Mark Field wrote a thoughtful piece about home ownership yesterday but worryingly missed some very obvious political points alongside more practical ones.
The fact is that British people want to own their own home. Polling shows, time after time, that the percentage of people who see ownership as the preferable tenure is unchanged, and in fact recently rising (CML poll in September this year, 85% people hope to home-owners in the next decade). That wish is rooted in aspiration and personal responsibility, two key tenets of the Conservatism, and it also reflects an utterly rational human desire – providing security for your family.
Young people – as described in The Jilted Generation and the The Pinch – are currently angry at all manner of Coalition policies (Winter Fuel Payments for all is a surprisingly sore subject) that seem to be aimed at them. They are not going to take kindly to a home-owning (I confess this is an assumption) Tory MP telling them that they will not have the same chance to own their own home in the future.*
- Would Mark Field have been happy to raise his children in a rented property, one month from being thrown out at the whim of his landlord?
- Would he be happy paying rent every month that outstrips the mortgage payments on the same property?
- If he lived in London/South East how much would he be able to save for the future, for retirement, for rainy day while renting and living on the average salary?
The Private Rented Sector (PRS) is an important source of housing and fulfils a very useful role as people embark on their careers and set the course of their lives. But it’s not the solution to our current housing crisis. I presume those that see the PRS and the Continental model as the solution would be in favour of rent controls and long term, more secure tenancies.
Only three kinds of people really buy houses at the bottom end of the scale: landlords, institutional investors (widely courted by the last and current Governments) and first-time buyers.
In the current climate, with first-time buyers stymied by a lack of finance, to drive landlords and the institutional investor away from the market would be to drive away most of the buyers.
Do that, and prices fall through the floor.
This would hardly be a popular policy, although it would improve affordability, and it would also slow down house building even further, including social/affordable housing… unless the State wants to start pumping huge amounts of money back into the sector?
Mark Field also mentions the mortgage market. There’s no doubt that the easy credit conditions were a major factor in the housing boom though I would argue that a lack of supply was just as important. He’s right, we don’t need huge numbers of confusing products but the FSA’s MMR proposals are far too strict in a market that has effectively self-regulated. We do not want a return to the irresponsible pre-crash mortgage lending but instead of proposals implemented that would see many MPs struggle to get a mortgage we need an increase in mortgage products for first-time buyers aided by more competition in the mortgage market.
Grant Shapps recently talked about the need for house price stability; in effect he was advocating a long term correction of prices, it’s actually a fairly bold statement (he took some knee-jerk criticism in the media) and infinitely preferable to telling people that home ownership is off the table. The healthiest way of doing that is increasing supply. Alongside slightly higher availability of responsible mortgage lending this is where the recovery our housing market will start.
* It is also pretty annoying to be told that houses need to be seen as homes, not investments, by the generation that have almost exclusively used them as such – give young families the opportunity to have that home, don’t penalise them for previous mistakes!