The housing prospects facing the roughly one-third of British people who do not own their own homes continue to get worse. Hopes that the pandemic would lead to an easing of pressures, because remote working would increase flexibility for those making decisions about where to live, have been crushed. Instead, prices rose 10% between March 2020 and March 2021, and have kept on rising. June saw a year-on-year increase of 13%. Private rents are also at record levels, with recent figures showing the average outside London up 11.8% on a year ago. In the capital the figure is 15.8%.
Because the majority are homeowners, attitudes surrounding housing inflation are at odds with those around rising prices for energy or food. But for those renting privately or hoping to buy, it forms part of a wider affordability crisis. Particularly for younger people, the difficulty of buying a first home is a generational injustice – although this framing can obscure the fact that many of those with home-owning parents stand to benefit in the longer term. From 59% in 2003, the proportion of people in the 25-34 age bracket who are homeowners has fallen to 47%. The racial disparities are also stark, with lower rates of home ownership among ethnic minorities.
The lack of consensus over the solutions to Britain’s housing crisis reflects wider differences of view about public policy, as well as the conflict of interests between those who own property and those who don’t. Another factor is gaps in data. The government has never studied the impact on prices of foreign investment in UK property, but these purchases are widely accepted as having contributed to price inflation in some areas. Research commissioned by the mayor of London showed that 36% of new builds in the “prime” inner London boroughs had foreign buyers, and that these were less likely to be used as main homes. A new register of overseas entities should provide more clarity about who is profiting from UK property purchases.
But transparency will not solve the affordability crisis. Currently a fifth of homes are owned by private landlords, and changes to the tax system, including council tax and capital gains rates, are needed if rich buyers are to be discouraged from turning homes into financial assets. Increasing the supply of socially rented properties, and boosting tenants’ rights, should be viewed as urgent necessities. It is dismaying that housing policy overall is not a higher-profile issue than it is. Liz Truss’s pledge to “rip up the red tape that is holding back housebuilding” sounds more like a threat than a promise, to anyone who cares about the UK’s net-zero target and thinks that meeting human needs, not deregulation, should be the government’s aim.
There is no quick or easy fix to a situation that has built up over decades. But there are possibilities. Researchers at the banking reform campaign group Positive Money have argued that the Bank of England should be tasked with reshaping the mortgage market, while a new report from the Joseph Rowntree Foundation makes a case for measures aimed at shifting property out of the private rental sector into other forms of tenure. The first essential step is to recognise that the large-scale transfer of homes out of social ownership to private landlords, in the decades since right to buy was launched, has been a disaster. Particularly in combination with other inflationary pressures, house prices rising faster than incomes are a gross injustice and make a mockery of levelling up.
The fact that two-thirds of the population stand to benefit from these rising prices makes any attempt to dampen them tricky. But progressive politicians should take heart from polling showing support for the idea that the primary purpose of housing should be shelter, not profit. In the current context of dysfunction and unfairness, fortune ought to favour the brave.