Home ownership set to fall in UK
- 30 August 2011
- From the section Business
The idea of the UK as a home-owning democracy inspired many of Margaret Thatcher's most loyal supporters. The right-to-buy policy is still seen by some as one of her most important legacies.
But, according to a report by the National Housing Federation, home ownership is on a path of long-term decline. In 10 years' time, owner-occupation rates will be back where they were in the mid-1980s.
The number of people living in a property where the owner is also the occupier has been falling since 2001.
The authors of this new study suggest that by 2021 it will be down to 63.8% from a peak of 72.5%. In London, they say it will dip below 50%.
Politicians on all sides are alarmed by this trend. They know that a whole generation fear being locked out of the property market.
If the "bank of mum and dad" is unable or unwilling to lend, the chances of getting on the housing ladder are looking increasingly slim.
Some of the reasons for this are well rehearsed.
Saving for a deposit is too hard with real incomes falling and youth unemployment high. The banks are cautious about lending. Mortgages are hard to obtain. House prices, in many areas, haven't fallen very much despite the credit crunch and the recession.
Helen Sears, a PE teacher in Bedford, is trying to set up home with her boyfriend but she says they cannot afford to own a home outright.
Instead, they are taking part in a "shared ownership" scheme - which means they buy half the house and pay rent on the rest. It is one way of getting a toe-hold on the property ladder.
"We feel like it's going to take forever to be able to get a house," she says.
"The only other option would be to rent for us to live together - but that wouldn't actually go towards our own home. That's why we want to get on the ladder, but it's really tricky."
The difficulties of raising deposits and obtaining mortgages are one side of the problem. The other is housing supply. It is, though, a bit of a catch-22.
Developers say they are willing and ready to build more homes. But they worry that they won't be able to sell them, because potential buyers will not be able to raise the finance.
The dilemma for policy makers is how to escape this damaging cycle, of restricted supply leading to high prices, which leads to curtailed demand, resulting in unwillingness to build.
New Homes Bonus
The Home Builders Federation says fewer homes are being built in England than at any time since the 1920s.
Housing Minister Grant Shapps has put his name to a steady stream of initiatives.
Perhaps the most significant is the New Homes Bonus. Under this scheme, central government will match the council tax raised by local authorities on a new property for the first six years.
Whereas before, councils did not have much financial interest in building homes, this is supposed to give them the incentive they need to approve development.
Labour accuses the coalition of "gimmicks" and says the policies are already proving ineffective. The opposition points to a big reduction in the affordable homes budget as one reason for the continued shortage of new housing.
But ministers say the problem under the previous government was an over-reliance on Whitehall targets and top-down decision making.
Under the banner of "localism", communities are now being asked to take charge of planning decisions.
It is an approach which seems to have a degree of support in the housing sector.
"We need to ensure that local people understand why homes have to be built," says Paul Tennant, the chief executive of Orbit, one of the country's most prominent housing groups.
"At the end of the day most people recognise the need for their own family to find somewhere to live. Often it's a case of people realising it comes down to the realities of life - you need a roof over your head."
Urban sprawl risk
But sudden moves to simplify the planning system have provoked an angry response from some campaigners.
Over 1,000 pages of planning guidelines for England are being reduced to about 50 in an attempt to make the system faster and easier to use. A new presumption in favour of "sustainable development" is being introduced.
The National Trust is urging its 3.7 million members to fight the proposed changes.
Spokesman Ian Wilson says: "We believe there is a significant risk we will begin to see much more urban sprawl, which is not to say that development shouldn't take place.
"But we are concerned about where that should take place. The loss of brownfield targets means that we might see more development on greenfield sites."
Ministers say the existing protection for the countryside will remain under the new planning framework. But they are also under great pressure to encourage economic growth, and revive the dream of home ownership for millions.