More home ownership is progressive

This post also appeared on Progress Online.

Labour has gone big on helping private renters in recent months. And we’re right to. With ever more people forced to rent from private landlords, including 1 million families, we need to improve standards and give people greater security in their home.

However, we should remember that ‘Generation Rent’ still aspires to join our nation of homeowners. 77% of renters under 40 want to own their own home, but 64% believe they have no prospect of ever doing so.

Traditionally in Britain even those on moderate and low incomes have been able to buy their own home. That is less and less the case. Homeownership is increasingly restricted to older people and people with access to the bank of mum and dad. The rest are locked out. That is a cause and a consequence of greater inequality.

Helping people on moderate incomes buy their own home is a progressive policy. Financially, it means more people can own a valuable asset. Socially, it means more people have security and independence in the place where they live, can put down roots and be part of a community. These are hardly luxuries that should be confined to a shrinking number.

To expand the number of homeowners again we need to build more homes. People cannot buy because prices are too high and prices are too high because we have too few homes. No policy will succeed in the long-term if it doesn’t build more homes.

That’s where the Conservatives have failed. Their Help-to-Buy policy has made mortgages more available, but they’ve failed to build so prices are being driven upwards again – raising the bar ever higher for people on normal incomes.

So, what could an incoming Labour government do to support people into homeownership?

1) We could lift the artificial restrictions on local authorities from building their own homes. Council housing doesn’t just need to be for social rent; there’s no reason why it can’t be shared ownership or for sale. After more than two decades of restrictions, councils now have built-up capacity that they can put to use in economically difficult times.

2) We must change the rules of the game for the private development industry. At present developers benefit more from a lack of supply and high prices than they do from building more homes. Public policy needs to change those incentives; penalising those developers who hold on to land without developing it and making the market more competitive by supporting new firms to enter the market.

3) Councils, housing associations and the private sector could build more for rent now on long-term secure tenancies and give tenants the right to buy those homes or convert them into shared ownership when they are able. Tenants get the benefits security in their home right away and then build up their ownership over time.

Homeownership isn’t the only way to have a secure and good quality home and Labour’s right to improve the lot of Britain’s renters, private and social. However, to meet the aspirations of the majority of people we need a new model of homeownership and one that doesn’t fuel the inexorable house price rises of the past.

– For a different and far more intelligent version of “having more ordinary home owners is progressive”, try Toby Lloyd here.

 

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2 Responses to More home ownership is progressive

  1. Pingback: The emerging consensus on private renting | Red Brick

  2. Very clear succinct analysis, Tony. How d’you get wider coverage????
    2) is the key issue:. I’ve been pointing out for forty years that land is the residual element in housebuilding decisions (selling price – construction cost = land value) so speculative developers can never solve a shortage.
    I wrote to Dromey and Balls suggesting that QE money be given to councils to buy up any homes developers can complete within 2 years (with some counter-inflationary controls). Immediate boost in work on homes currently “on ice” and – as per your 3) – the possibility of selling some of them in due course (as, way back when, I was planning for new-build leasing in Ealing).

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