‘I own my home.’ These words, for many, are the ultimate statement to aspire to. After all, a house is likely to be the single largest debt and asset that people will possess over their lifetime.
However, home ownership has been falling for more than a decade, after rising for most of the past century. Most recently, in a long line of factors, skyrocketing interest rates designed to stem Britain’s rampant inflation has made it increasingly unaffordable. This has pushed people into the renting market and today, those renting now comfortably outweigh those with a mortgage. And renters have, on average, faced a £2,800 annual increase in rental costs over the last three years.
What has led to this point? The overarching factor is the insufficient supply of housing, where the demand for homes has consistently outstripped the pace at which new properties are being built, driving up prices. A lack of social housing has disproportionately contributed towards this trend, forcing those buyers/renters into the regular housing market and creating an escalatory ripple effect.
The Right to Buy scheme, popularised by Thatcher, continued by Blair, and turbocharged by Cameron, is also a major contributor. Those in social housing were able to buy their houses at a discounted rate, which whilst increasing homeownership, significantly diminished the availability of affordable housing.
In just four decades, the policy has resulted in two-thirds of Britain’s council houses entering the private sphere.
Moreover, these properties are often merely leased out again by landlords at higher rents. An ineffective planning system, coupled with an influx of profit-chasing foreign investment has also contributed towards a poorly distributed housing supply.
Examining more recent policies, election-friendly – but inflationary-prone – Help to Buy has also exacerbated the issue. Used for around 340,000 home purchases, the House of Lords ultimately deemed the scheme poor value for money, and suggested that the £29 billion should have been spent on simply increasing the supply. The Built Environment Committee argued that housebuilders, aware that buyers could borrow a substantial amount from the government interest-free, raised the prices of eligible homes, particularly in desirable areas.
It’s clear that the UK is in crisis, and has been for some time, so why has housing seemingly been propelled to the top of the political agenda? Keir Starmer made the issue a cornerstone of his speech at the Labour Party conference and the Liberal Democrats have emphasised their commitment to affordable housing.
Firstly, I think that we are reaching the cliff edge of this crisis. Cost-of-living pressures compounded by rising interest rates, stagnating wages, and a competitive rental market have left even those with solid incomes in housing insecurity.
It is estimated that one in three people are using over 50% of their post-tax income to pay for rent. Many fear that there is simply no leeway left in the crisis; we are standing at the precipice.
Secondly, with an election on the horizon, politicians are eager to capitalise on an electoral opportunity. Renters now outnumber buyers and the middle classes are struggling, leaving a lot of votes up for grabs. Notably, in contrast to his overall dismal performance in 2019, Jeremy Corbyn secured the votes of half of all private renters, up from a third who supported the party in 2010. Baby boomers and Generation X may have paid off their mortgages, but the gap between them and their renting children is widening. Will another candidate win over this growing demographic?
Labour are trying to be proactive, at least in the media. Angela Rayner is pushing for a review of Right to Buy, specifically the high discounts introduced by the coalition government. Whilst the party remains in favour of poorer families having the opportunity to own their homes, they’re also committed to preventing newly-built houses from entering the private sector. The Liberal Democrats have also pledged to meet a national target of building 150,000 social homes annually.
Currently, the Conservative strategy involves local planning reform, as announced by Jeremy Hunt in the autumn statement. This hurdle has been a particular thorn in the side of Britain, with archaic laws stifling housebuilding.
With Britain’s economy stumbling, systemic issues with the housing market have come under sharp scrutiny. With pay packets increasingly squeezed, the pressing question is who will step up to address these issues and, more importantly, how they plan to do so.
