Unlike the Continent we are a land where the majority of us aspire to owning our own home. In fact according to the Housing and Planning Statistics 2009 there are 22 million dwellings of which 68% are owner occupied. There are only according to these statistics around 3 million properties which are privately rented. Contrast this with Germany where half of the housing stock is occupied by tenants.
So why are we so obsessed with ownership? For many of us it is how we have been brought up, to do well at school, to find a job and to then look to buy a property, normally as part of settling down and starting a family. It’s part of our make up as well as being regarded by some as a symbol of success. For others home ownership is about financial security at a time when pensions and other investments are constantly at risk form economic downturn.
The tide may however be changing or about to change and there are many reasons for this, the main one of which are the austerity measures taken by the Government and the impact these will begin to have on how we live our lives in the future.
There are of course other factors such as affordability. The National Housing Federation reported an eight per cent rise in house prices and the continuing squeeze on lending means that would-be buyers in Cornwall now need to earn more than £54,000 a year to set foot on the property ladder.
The Government’s housing policy however is the main cause for change in the way we look at housing and could well see the end of the Country’s property owning democracy. The Government has as part of its recent Spending Review slashed the building budget for affordable homes by 60 per cent, and given only 140,000 new private houses will be built in the UK this year, we will soon be facing a major shortage of new housing stock.
The shortage of new housing combined with limited mortgage lending, insecurity about jobs and the worry of making long term lending commitments, and in some areas the high cost of getting onto the property market, can only lead to large property institutions seizing the opportunity this presents to invest in the building of property designed only for rental.
‘Build to let’ is the latest buzz phrase and we have already seen the likes of Legal & General, Aviva and ING making overtures in this direction.
Some private investors have already begun to purchase land in London with a view of creating ‘no thrill’ three bedroom family flats in complexes where heating and other services are shared. Rents would be set at around £300 a week – surprisingly, just below the £340 housing benefit limit to be introduced next year for three-bedroom accommodation. To me this all sounds similar to the Council Estates which exploded onto the scene in the 60’s and 70’s.
The Government’s agenda hidden in part behind the Spending Review is quite clear; it wishes to reduce the role of the State in housing and to open the door for the private sector to fill the gap. The challenge for the private sector is to decide where demographically it will pitch its investment. The risk is that those who were at one time looking to get on the housing ladder and who may be looking for rental property could be overlooked with the focus being on those eligible for housing benefit given the financial security and guaranteed return this presents. Those who fall in between low income and the level of wage needed to purchase a home could find themselves even further out in the cold.
For this reason there must be stricter controls exercised through planning restrictions to ensure we do not end up as we did in the past with parts of the country where all those occupying property are from the same social background. We must strive for a fairer distribution of our ever shrinking housing stock otherwise we face the risk of creating even deeper cracks in the social fabric of our country.
David Pett is a partner with Morgan Jones and Pett and can be contacted HERE: CLICK TO E-MAIL
