Natalie Elphicke OBE is the Chief Executive of The Housing & Finance Institute.
Over the last 15 years Britain has embarked on a housing experiment that has failed six million people, the majority of whom have been the young and the least well off. The experiment has been the state-supported explosion in private renting.
Successive Labour and Conservative governments have overseen a doubling of private rented housing since 2002, at the expense of both home ownership and social housing. Just 15 years ago, people would have been expected to own their own home or live in social housing. Now, too many have little choice but to live in the private rented sector.
These reduced levels of home ownership and social renting have been harmful to family and financial stability. Furthermore, as well as damaging family stability and opportunity, the high levels of private renting have failed to promote labour market mobility. Fewer people are moving than in previous decades. The doubling of the private rented housing sector has not resulted in greater labour market flexibility.
The damaging impact of the over-expansion of the private rented sector on the lives and opportunities of British people is laid bare in a ground-breaking report published this week. It is the result of a collaboration between the Housing & Finance Institute and leading housing association, Radian.
For decades, a battle has raged within as well as between political parties about social renting, private renting and owning. The debate often takes place with ideological fervour. However, in practice, as Keith Joseph identified in the 1960s when answering the grotesque problems of the Rachman private rented era, all three tenures have a place in an effective functioning economy but only two – social housing and home ownership – should be given significant state support.
Our HFi/Radian Good Homes report considers the role that housing has in supporting, or reducing, the likelihood of good outcomes for people and their families, and therefore by extension where the balance of government policy and financial support should lie.
Housing needs to be stable and affordable in order to support job mobility and provide the springboard of opportunity for each and every generation to thrive and prosper. Good homes support better educational outcomes and improved life chances for young people. They are homes that result in healthier, happier and safer lives. They help the promotion of labour mobility and the growth and productivity of the country’s economy. They provide the circumstances to build savings and financial resilience to meet life’s ups and downs.
There is compelling evidence that there are only two tenures – social housing and home ownership – where the outcomes and wellbeing of people are supported consistently and effectively. Indeed there is compelling, almost overwhelming, evidence of the harm that has been caused by the expansion of the private rented sector across all generations.
This report seeks to re-focus the housing debate to consider what type of housing is most likely to result in the best outcomes for people and the country as a whole. It recommends an immediate change to current government policy, firstly to stop allocating billions of pounds to the private rented sector and then, instead, put more money and policy focus towards getting millions of people back into home owning and social housing.
It isn’t one or the other – social renting or home ownership – it’s both, because both are wanted and needed social renting and home ownership.
The changes to the housing market over the last 15 years have not simply affected the so-called ‘Generation Rent’. The structural change in the markets has affected all the generations. Indeed, 2017 was the first time in three decades that the number of people living in such stable homes has fallen below 80 per cent of all households. Proportionally that change affects around 2.4 million households, and around 6 million people.
The work on the Good Homes report started by looking at the ‘generation that housing forgot’, with a working presumption that it is the very youngest generation who needed different housing choices. Our work supports the findings of the Resolution Foundation, Shelter and others, all of which say that younger age groups face a triple difficulty in that they have less access to social housing, less access to home ownership and pay the highest proportion of their income on rent. The equity and savings gap between the older and younger age groups is astonishing, with under 35s having only £6 in £100 of equity compared to £75 of equity in their parent’s generation.
But it’s not simply all about the equity. We have found housing challenges at each and every age. The older generation, the over 65s, have experienced the largest fall of any age group in access to social housing over the last 15 years. So a poorer older person is less likely to be able to get moved into social housing than 15 years ago, pushing some of the least well off of this age-group into more expensive private renting that they may struggle to afford.
The generation most affected by lack of access to home ownership isn’t only the one that most people would think it is. The 35-44 age group also experienced a similar collapse in their access to stable housing, primarily due to a large fall in home ownership. They have been forming new households over the last 15 years while this step change occurred, and have not transitioned into home ownership in the way generations before have done. This is having a particular impact on stability for family life.
There are almost four million people currently in rented housing who want to own their own home. These startling figures mean we need to think differently about housing policy – and find new solutions for solving a worsening bad housing crisis.
We have recommended a radical new approach that will expand home ownership. We have suggested the government should introduce new student loan-style loans and tax breaks to help bridge the deposit gap so that people who can afford to pay a monthly mortgage can get a home of their own. We have also called for a substantial increase in the support for social housing to help the least well off benefit from access to a good home. We have proposed a new independent Housing Commission to review and set a ten year delivery plan, answerable to Parliament, to make sure that there is a long term effective housing policy that meets the needs of each and every generation to have a good home.
But new solutions are needed. From the youngest households to the oldest, the current emphasis on expanding the private rented sector is simply not delivering stable and affordable housing.
We now need a positive new vision for a good home, one that promotes stability, flexibility, affordability and opportunity for all. The HFi/Radian ten point plan would go some way to achieving it.