The prime minister’s plans to turn ‘generation rent into generation buy’ through government-backed 95% mortgages led to dire warnings of another financial crisis driven by risky lending. But while critics are right to urge the PM not to repeat past mistakes, his fundamental aim to boost home ownership is sound.
While the number of renters has grown considerably in recent years, as some choose renting for its greater flexibility, most people – including the majority of renters –still aspire to own their own home.
It is easy to see why home ownership is so highly valued in the UK, as residential has outperformed all other asset classes since 1945. The resilience of housing as an investment is demonstrated by the fact that amid a global pandemic and potentially deepest recession on record, house prices are rising, and this is a global trend.
To ignore the vast majority of Britons who want to own their own home would be a betrayal
This is not to say house prices will never fall again – housing is cyclical like any other market. And this is a highly unusual recession.
But the appeal of home ownership is more than just financial. Owner-occupation offers greater security of tenure than private renting and it is easier to put down roots if you are not moving every few months or years. There is also the sense of pride of being able to call somewhere truly your own.
Not everyone wants to own, of course. It is much harder to pack up and chase your dream job if you’ve got a mortgage to pay. Selling your home can be time-consuming and expensive.
That is why we need to build more homes of all types and tenures, with more housing for private rent and that is affordable. But to ignore the vast majority in the UK who want to own their home would be a betrayal by the government and property industry.
The most obvious way to boost home ownership is to increase the supply of homes for sale. The government’s proposed planning reforms may make this easier, but encouraging development is not the only option. Britain’s elderly population is sitting on a huge amount of housing wealth, often living in homes far bigger than they need. But the absence of a thriving later-living sector and a tax system that disincentives downsizing makes rationalising the use of the UK’s existing housing stock difficult.
Embracing innovative types of affordable housing tenure is another option. David Cameron’s Starter Homes programme was slammed as a dead duck. But as developer Pocket Living has proved, the premise of building discounted homes for first-time buyers with discounts locked in for perpetuity is also a workable solution.
Attacking the government’s ambition to increase home ownership ignores the wishes of the people we are meant to be building homes for.
Dean Clifford is co-founder of Great Marlborough Estates
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