An important day for British Housing Policy
Today, the Government will publish its white paper setting out its long-term housing strategy. This has implications for everyone living in the UK, including the homeless, those who rent, those who own and those who rent to others. It is a white-paper day for house-builders , those who manage our rental stock and it may even redefine our long-term attitude to saving.
Ever since I left college in 1983, the aspiration and expectation of working adults in the UK was to own their own home. This came before any form of financial security. Home ownership has become a substitute for life assurance, income protection and a retirement income. Household equity is – when all else isn’t – a source of national security.
For my generation, the chance to own a home grew over the 25 years to 2008. Cheap credit, available with minimum borrowing criteria and no deposit down , enable us to get on the housing ladder. Once one house had been purchased, more could follow. There was no need to have a business or even be in business, buy=to-let has become a lucrative hobby for many people.
But as council housing stock diminished and first generation right-to -buy properties became buy to let properties, the numbers of starter homes for future generations slumped. First time buyer prices soared which was ok till 2008; but then cheap and easily accessible credit ran out.
It has been since then that the phrase “the broken property market” has been on people’s lips. The fact is that most of us my generation remain over=dependent on property for our financial security and we have insufficient liquid assets to meet our cash flow needs in later life.
Meanwhile, our children and grandchildren struggle to get out of the family home and are becoming increasingly frustrated with the generational inequalities that have given so much to the baby boomers and so much less to them.
Universal Home Ownership – a broken dream
This is why this White Paper is important. This Government cannot pull the comfort blanket from those who have, nor can they pretend that Margaret Thatcher’s promise of homes for all is still realistic.
But if they are going to inspire another generation to aspire to financial security without home ownership, it will mean a massive detox from the expectation of risk-free equity accumulation created by a highly-geared mortgage.
It will also mean a radical reform of the private and public rental sector. By “public”, I mean “social housing” which must become just that, a type of housing as universally popular as social media. Social housing has yet to achieve this status. As well as this quasi public (not for profit) social housing, we need a properly organised build to rent sector.
I get encouraged when I visit Legal & General and see their commitment to building new homes for rent. Visit the strategy pages of their website and you can read about how they are helping Britain to build more homes which people can afford to rent. But the 131,000 homes we built in Britain last year was nowhere near the numbers needed (est. 250,000).
A high number of those houses were specifically built for the top-end London and home counties market, but I was encouraged to hear this morning of a new development of 4.500 properties in Wembley Park which will be rented by the developer and not put on the market.
The great British ownership detox!
I have never been a great property owner, I have a minority interest in a flat in Central London , most of which is mortgaged, I am a lucky one benefiting from un-naturally low borrowing costs and the prudence of a more financially gifted partner!
I am a great saver and a profligate spender – I have my money saved for retirement and a boat on which I wish to spend much of my later life! Houses do not feature at the heart of my financial well-being!
So it is relatively easy for me to call on the Government to instigate a property de-tox on Britain as a whole. I mean by “property de-tox” a revaluation of the centuries old exaggeration of rights to the owners of property and an enfranchisement of those renting as fully paid up members of our society.
That means a step down from the top of the ladder (from where our leaders have given us that “hand up”). It means recognising that it is not so bad at the bottom of the housing ladder (where politicians should be spending more or their time) and it means that our businesses, bank, insurers, pension funds and asset managers should be clamouring to get a part of a new kind of action.
If we are to build a million new homes in the next four years (or whatever the target it), then I want my pension fund, my ISA and my direct investments to be directed there. That seems a proper place for me to get long-term yield to match my income needs in retirement.
So I look forward to this housing paper, due to be published at noon today, with a lot of excitement. I now know some of the people who have done the thinking behind this paper and I trust them and their intentions.
We need a home ownership detox, we need to ensure that homelessness is reduced and that not only those who are living on the streets but those who cannot but live with parents, have a place of their own. We need to empty the hostels and find a place in society for those who feel marginalised because they are in social housing. We need private companies and financial institutions to work together “building to rent”.
Above all, we need to wean people from the addiction of believing home ownership , the be all and end all of financial planning. You cannot buy a sausage with a brick, in later life – which we will have a lot of – we need those sausages!