe Heseltine’s words remain as true today as they were in 1981. But as time has gone by, peoples’ desire of home ownership—and in particular, that of young people—has become less and less likely to be satisfied.
In a study released last month, the Resolution Foundation highlighted that home ownership rates for UK millennials at ages 25-29 were a full 27 percentage points lower than they were for baby boomers when they were at the same age. Generational falls in home ownership rates for younger generations had been larger in the UK than in the US, Australia or Spain, the think tank found.
Also in February, the Institute for Fiscal Studies issued a report saying that today’s young adults were significantly less likely to own a home than those born only five or 10 years earlier—with the sharpest fall seen among those earning middle incomes. Whereas 65 per cent of middle income earners aged 25-34 owned their own home in 1995-6, that figure was now just 27 per cent, the report said.
In order to address the challenges faced by a new generation of aspiring homeowners, Woking Borough Council is moving forward with an innovative new scheme for many of our borough’s social tenants. The scheme, which builds on the basic principles of Right to Buy, is called the Earn Your Deposit Scheme, or EYDS. The scheme gives tenants of Thameswey Housing, a subsidiary of Woking Borough Council, a helping hand in buying their first property. It does this by granting them a share of the annual uplift in the market value of their home.
Looking back over many years, the price of property in Woking has increased by about four per cent a year on average. Under EYDS, tenants in a two-bedroom property could expect to receive £2,400 per year towards a deposit on a home of their own. Meanwhile, families in a four-bedroom home could accumulate £3,600 per year, up to a maximum of £80,000.
This money would be set aside by Thameswey as a reserve and can only be used as a deposit by a first-time buyer on a new home. Furthermore, it would only be made available to ‘good tenants’—that is, those who pay their rent on time, look after their homes, and do not cause a nuisance to their neighbours.
EYDS has two key advantages over the Right to Buy. First, due to the way it is structured, EYDS should be less open to abuse by people who are intent on assembling buy-to-let property portfolios. Second, it does not diminish the social housing stock over time. Under EYDS, when tenants accumulate a deposit for their first home, they must move into the private sector to purchase that property. The affordable housing they vacate remains in place for others who need it.
What’s more, we at Woking Borough Council are calling on the government to allow us to extend EYDS to all our social properties. That includes those directly owned in the Housing Revenue Account, fully replacing the Right to Buy. If local authorities were given this kind of flexibility, we think the scheme we are adopting in Woking could provide an alternative that is more sustainable and better suited to today’s market.
Our young people need to know there is more than just a slim possibility of one day getting on to the housing ladder. We believe in two basic truths: that Conservatives are at our best when we give people hope; and that changing circumstances require new thinking and innovative solutions. EYDS is one such solution. For many young people, the dream of home ownership is shifting further and further out of reach. It is up to us to restore it.