Young homeowners were described as
fast becoming a disappearing species. The percentage of those aged between
16-24 living in houses or flats they own themselves had dropped from 36% in
1991 to just 10% in 2012. Those only slightly older were also having difficulties
getting on the property ladder. Home ownership had dropped among the 25-34 age
group from 67% to 39.5% in the same period.
And since 2010, the number of middle-aged homeowners has started to
flat-line too. Only home ownership amongst pensioners appears to be still on an
upward trajectory.
Why should this matter to Liberal Democrats? Well as Liberator has argued
many times through its contributors, the party needs to build a core vote by
identifying those people most likely to be attracted to our basic beliefs. Various
commentators have told us in recent weeks that those most likely to be
sympathetic to our aims are younger people, those with a university education, and
those who work as professionals, especially in the public sector. They are
attracted to our commitment to human rights, our internationalism, and are
worried about climate change. They also support good public services.
What the Liberal Democrats have never been good at is to put forward a
policy programme which provides positive benefits in material terms to our
likely core voters. Labour and the Tories have no such qualms about
manipulating the market place to benefit their core voters. It is time we were
more blatant about it.
Many of our potential core voters are likely to be trapped as private
renters unable to save up for the deposit for a first purchase. The significant
drop in homeowners in the under-40 age group is due to spiraling house prices
that are set at too many multiples of potential buyers’ gross incomes.
But there is an emerging trend that many people are paying rents that are
higher than the equivalent mortgage payments would be on the properties they
occupy. They are in the dilemma of paying a high rent but cannot afford to save
for a 10% deposit on an equivalent property.
Which brings me to my proposal. If the Tories can extend the right to buy
to Housing Association tenants (but at a discount and with no guarantee of
replacement homes being funded) then we should consider extending the right to
buy to those renting in the private sector, under certain conditions.
Those paying rent but who can obtain a 100% mortgage offer on the property
they occupy from a recognised bank or building society, where the mortgage
payments would be the same or less than the rent they are paying, should gain a
legal right to buy the property. In these circumstances the test of
affordability would be met and should satisfy the mortgage providers.
Any valuation of the property could be established by the average of values
estimated by the mortgage provider, an estate agent nominated by the buyer, and
another nominated by the landlord. The property would be sold at an agreed market
price, so the landlord would not lose out, unlike the Housing Associations, who
will do under the Tories’ proposed scheme.
The effect of enshrining this in law would be to moderate both house prices
and rents. Landlords would become wary of putting up rents above the equivalent
mortgage cost in case they lost their properties. With more genuine
applications for mortgage funds, and a consequential increase in the number of
properties becoming available to purchase, the current situation of too many buyers
chasing very few properties would be relieved and this would also help to moderate
property prices.
A number of buy-to-let landlords would decide to move out of the business
because their returns would diminish. This would help to correct the generation
gap that has emerged in recent years which saw older people investing in
property as an alternative pension option.
Not everyone currently renting and being able to afford the mortgage
payment would want to claim the right to buy of course, because the property
may not be an attractive longer-term proposition for them.
I am aware that my proposal makes no contribution to the need for more
housing generally, but the Chancellor’s recent gifts to first time buyers to
help them with deposits has cost the Treasury money, and helped to drive up
prices even further, while my proposal requires no Government subsidy while
having a moderating effect on house price inflation.
Thomas Picketty established in his book Capital that the current trend of
concentrating capital assets in older age groups was increasing across the
West. To ease the potential generational tension progressive parties need to
regulate markets to offer new ways for younger generations to gain assets.
My proposal is one which would make a modest impact on this problem, and
would be attractive to the very cohort of voters who are attracted to us for
more altruistic reasons. So why not help them in their pockets too?
Potentially included in the next edition of Liberator magazine...
