Time to abandon the promotion of home ownership

June 17, 2009 by
Filed under: Credit crunch, Public policy 

Speaking yesterday at the Chartered Institute of Housing I argued for a new overarching aim for housing policy. This, I said, should be achieving parity of esteem between different forms of housing tenure; essentially between home ownership, private and social renting.

I’d like to make the argument more fully as a pamphlet, but in the hope of attracting another crop of interesting comments here are the top lines.

Five reasons why making the expansion of owner occupation the overarching aim of housing policy is now wrong:

• Privileging home ownership as a goal and linking it in the public mind with social mobility and getting rich has led to the residualising of social housing; now a sector associated with multiple deprivation and poor life chances (see the work of Professor John Hills). 

• Pursuing home ownership as a route to making money exacerbates economic volatility.

• High levels of home ownership reduce population mobility – this is bad for employment and the economy.

• Acquisitive home ownership leads to the socially damaging and environmentally unsustainable hoarding of homes and space. There are a million empty homes in the UK and millions more under-occupied houses.     

• Anxieties about home ownership are a barrier to an affordable, flexible policy to resolve the growing social care crisis.

Six ways we could achieve parity of esteem and advantage between tenures:

• We should acquire and build more and better social homes. And we should stop fleecing social tenants to plug the public finances (every year over £200 million is lifted by the Treasury from council rent and sales receipts).  

• We need an explicit commitment by Government to manage asset inflation using interest rates, regulation and taxation to deflate any emerging bubble. The message should be loud and clear; home ownership is no longer a get rich quick scheme. 

• We need to modernise the private renting sector with a better investment framework, improved regulation (especially to deal with the scandalous quality of letting agencies) and more innovation.

• We need to transform the quality of estate and housing management, mainly in the social sector (where there is virtually no competition between providers) but also in the private sector.

• There has been real progress these last ten years in improving the poorest neighbourhoods (overwhelmingly in the social housing sector). We must not allow this progress to be a victim of the recession and spending squeeze.

• We need to hire an advertising agency to make the case publicly for renting to be modern, flexible and fun (Sing along now; “My old man’s a designer, he wears a designer’s hat, he’s got Armani trousers and he lives in a council flat”).

You may by now be thinking I have taken leave of my senses. Home ownership has been the priority policy goal of successive governments since the late 1970s. But before you suggest to Barbara that I lie down in a darkened room, here are two statistics to mull over. First, the proportion of households in home ownership had started to fall even before the credit crunch. Second, a CIH survey released this week revealed that less than a third of young people say that owner occupation is their tenure of choice.

I am not saying no one should own. I recognise that people can have a different relationship with their home when it is ‘theirs’. But what we should abandon is the idea that policy should tilt the choices people make in favour of buying or that governments should be judged by how many more people they get to own a mortgage.

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32 Comments on Time to abandon the promotion of home ownership

  1. david ramsay on Wed, 17th Jun 2009 11:21 am

    2. Matthew,

    The obsession with house ownership is damaging for all the reasons you outline. However, your advertising agency will have a tough task to change the image of rented housing among the middle classes. It is associated with falling on hard times, regardless of the size or class of property rented. Many middle class people automatically assume that something is wrong if you do not own your house and are suspicious if you choose to rent. This attitude is deeply rooted and remains ingrained despite the Recession and downturn in the property market.

    I speak from experience having a sold a house 2 years ago and rented by choice. I was amazed at the peer pressure to buy again, largely based on the prejudice I mention, but also from the blind belief that you will lose out financially if you do not stay on the property bandwagon. It is endemic.

    My sons, in their twenties, do not see owning property as a major priority so maybe the change will be generation driven.

  2. Pete B on Wed, 17th Jun 2009 11:26 am

    3. Building more and better social homes would also be an excellent way of reducing the price of sustainable building technologies. Simple economics tells us that by increasing demand through a massive programme of ‘green’ house building, we will drive down the price of those technologies to a level much closer to the non-green alternatives and thus make them a more attractive prospect for everyone.

    I also wonder whether there is enough diversity in the rental markets. If big houses, and houses in nice areas, are synonymous with owner occupancy, the notion that home ownership is the way to get on in life is unlikely to go away.

    The other point I want to raise is that the reason many people buy their home is to avoid having to pay rent or a mortgage in retirement. Retired people who rent are extremely vulnerable to rent increases since they will usually be on a fixed income. An important part, therefore, of a promotion of rented housing would be to address fears about rent increases in retirement.

  3. Julian Dobson on Wed, 17th Jun 2009 12:50 pm

    4. I agree, with one exception.

    A couple of months ago I posted a response to the Conservatives’ housing green paper (it’s at http://livingwithrats.blogspot.com/2009/04/good-bad-and-ugly.html) which argued that as long as social housing is the tenure of last resort, we’ll have a class divide between owners and tenants.

    Housing policy for the last 20 years has stigmatised tenants as lazy, workshy and antisocial, and lauded owner-occupiers as people with ambition and get-up-and-go. And so people did get up and go, turning prejudice into a self-fulfilling prophecy.

    There are three ways to reverse that trend: increase supply, invest in management and widen eligibility for social housing. They need to be done together. Only after such a sustained programme would an advertising campaign have any credibility.

  4. Duncan on Wed, 17th Jun 2009 4:03 pm

    5. Matthew,

    I totally agree.

    I wrote a piece for LabourList on this issue a couple of weeks ago.

    http://www.labourlist.org/house_prices_and_the_left_duncan_weldon,2009-06-08

    I concluded:

    Thatcher revolutionised the housing market through the ‘right to buy scheme’. Britain is now close to being the ‘property owning democracy’ of which she spoke. Given that 70% of voters are now owner occupiers it is no surprise that governments, of all colours, will aim to give these people what they want. But this is not what centre-left politics should be about. We need to create a new housing market, where prices rise in line with earnings, where people think of their home as a place to live not a source of cash and where tenants (whether private, social or council) are not seen as lesser beings than owners. This will mean building a lot more homes, replenishing the social and council stock and probably being more prescriptive with banks as regards their lending policies. It is hard for any government to say to 70% of its electors, we don’t want the value of your assets to rise so quickly, but, for a centre-left government, it is necessary.

  5. Susan Heaton Wright on Wed, 17th Jun 2009 5:51 pm

    6. I agree to a certain extent, BUT there is also the right to choose how one spends one’s money. For a number of people, the motivation to save to purchase one’s first property was and is very strong, and the pride of achieving this is very powerful.

    Also, whilst I am in favour of social housing, this needs to be carefully managed so that the living environment is not wrecked. Locally we have a desirable development that was a mixture of private and social housing, which has been ruined by litter, behaviour of some of the residents and roam dogs that terrify some of the residents.
    On paper your arguments are good, but sadly the reality does not always deliver!

  6. Colin on Wed, 17th Jun 2009 6:53 pm

    7. I think a significant element of the challenge is to build a rented sector which is selected by choice as is seen in Germany. If there was adequate supply and a good market was developed it would offer the mobility that social housing seldom does in locking residents into locations.

    Finding the investors to ack such an expansion is a challenge (pensions funds, again?). It may also provide a market where social and non-social rented tenents could co-exist.

  7. Chris Cook on Thu, 18th Jun 2009 12:04 am

    8. I believe that a new approach to tenure and to investment in land/housing is now possible using a partnership framework.

    I set out how this might work in the Annual Lecture for an Irish think tank last November.

    http://www.slideshare.net/ChrisJCook/equity-shares-a-solution-to-the-credit-crash-presentation

    This enables not only a new way of dealing with existing unsustainable housing debt, but also a simple but radical approach to sustainable development of land.

  8. matthewtaylor on Fri, 19th Jun 2009 8:29 am

    9. I Agree Julian. Advertising is the cherry on the cake – the cake is the policy framework

  9. matthewtaylor on Fri, 19th Jun 2009 8:36 am

    10. Good points Pete. So, part of a reform package has to be an investment and regulatory framework that encourages five year rental agreements. Another idea is that the Government publish a house inflation index figure every year (will normally be very similar to RPI) which can be built into rental agreements as the annual uplift thus protecting owners margins and giving tenants some predictability. In terms of types of housing i would like to see much more innovation in terms of lower costs shared living so that families can live in compact flats but with good access to high quality shared spaces and facilities; from allotments to playgrounds to laundrettes

  10. matthewtaylor on Fri, 19th Jun 2009 8:38 am

    11. Thanks David. Nice point. That’s why a vital part of my package is a Government commitment to puncture any emerging housing bubble. As long as people think it is only a matter of time before we see another bubble tenure decisions will be made on the basis of wanting to get rich rather than housing need of lifestyle

  11. matthewtaylor on Fri, 19th Jun 2009 8:45 am

    12. Thanks Duncan. Great piece. I will definitely quote it if I return to the subject

  12. matthewtaylor on Fri, 19th Jun 2009 8:49 am

    13. Fair enough Susan. I am not opposed to owner occupation just think people should choose it for sound reasons of lifestyle and preference not as a get rich quick scheme (or in the case of thsoe who jump on the ladder at the wrong point ‘ get poor quick scheme). And in my experience good housing management (of which there is far too little) also helps tackle anti-social behaviour.

  13. matthewtaylor on Fri, 19th Jun 2009 8:53 am

    14. I agree Colin. I understand that the Homes and Communities Agency is currently undertaking a study of how to improve the investment framework for private renting. I chatted to Sir Bob Kerslake (heard of the HCA) the other day and he pointed to the progress in supplying student housing as evidence of what can be done with a good framework

  14. matthewtaylor on Fri, 19th Jun 2009 8:53 am

    15. Thanks Chris. I will have a look at this over the weekend.

  15. Nick Van Ostren on Fri, 19th Jun 2009 10:09 am

    16. Matthew,
    I assume that your egalitarian views on the virtues of renting come from the perspective of a home owner.
    I would be more convinced by your arguments should you chose to tear up your title deed and join us renters in our cycles of uncertainty.

  16. matthewtaylor on Fri, 19th Jun 2009 4:21 pm

    17. It’s a fair question Nick. I currently live in a rented flat in Stockwell.

  17. Brian Hughes on Fri, 19th Jun 2009 4:28 pm

    18. Huge task! Problem is that a shortage of housing keeps the price of homes high and rising prices appear to be good news to most involved in the business. Estate agents are on commission, developers see their land values rise, householders get the illusion of being richer and governments pick up more stamp duty and have happier feeling voters.

    It’ll take a lot of work to break this pernicious cycle and I’m not sure that any national politician really has housing as high on their agenda as they may claim to have. There appear to be very few votes to be had by promising to build more homes (thereby “concreting over our precious fields” (have the people who say such things never flown over Britain? – most of it is fields!) and potentially depressing house price rises).

  18. ad on Fri, 19th Jun 2009 7:12 pm

    19. “High levels of home ownership reduce population mobility ”

    People renting privately can move easily – is this always true for people in social housing? If not, we need more people to be renting privately, but fewer people in social housing.

  19. Colin on Fri, 19th Jun 2009 9:09 pm

    20. Thanks for the reply.

    We’re working with HCA on the same issue.

    German models of provision may give us some markers.

  20. matthewtaylor on Sat, 20th Jun 2009 12:27 pm

    21. ……Or to make it easier for social renters to move

  21. matthewtaylor on Sat, 20th Jun 2009 12:30 pm

    22. Maybe we should get the HCA and RSA to pull a range of people together to discuss all the aspects of a policy of parity of tenures.

  22. Julian Dobson on Sat, 20th Jun 2009 12:51 pm

    23. It’s been encouraging to see this debate taking place. One other option to throw into the mix, which I think provides an alternative to the boom and bust of private ownership and the stigma attached to social renting, is the community land trust model.

    This is well established in the US and increasingly being adopted in the UK, though on a very small scale at the moment, and mainly in rural areas. The idea is that the land is owned in perpetuity by a local trust to provide affordable housing and other community assets (business premises or play facilities, for instance). While the government and the housing policy world have been slow to see the potential, it’s starting to attract a lot more interest and is being backed by both the Tories and the Lib Dems.

    It’s now being tested in urban areas too, with schemes being developed in Brixton and Stoke Newington, for instance. You can find out more at http://www.communitylandtrust.org.uk/ and there’s a national conference on 30 June (I declare an interest here as I’m one of the organisers) – see http://www.clt-conference.co.uk/

  23. ad on Sun, 21st Jun 2009 2:13 pm

    24. Matthew, true enough.

    How do we make this happen?

    And in view of the cuts that are coming, how do we make social renting less expensive for the government? (I assume that social renters are in effect subsidised, otherwise what would be the point of social renting?)

  24. Rachael West on Mon, 22nd Jun 2009 4:37 pm

    25. In Australia, we had some issues with state housing for indigenous people: Aboriginal Australians would often wreck the properties that were built for them.

    The houses ‘we’ built for ‘them’ weren’t actually what they wanted; they tended to be designed and commissioned by a state government department in a city thousands of kilometres away.

    Recent projects that have been more successful have been a result of a better stakeholder process, Aboriginal people working with the engineers to provide a solution that works for everyone. Win win: indigenous communities are happy, the public is content that their tax dollars have been well spent and the consultants deliver good work.

    How this relates (!): I think the idea above to bring different people together for a discussion is great, but I wouldn’t necessarily start with a solution in mind. Housing means something different to everyone; I would love to see a discussion bring together the values of a range of groups and see what emerges.

  25. matthewtaylor on Tue, 23rd Jun 2009 6:52 am

    26. Thanks Julian. CLT does look interesting. It’s the kind of idea I would like RSA Fellows to engage with as we try to get the Fellowship to be more active. Good luck with the conference.

  26. Colin on Tue, 23rd Jun 2009 9:02 am

    27. I’m interested in CLT’s.

    I did some work with Tribal a few years back modelling a couple of examples for the GLA.

    I felt there were complexities in the model when you started to consider how churn is managed (and how you manage tenant/income mix).

    This may be because they were small schemes and as such were creaing a very “lumpy” market.

    On a bigger scale it might be more fruitful which is kind of what I liked about Chris Cook’s model.

    I would welcome an RSA/HCA forum on this but us Local Authorities need to be involved.

  27. Simon Brown on Wed, 1st Jul 2009 2:13 pm

    28. I read your article in The Times and felt compelled to answer to you rather than The Times not least because on here I am not limited to 300 characters including spaces.
    jdb on the times website makes a valid point:
    Successive UK governments have organised the private rented sector as a speculative investment vehicle, via tenancy arrangements and tax treatment. The outcome, rents are too high (as prices are driven by speculation) and tenure is too insecure for families.
    This certainly matches my experience.
    I had to give up the flat I owned due to ill health (I’m much better now, thank you) that also left me insolvent and therefore bankrupt. I doubt I will ever be approved for a mortgage and in any case I have a problem with property ownership – maintenance costs + mortgages + insurances will always be more than rental because proper landlords have the benefit of economies of scale.
    The problems I have encountered as a private renter has been as follows:

    I lived with my partner in a bedsit South London, the landlord was amiable but refused to do any maintenance on the property and it was a damp hell hole. Only once we moved out and the prospective new tenant insisted she would not rent until the flat was properly renovated did he bother to do any maintenance at all.

    I lived in a lovely cottage in North London. Our landlord was a reasonable fellow but at the end of our first year tried to put the rent up by 19% because it was the market rate (he said) despite this being against the terms of our contract. In the end he offered a more modest increase but passing responsibility for Corgi inspections of the boiler on to us. We moved. He ended up with a tenant who has apparently wrecked the place. More fool him.

    We lived in an appalling and unsafe studio in Bounds Green whose conversion (from the front room of a Victorian house) had been so badly bodged that the entire row of kitchen units collapsed on my head. The landlord came in and proudly announced that he and his Romanian workmate had reattached them using “proper butterfly screws for use with plasterboard”. Unfortunately it was Victorian plaster, not plasterboard and the cupboards started to detach again despite leaving them almost empty. The sealant in the shower was rotten and I had to replace it or we might not have got our deposit back – not my responsibility but I didn’t want to end up losing so much money. None of the electrics were properly earthed, my neighbour had running water and damp down his back wall. We left as soon as we could.

    Where I currently live the boilers need replacing but the landlord wants to switch the entire block of flats from gas to electricity which would be impossible as there is nowhere in the flats for the water tanks to go. The landlord wants to knock down our garages and rebuild them with different garages with another flat above to rent out despite it being in a major conservation area and planning permission being denied every time he applies. The landlord refuses to remove a wasps nest on the property as it’s not inside one of the flats. The landlord has not replaced the ageing carpets or done any renovation since he bought the property 5 years ago and refuses to help intervene with our ageing neighbour whose double incontinence and unwillingness to accept help means we are unable to invite guests round. Our balconies are collapsing and I’m not hopeful of any remedy.

    Why does all this happen? Simple – tenants have no rights that they can enforce. Sure I’m entitled to hot water under the 1985 housing act but try enforcing that when the boilers die. Again. Sure I’m entitled to the peaceful enjoyment of my flat according to my contract but try telling that to the landlord. Tenancies are not secure, we are quite likely to have to move every 12 months, successive governments have made it incredibly unpleasant to rent. I would rather rent as I believe property ownership is a waste of money and an inefficient investment and right now I have no choice. Why do all the landlords I ever have to deal with feel the need to neglect their properties and tenants in a bid to make a few extra pennies?

    I only thank heavens I don’t live in social housing but sometimes private renting can be purgatory.

  28. Sharon on Fri, 3rd Jul 2009 4:55 pm

    29. I totally agree that the constant pressure to own your own home is relentless but
    as someone who has never owned her own home, I don’t feel that I have lost out one jot. In fact I feel tremendously sorry for those that have lost the homes they have worked hard to purchase due to the economic downturn. Not to mention those that have had their homes compulsorily purchased over the decades for whatever reason.

    Renting is far more socially acceptable to our European neighbours but our obsession for owning property has been handed down to us through centuries and it will take time to change it.

    However, before that can even be remotely entertained then the rental market has really got to get its act together. Until we do, then getting attitudes to change will be even further away than the next generation!

    Regards
    Sharon

  29. matthewtaylor on Mon, 6th Jul 2009 7:26 am

    30. Thanks for this Simon. Sorry it has taken me a few days to reply. One of the points I wanted to put in the original piece but didn;t was to tackle the appalling quality of most letting agencies. They charge high fees but do virtually nothing, Your experiences sound really grim. Did you use a letting agent and were they any good?

  30. Simon Brown on Mon, 6th Jul 2009 8:24 am

    31. I’ve done both – used private landlords and letting agents. Other than acting as an advertising service and sorting out the deposit protection, I’m not sure what they are supposed to do. That said the current letting agent where I live is angling to manage the property as he recognises that the property is badly managed and reckons he’d do a better job than the landlord (could hardly be worse). He acts as a very efficient go-between with the landlord who is often unapproachable and unwilling to respond to requests. Obviously some people make unreasonable requests but in the middle of winter with 6 inches of snow outside I don’t think it’s unreasonable to contact my landlord if the hot water isn’t working.

    The main issue, for me, is security. I can’t make long term plans for work, for my family, for business, for anything if I think that in 6 months time I might have to move again. It will hammer my already frail credit rating, it will cost me an absolute fortune and the situation ends up being that all rented accommodation is, to some degree, temporary accommodation. I understand that landlords need protection from rogue tenants and need to be able to evict people who don’t pay their rent but I object to being evicted (effectively) by my landlord’s greed when he wants a rent increase when rents are dropping locally and nationally.

  31. Sharon on Mon, 6th Jul 2009 10:04 am

    32. I agree with Simon – its sometimes really hard to figure out just what landlord and letting agents do.
    I have a long lease and the situation is just the same. An absent freeholder (later jailed for Customs and Excise fraud) negilgent managing agents who didn’t want to know, Individual landlords that don’t give contact details to their tenants and lettign agents who do as little as possible and when they do do something, the workmanship is terrible.

    Simon, if you ever do buy a property, buy freehold. If you have to continue renting then ensure that your letting agent and landlord belong to some kind of memberhip organisation where they have to abide by a code of conduct. You in turn will at least have someone else to approach if your landlord/agent turns out to be less than helpful.

    Kind Regards
    Sharon

  32. Affordable housing delivery « Planning Advisory Service on Fri, 10th Jul 2009 9:44 am

    33. [...] slightly tricky if you’re not there to see it in person. In the comments of the rather fine Mathew Taylor blog that followed his presentation at CIH I found an excellent introduction to CLT. It is 142 slides, [...]

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