The ‘own your own home’ myth

Vincenzo Rampulla NLA Public Affairs Manager

Some modern myths are so stubborn they never seem to die, no matter just how crazy they are.

Take the idea that the UK will one day be a country where everyone will own their own home. Even now, as we claw our way back from a recession caused (at least in part) because of this preoccupation with home ownership, it remains the accepted orthodoxy. And one that the Government has swallowed completely.

Today’s speech by the new Housing Minister, Grant Shapps MP, was just another ritual offering at the altar of home ownership.

Like every other Housing Minister, he talked about a pledge to help Britons on to the housing ladder. The reality is that the Government are now just pushing people into home ownership because an alternative would be the harder path.

Of course, people want to believe it. Property owning has always been viewed as a ‘safe bet’ to realising financial security. It is not surprising that the aspirant working class rushed to buy their council houses when Margaret Thatcher instituted right-to-buy in the 80s.

But the facts point in the other direction:

  • House prices are still beyond the reach of most people. Across the UK, house prices ballooned by 121% over the last decade. Although 1.4 million people want to buy their own home, 75 per cent cannot afford a mortgage with an 80 per cent loan-to-value.
  • We are not building enough houses. Back in 2004, the Government was given the unenviable news that 120,000 new houses would be needed each year by economist Kate Barker. We currently face a shortfall of 150,000 homes built.
  • People need mortgages but there aren’t many available unless you have an average of £30,000 for a deposit. Even then a rise in interest rates could spell disaster when it comes to keeping up with mortgage payments.

For too long the Government has shouted from the rooftops about home ownership with a preacher’s fervour, ignoring the need for a more balanced housing market.

More people are turning to renting and are re-thinking whether it’s worth rushing to own their own home.

Perhaps it’s time that we faced facts and realised that people paying inflated house prices entirely with loans was never the greatest idea.

Maybe it’s time for the Government to have a rethink?

4 thoughts on “The ‘own your own home’ myth

  1. I tend to agree with you on all this.
    We have long said that the high water mark for property ownership was passed some time ago and changes to lifestyles increasingly make renting an attractive idea for many.
    It would help though, if mortgage lenders would allow landlords to issue longer fixed term tenancies (they can always recover a property should a landlord default on the mortgage payments.)
    In relation to expanding the rented sector I also question why lenders’ margins on buy to let mortgage rates are so much higher than standard residential mortgages.
    The difference is hardly justified by a significantly higher arrears experience. On a recent post at our blog we put the blame squarely on lack of competition in the buy to let lending space (especially following the long absence post credit crunch of money market dependent lenders like Paragon.)
    We say to the big lenders, make mortgages for let property available at reasonable rates and with sensible deposits and allow landlords to isue longer term tenancies and the small landlord will expand the sector very nicely.
    Do all this and the private rented sector will not need any institutional investment.
    Alas, the government seems determined to get the institutions involved in developing and expanding the private rented sector.
    Here was our blog post on this matter:

  2. Again, a good post but I have to agree with Nick.
    If landlords had not resisted a regulated and licenced PRS then it would probably have already established itself as a real sector of choice. Economic influences that force people to rent is no real reason to celebrate the sector.

    I noticed you tweeted (whilst I was writing this) that you want to encourage safe and decent homes whatever tenure. Quite so but this simply isn’t happening, especially in the lower end of the private rental market.

    There is no getting away from the fact that we do not view renting in the same way as other countries.
    So, if landlords are really spitting feathers about Mr Shapps ‘ownership aspiration’ announcement then they will have to work a lot harder to improve their image…perception, perception, perception!

    Miss Sharon Crossland AIRPM
    Leasehold Life

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