More homeowners at any cost?

With levels of homeownership lower than for decades, is there nothing that the Tories will not do to stop the slide? Last week saw Duncan Smith’s batty idea of giving social homes away to previously unemployed tenants who get back into work for a year. This week a more subtle agenda is set by Natalie Elphicke in Conservative Home, following on from her rather insipid report to the housing minister in late January.

Elphicke starts her argument by saying Britain ‘has one of the worst records’ of ownership. She gets in a dig at Gordon Brown by implying that he was responsible for the slide, but this is flirting with small changes in the figures: English homeownership first rose above two-thirds of households in 1989, and stayed that way for two decades until just after the recession in 2009, never rising quite as high as 70%. Then in only three years it fell by more than two percentage points, to 64% in 2012 (definitive later figures aren’t yet available). The early rise in homeownership in the 1980s was undoubtedly due to right to buy, and it’s true that sales under Labour fell dramatically with the recession in 2008. But it’s also no coincidence that the plateau in owner-occupation occurred at the same time as the rise of buy-to-let from 1995 onwards, a development allowed by the Tories which saw the growth of private renting from 10% to 18% of households in a decade, largely fuelled by purchases from former homeowners.

Elphicke’s ‘worst record’ is justified by international comparisons. But we know that the highest ownership levels in Europe are in east European countries where state-owned properties were handed to tenants. In western Europe, the picture is much more mixed, with France and Germany both having lower ownership rates than Britain. Also, several countries with high rates – notably Ireland, Greece, Spain and Portugal – have had extreme economic problems to which the absence of any alternative to homeownership has contributed. Look at Ireland’s deserted new build estates, or Spain’s levels of repossessions (also drawn to public attention this week by the release of the Spanish film Near to your House).

Natalie Elphicke says that ‘the left may not like it’ but the advantages of homeownership have been proved in the United States. Well, we might ask if that means she’s fully signed up to the Tory view that the recession had nothing to do with the banking collapse, which began when the US sub-prime mortgage market imploded. If homeownership works so well States-side, how come the two agencies designed to promote it as far as possible down the income ladder, Fannie Mae and Freddie Mac, had to be rescued by the US government when they folded?

In the Elphicke view, we need ‘a more modern right to buy’ which she wants to rebrand ‘Own your Home’. Other than a snappier title, I’m at a loss to understand what is more modern about it. She sets various principles for her new scheme: affordability (nationally and to the individual), not ‘sub-prime’ (which seems to mean no dodgy mortgage terms) and respecting property rights. One wonders about the property rights of the landlords, who over the lifetime of right to buy have been forced to sell houses for an average discounted price of £20,000 each, and even then have had to give the Treasury chunks of the cash. Needless to say, Elphicke thinks discounts still aren’t generous enough (yet somehow higher ones must still meet her test that any scheme ‘must be capable of being funded within its own terms’).

Finally, her new scheme must be ‘modern and creative’. In a priceless piece of meaningless policy-speak, she saysWe shouldn’t be afraid to consider and embrace new methods of ownership, new approaches to finance, and new ways to help people save in their home where they help with the purpose of people owning their own homes and saving for their future’. At this point she harks back to Keith Joseph and Nicholas Ridley, so we are still left wondering whether or not she believes that Duncan Smith is, like Joseph and Ridley, able to ‘think differently about meeting the housing and finance challenges of the day’.

Of course, the most ‘different’ of the Tory policy-makers in this field was Dame Shirley Porter, although her schemes to promote ownership and get rid of social housing at any cost weren’t sufficiently imaginative to escape the attentions of the District Auditor. Nevertheless, her desperation to drive up the numbers of owner-occupiers certainly has echoes in the Tories’ latest wheezes. Surely they have nothing to do with winning votes back from UKIP, do they?

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