In case anyone had still not got the message, there was an explanation of the political imperative for the Conservatives to boost home ownership by James Forsyth this morning. Writing in The Sun he said:
“Labour’s rise in London is quite remarkable. They have gone from 37 per cent of the vote in 2010 to 55 per cent in 2017.
There are several reasons why the capital is turning red but one of the biggest is the decline in home ownership.
Home ownership in London peaked in the 1990s and has been falling since. Homeowners became a minority in London in 2011, the first time that has been the case since Margaret Thatcher’s Right To Buy revolution in the early 1980s. On current trends, 60 per cent of Londoners will be renters in seven years’ time.
It is no coincidence that this rise in renting has coincided with Labour’s surge in the capital. For one of the things that makes you most likely to vote Tory is owning your own home. Labour’s surprise success at the last election was largely down to a big increase in turnout among renters who swung heavily to Labour.
Labour London offers a preview of what happens to the Tories when homeowners become a minority.”
Spotting that this must be a priority – and can’t be put off until after Brexit – is the easy bit. The challenge is to meet the objective of a rising home ownership rate. We will not get there with bland platitudes and a bit of technocratic tinkering.
What is particularly disappointing is the slow progress on extending the right to buy for housing association tenants. This was promised in the 2015 Conservative Manifesto which said:
“We will extend the Right to Buy to tenants in Housing Associations to enable more people to buy a home of their own. It is unfair that they should miss out on a right enjoyed by tenants in local authority homes. We will fund the replacement of properties sold under the extended Right to Buy by requiring local authorities to manage their housing assets more efficiently, with the most expensive properties sold off and replaced as they fall vacant. We will also create a Brownfield Fund to unlock homes on brownfield land for additional housing.”
By the 2017 manifesto this had been weakened to the vague statement:
“We will continue to support those struggling to buy or rent a home, including those living in a home owned by a housing association.”
Apparently the housing associations and local authorities have persuaded the Government that selling the expensive properties would not be enough to fund the replacement properties and that some extra Treasury handout must be found.
They would say that, wouldn’t they?
These assertions appear to have been passively accepted by the Government. But it is pretty feeble to do so.
For a start the housing associations have plenty of high value properties of their own which they can – and often are – selling when they become vacant, to fund the building of a larger number of replacement homes. The same applies to local authorities. So why should local authorities have to hand over funds to housing associations? I suppose one argument is that councils have a substantial amount of surplus land (including around the edges of their existing housing estates). Of course if you already own the land then the cost a new home is greatly reduced – perhaps by around half.
Some research from Policy Exchange in 2012 found that if a formula they proposed was followed there would be sales of 28,500 high value social housing “voids” a year – and that would provide enough funds for between 80,000 and 170,000 new homes depending on where the sales took place.
Yet even without bringing in the proceeds from expensive property sales it should be entirely viable for both councils and housing associations to fund replacement properties from the proceeds of the right to buy sales – even after the discounts are applied.
The right to buy housing association pilots so far have seen very strong demand from tenants combined with anger that the process has been delayed.
So the Government should get on with providing the right to buy for all housing association tenants – and not worry too much about trying to placate those in the “sector” who are hostile to home ownership anyway no matter how much extra funding they are offered.
Yet if they wanted to be really conciliatory, the Government could hand over (or sell cheap) to housing associations some of the five million acres of land owned by central Government.
So catching up with what was promised in the 2015 manifesto would be a start. But, of course, more is needed. There should be a right to shared ownership.
In 2012 the Centre for Policy Studies produced an excellent paper entitled Unleashing the British Bulldog. It advocated a “right to own” and declared:
“From the point of view of both creating more housing stock and promoting social mobility, a more radical option would be to promote a Right to Own. The Peruvian economist, Hernando de Soto, has done ground-breaking work showing the beneficial impact of giving the poorest people in shanty towns title over their unregulated and untradeable properties.
“Giving title to the poor over sprawling homes and other assets – such as businesses – otherwise caught up in a legal no-man’s land can free up credit and encourage investment. The situation in Britain is far removed from the poor countries de Soto has in mind. Our legal and property systems are well-developed. Nevertheless, the assets that comprise the social housing sector are massively underutilised. There are around 4 million social homes in England worth around £250 billion. A Right to Own scheme could unlock that underutilised capital and incentivise home ownership for those excluded from the bottom rung of the housing ladder.
“One option is a scheme that gives tenants an equity stake in their home that could be either realised on sale – and put towards a deposit – or transferred to a shared ownership scheme (combining equity and renting). Giving tenants an automatic share in ownership of the property – scalable according to variables including income, deprivation, and length of tenure – would incentivise those in work to save, sell up and buy a new home. That would also free up existing stock by enabling proceeds from the remainder of the sale to be reinvested in building new social housing. By releasing ‘dead equity’ – in the same way that de Soto advocates releasing ‘dead capital’ – there is an opportunity to promote social mobility for those who would otherwise remain excluded from home ownership.”
The author of that paper? None other than Dominic Raab, who is now the Minister for Housing.
When it comes to boosting home ownership as the most effective method of averting the calamity of a Corbyn Government the prudent approach for the Conservatives is paradoxically to be bold.
Over to you, Dom.