In The Purple Book Caroline Flint makes a number of policy suggestions as to how Labour’s housing policies in 2015 and beyond could help reconnect with voters. Policy ideas around promoting greater shared ownership, mutual ownership, rewarding private landlords who manage their properties to a high standard and intergenerational equity transfer to encourage home ownership for young professionals, should all be developed. However, I’m not sure this all adds up to a coherent policy with a narrative people can readily understand.
For example, the shared ownership model is complicated with payments required for leasehold charges, rent, mortgage and mortgage protection insurance. If incomes remain depressed, those participating in such schemes will find there is little prospect of extending their mortgage portion beyond the minimum and those whose find their income declines may lose the minimum investment they have put in should they default. This is hardly realising the dream of a property-owning democracy.
My concern is that our policy agenda remains mesmerised by the concept of spreading home ownership to the three million or so who tell pollsters they aspire to own a home. Not surprisingly, I suspect people aspire to home ownership because it offers a greater degree of security and control than is available in either the public or private rented sector. But in order to rebalance our economy, don’t we need to promote the idea that people might like to invest their earnings or financial assets in something other than bricks and mortar?
Furthermore, home ownership in Britain may have peaked so to offer more of yesterday’s housing policies may have a declining appeal to the electorate. We should also question the morality of encouraging people to buy when their incomes are not up to the task. After all, this is what caused the banking crises of 2008. We need to be honest with the electorate and discuss the merits of other housing tenures and the role our housing policies can have in helping Britain rebalance its economy and provide secure housing tenures.
Future housing policies should also help address the needs of the labour market as it is today and allow our citizens greater geographical mobility. Home ownership assumes that people’s working lives are geographically static. Our policies should encourage people to live in secure and fair rent homes.
Labour policies therefore should look to making people feel secure and in control. This means legislating around rent levels and beefing up local councils’ regulatory role in working with private landlords and prosecuting inadequate landlords who fail to maintain their housing stock or raise rents without arbitration. A happy consequence of housing policies that encourage a thriving and secure rented sector is that house prices will decline, making home ownership a viable option for more people. Where landlords fail to comply with reasonable but firm regulation, we should also promote greater use of compulsory purchase orders CPOs. After all, we seem to be able to CPO properties when we want a high speed rail link or an Olympic Park. Properties purchased under CPOs could be offered to private landlords, housing associations and local authority managing agents who comply with public sector ‘decent homes’ standards. Tax incentives could be offered to landlords to stimulate interest.
Creating a more vigorous rented housing sector could also help generate new investment funds drawn from rental income to deposit with local investment banks. This would provide additional resources to develop local economies. At present a sizeable proportion of rental income leaves the country, not just the locality. For individuals renting their homes a tax incentive could be offered to encourage people to invest in the same local investment bank opportunities. Helping people develop a financial asset for passing on to future generations or pay for personal care in old age.
A future Labour government should use tax and regulatory policies to reinvigorate a popular private rented housing sector. Ironically, reversing the market distortions created by ‘mortgage tax relief’ and ‘right to buy’ state subsidies of the late 20th century. This will help promote a greater understanding by the electorate of how our housing policies helps them rebalance our economy.
—————————————————————————————
Jeremy Killingray is former councillor and a member of Progress
—————————————————————————————
How refreshing to see someone questioning the dream of home ownership at all costs. I welcome the idea to expand the rental sector and opening up new markets with affordable and secure tenure. As a housing professional working in the social housing sector I also welcome a debate on the future of rented housing as a real option for all.
There is a major role for Registered Social Landlords to work more in the private rented sector with rents reflecting location, security of tenure and property standards. However we have to be careful that we don’t continue to increase the burden on Housing Benefit with ever increasing rents in this sector and in turn becoming unaffordable for those in need.