One of the greatest advances since World War Two was the rise and rise of home ownership. Whereas in 1953 just 32% owned their home, this had risen to 71% in 2003. But home ownership fell from 71% in 2003 to just 62% in 2016. In the past two decades for those aged 25, the number owning their home fell from 46% to 20%.
Yet over 85% of people still want to own their home and falling ownership is a massive source of frustration. Additionally, even some owners are trapped in a smaller flat than they need as they cannot afford a family sized home.
The key in the long run is greater housing supply. It is important to note that, despite some very lazy commentary to the contrary, the UK does not have an undersupply of social or council housing. We actually have the fourth highest level of submarket rent in the European Union – we are miles ahead on that front.
Instead, the failure has been on the system to deliver enough private homes – a failure that is much worse than other countries. For decades, councils have been told that they have to deliver a local plan and ensure that enough homes are built in their area to keep up with population growth and the desire for more space. Very few councils have done so. Even worse, the government until 2015 did not even monitor in a systematic way housing numbers delivered in each area and cross reference this with local need to make sure this goal was met.
The Government has now announced a ‘delivery test’, with councils having to build enough homes to meet 95% of any requirement in their area or face an action plan on how to get the level of homes up to the level required. These action plans need to set out, in a simple way, the infrastructure needed, the design of new homes, and measures to make sure that local people see the benefit of new homes (for example, low-cost home ownership for local people).
Unfortunately, few believe these action plans will follow, and most think councils will get away with not meeting housing need. Government talks big about housing but it needs to think small and intervene intelligently if it is to actually get housing numbers to 250,000.
To deliver sufficient homes will require a diversification of housing supply away from the big housebuilders. The major housebuilders build out sites slowly to ensure that they can sell them – at a rate of around one property a week. They also tend to build a fairly similar product across the country. They are a key part of the mix, but they will not get us to 250,000 homes a year.
Such diversification in housing can also help achieve other objectives as well as just supply. For example, an increase in retirement housing, which is sold to a totally different market to the normal housebuilders, would bring the UK more in line with other countries, where the numbers living in retirement homes are much greater. For every year that people delay moving to full time residential care this saves around £30,000 in health and social care. So retirement housing is about both housing supply and fixing social care.
Another example is shared ownership, where a home is purchased jointly, with a share taken up by another investor. It is often cheaper than renting or owning outright. After 2015 the Government had started to switch funding to help build shared ownership. The grant required for each shared ownership home was around half that of social housing so this meant more affordable homes.
There are already four million sub-market rent properties versus just 200,000 shared ownership homes. The Conservatives urgently need to offer something now in the short term to younger people – and expanding shared ownership must be part of the mix. Private investment into shared ownership can link up pension funds to helping people become owners, rather than trapping them into renting.
The Conservative Party should not give up on home ownership – the British people have not. The Conservatives just need a narrative and a clear action plan to turn people’s aspirations into reality.
Alex Morton is Director at Field Consulting, and was formerly David Cameron’s adviser on DCLG matters. This is an article from Bright Blue’s latest magazine ‘Capitalism in crisis?’
