The housing charity, Shelter, has revealed that families are being priced out of the "out-of-control" rental market in 55% of English local authorities. Shelter said research showed that 38% of families with children who were renting privately had cut down on food, in order to pay their rent.
Although renting has traditionally been regarded as a cheaper alternative to home ownership, the credit crunch and the lack of mortgages has forced many traditional home buyers to become Reluctant Renters. Indeed, the average age of a first time buyer without help from the bank of Mum and Dad is now 37. A national mortgage drought has also led to us building fewer houses than in any year since 1923.
In addition, the abject failure of the last Labour Government to track demand for Social Housing saw in excess of £11 billion pounds spent, a net reduction in social homes, and our housing waiting lists double.
Given this perfect storm of record-low house-building, severely restricted supply of mortgages and 13 years of disastrous social housing policy, explosive inflation in private rents was to be expected.
Fixing this problem will not be simple but for lessons, we can look to our own Party’s history. Between 1980 and 1997 the then-Conservative Government sold 2 million council homes. One would naturally think this would have increased waiting lists for social housing. In fact, it had the opposite effect, waiting lists fell from 1981 to 1997. This low-cost affordable route into home ownership kept the market price of private housing down, enabling more families to realise the dream of owning their own home while at the same time keeping waiting lists falling.
David Cameron’s New Right to Buy policy will deliver similar dividends, but this time it will also replace social stock for new affordable rent homes compounding these benefits. In our Party, we know that there is not a social market and a private market, it is just one housing market. The Government must ensure the whole market works and unless we do so, we will continue to see the boom and bust cycle repeatedly played out in every sector of the housing industry.
Part of getting the housing market right is dealing with our chronic shortage of homes. Here too, the government is moving quickly and in the right direction. Release of public land, the payment of the New Homes Bonus and, crucially, the reform of our planning system will increase supply. Estimates vary but there are believed to be about 240,000 consented but un-built homes in Britain today. If we built every one of these, it would equate to one year’s supply of housing. Without reform we would not be able to replenish our national land bank quickly enough.
These policies will deal with our current demand, but what has driven rents up recently is pent up demand to buy. The government must continue to lean on the FSA to ensure that we see a rapid return to the 90% mortgages. Return to business as usual is long overdue – it is time for the FSA to stop stitching the stable door shut. The horse has long since bolted, it is right that the FSA seeks to avoid another unsustainable boom. However, the housing market has built national wealth for hard working families, and it is not good for our country to snuff out the recovery.