For many years, however controversial her other reforms, it looked like Margaret Thatcher had grasped the British obsession with home ownership perfectly. When she came to power in 1979, some 55% of British homes were owned by their occupiers. By 1987, helped along by easy credit and the right of council tenants to buy their homes at a hefty discount, it had soared to 64%.
Buying your own home wasn’t just a way of setting down roots: it was a way of becoming a full member of society. (Renting may have been OK for students or Germans; decent British sorts owned.) More than that, it was an investment, not only in your future, but in the economy as a whole. Rising house prices begat economic confidence; economic growth begat rising prices. What could possibly go wrong?
Well, as it turned out, almost everything. Home ownership rates peaked at 71%, about 2003; in the years since they’ve fallen even faster than they once rose. Today, the British still aspire to be a nation of homeowners, but it’s in roughly the same way we aspire to be a nation of sexy billionaires, and new figures published by the Resolution Foundation (RF) show that the home ownership rate in England is the lowest it’s been since 1986: 63.8%, and falling. (Earlier figures had suggested it had bottomed out, but LOL, no.) That, just in case anyone still believes in the myth of British exceptionalism, is lower than France. As with so many of the Thatcher government’s privatisations, the housing revolution now looks less like sustainable long-term growth strategy than a one-off giveaway.
For a long time, it’s been possible to comfort ourselves that the trend reflected the insanity of the London housing market, where a fair size shed in the right part of the capital can fetch half a million. It was a problem, yes; but it was a geographically contained one.
The RF report, though, puts paid to that theory. Home ownership rates have fallen by 10 percentage points or more in markets as diverse as the West Midlands, West Yorkshire and Northern Ireland. The biggest fall of all, however, has come in Greater Manchester, where the ownership rate has fallen by 14.5 points, from 72.4% in April 2003 to just 57.9% by last February. If you believe, as most of our leaders do, that home ownership is A Good Thing, then we have a national problem on our hands.
Well, as it turned out, almost everything. Home ownership rates peaked at 71%, about 2003; in the years since they’ve fallen even faster than they once rose. Today, the British still aspire to be a nation of homeowners, but it’s in roughly the same way we aspire to be a nation of sexy billionaires, and new figures published by the Resolution Foundation (RF) show that the home ownership rate in England is the lowest it’s been since 1986: 63.8%, and falling. (Earlier figures had suggested it had bottomed out, but LOL, no.) That, just in case anyone still believes in the myth of British exceptionalism, is lower than France. As with so many of the Thatcher government’s privatisations, the housing revolution now looks less like sustainable long-term growth strategy than a one-off giveaway.
For a long time, it’s been possible to comfort ourselves that the trend reflected the insanity of the London housing market, where a fair size shed in the right part of the capital can fetch half a million. It was a problem, yes; but it was a geographically contained one.
The RF report, though, puts paid to that theory. Home ownership rates have fallen by 10 percentage points or more in markets as diverse as the West Midlands, West Yorkshire and Northern Ireland. The biggest fall of all, however, has come in Greater Manchester, where the ownership rate has fallen by 14.5 points, from 72.4% in April 2003 to just 57.9% by last February. If you believe, as most of our leaders do, that home ownership is A Good Thing, then we have a national problem on our hands.
Or, since renting is clearly horrible, perhaps not. The RF report found that fewer than one in 10 private renters say they have no ambition to own purely because they’re happy where they are; fewer than one in 30 says they prefer the flexibility of renting. Ask almost any private tenant for their opinion of their landlord, and you’ll swiftly understand why.
The real reason home ownership rates are falling is both incredibly simple and entirely predictable: prices in almost any city with a decent jobs market are now unaffordably high. There are many reasons for that: a national failure to build enough houses; the long, slow death of council housing; the increasing concentration of jobs in a small number of boom towns.
But a big one is surely the buy-to-let bubble, in which ministers have encouraged older people to invest in property as a way of plugging the hole in the pensions system. This has worked, in so far as the current generation of pensioners are the richest this country has ever seen. But it’s also made the housing crisis harder to solve: if the government could halve house prices tomorrow, it’d be swapping a housing crisis among the young for a pensions crisis among the old.
Not solving it, though, means swapping a medium-sized pensions crisis now for a enormous one in the fairly near future: by the 2040s, if government takes no action, we’re likely to be facing a generation of pensioners who have neither pensions, nor property wealth to drawn on, and still have rent to pay. All bets are off as to what will happen then, but I don’t think we can rule out the solution presented by the 1976 cinematic classic Logan’s Run.
n some ways the buy-to-let bubble is merely a more virulent form of a condition that’s afflicted our national obsession with home ownership from the beginning. The main reason buying your own home makes you richer is because it increases in value: somebody will pay more for it tomorrow than you can today. In other words, rising house prices have always been a socially acceptable way of allowing the old to rob from the young. In an economy in which inflation has been held down, that would always eventually prove unsustainable.
But the British fetish for home ownership isn’t simply a matter of snobbery, or even one of financial planning: it’s an entirely practical response to the fact that our private rental sector is awful. If tenancies could be made longer, and price rises more predictable, then renting might become the sort of thing people would voluntarily choose. In Germany, tenants’ rights are so strong that it’s possible to live your whole life in a rented home without feeling insecure. In Britain, any family in a rented home runs the risk of risk of being priced out of their home at short notice, with all the disruption and changing schools that would bring.
So far, attempts to shore up tenants’ rights have not found favour with a House of Commons still stuffed with landlords. As generation rent starts to settle down and have kids, perhaps that will start to change. But – well, would you bet your house on it?