Much rot is spoken about how the young have it so bad. In fact, this generation is healthier, richer and better-educated than any before — as well as being better-behaved and more conscientious than their parents were. But the one area where they do struggle is in buying a house. The asset boom of recent years has disfigured the economy, sending property prices soaring and conferring vast wealth on pensioners while giving the young a mountain to climb. Home ownership rates stand at a 30-year low. And the proportion of 25- to 34-year-olds in private rented accommodation has almost doubled in the last ten years.
This marks not just a dramatic socioeconomic shift in a country that was once strongly associated with owning your own home. (Britain now has the fifth-lowest ownership rate in Europe.) It also represents the rapid growth of a significant new political constituency: people who were brought up in owner-occupied homes but who must now bring up their own children in rented ones.
For the Conservatives, whose success over the past century has owed a lot to their claim to be the party of home-ownership and aspiration, this poses an existential threat. Why would anyone want to support the party of property if they cannot see a way to acquire a property of their own?
Rising house prices were once an electoral asset. They made people feel richer and more likely to reward the government presiding over the market that brought them their capital gain. But now the situation has flipped and high house prices are a huge negative for young voters. If you are stuck in a rented flat, frustrated at your in-ability to afford your own home, the housing policies advanced by Jeremy Corbyn at last year’s general election are far more appealing: a cap on rent rises, three-year minimum tenancies and a licensing scheme that aims to drive rogue landlords out of business.
It is little use the Conservatives protesting that these policies will not work, that rent controls will lessen the availability of rented property and make it even harder to find a home. Those stuck renting are likely to conclude that the current system is at fault and any change which disfavours landlords will be an improvement. Capitalism will never appeal to those without any capital.
Nor is there any point in Conservatives arguing, as they sometimes do, that property ownership doesn’t matter very much. It’s true that some advanced countries manage quite happily with even lower rates of home-ownership than ours. In Germany, only 52.5 per cent live in owner-occupied housing, against 64.4 per cent here. But there, most people renting have the security of long-term tenure. In Britain, most tenancies last from six months to a year.
We now have 1.8 million families with children living in homes where they can never properly settle. They may have to move every few months: cots, baby bouncers and all. If they cannot find another local rental property they may have to take their children out of schools where they are doing well. This marks a huge change since the last time that property ownership rates were this low. Then, renters in both the private and social sectors largely had the right to stay in their homes for as long as they liked.
The solutions to this problem attempted by the current government and the Tory-led coalition which preceded it have been inadequate and counterproductive. George Osborne’s Help to Buy scheme enabled a few people to get on the housing ladder by forcing the taxpayer to underwrite their mortgages, but only at the cost of stimulating more house-price inflation, making things even tougher for the next generation. A policy of subsidising demand without increasing supply is doomed from the outset.
If the Conservatives are to maintain the reputation as the party of home-ownership which has served them so well then they are going to have to consider the kind of radical measures used in other countries where the housing market was targeted by international investors. Switzerland allows only bona fide residents to buy residential property in most cases. Jersey and Guernsey have parallel ‘open’ and ‘local’ markets which ensure most housing is bought by the people who live there. It would take only a very small reform to ensure that a proportion of new housing in Britain becomes subject to covenants ensuring it can only ever be bought by owner-occupiers.
As for rented housing, the government could do worse than simply to adopt some (not all) of Labour’s policies. It would cost no public money to change the law so that in most cases tenants could look forward to a minimum of three years’ security of tenure, with rents controlled for that duration.
There are Conservatives who will scoff at some of these proposals, seeing them as undue interference in the market. But our restrictive planning system ensures that housing in Britain is not a free market anyway. And those who stick to this line may soon wake up to find that the Conservative party has lost the younger generation for good and will never hold power again.
The Tories have two options: fix the housing market or lose the next election. It’s time to choose.
Subscribe to The Spectator Australia today for a quality of argument not found in any other publication. Subscribe – Try a month free