Dr Rosalind Beck is a doctor of Criminology and a Conservative Party member in South Wales.
Boris Johnson’s announcement that he will turn ‘generation rent’ into ‘generation buy’ by introducing five per cent deposit mortgages for two million first-time buyers (FTBs) will have been widely welcomed by young people keen to get a foot on the property ladder.
According to an estimate by the Centre for Policy Studies (CPS) there may be as many as 3.6 million ‘resentful renters’ who could have been home-owners by now. Superficially, it looks like a great idea to help these buy.
Unfortunately however, I believe this policy is not only a non-starter but frankly outrageous, for reasons outlined below.
The first problem is: where would these homes come from?
An obvious answer is ‘new-build properties.’ However, why would the Government’s poor track record on getting developers to build sufficient supply be any different this time? These properties are also often expensive options. Help to Buy has meant young people paying over the odds while developers make a handsome profit.
Further down the line, many are unable to re-mortgage and are stuck on high interest rates. The CPS’s idea that they instead have long-term fixed rates would not solve this if those rates are uncompetitive. This is what has previously happened.
The only other way of sourcing homes for FTBs involves a transfer of assets from the private rented sector (PRS) to owner-occupation. However, when I conducted a straw poll of landlords it was their view that only two per cent of tenants would currently be viable and willing purchasers even if they were gifted the entire deposit by the taxpayer. My own experience confirms it is very rare for a tenant to buy the home they are renting (reasons for this below).
If we put this to one side though and assume these resentful renters and perhaps young adults still living at home are in a position to purchase, what type of existing properties would they want?
We can discount larger properties in the PRS, 500,000 of which in England and Wales are Houses in Multiple Occupation (HMOs). The idea that two to three million tenants could be decanted so their homes could be sold to people who would under-occupy them is ludicrous. What’s more, where would the displaced tenants go?
At the other extreme, studio flats are not usually bought by FTBs as they can be difficult to obtain mortgages on. Also undesirable since the Grenfell disaster are flats in high-rise blocks and/or any in buildings with safety concerns. three-bed homes are also not feasible for FTBs, except in cheaper areas.
So probably the key target properties for FTBs would be one and two bed flats in low-rise buildings and two-bed houses. If FTBs are somehow to be given access to these, what is the Government’s plan for the millions of individuals, couples and families already living in them?
This reminds me of the time someone told me that as a landlord I should be housing Syrian refugees. As I pointed out, having no vacancies, I would first have to evict my tenants.
Judging from Johnson’s negative comments about the PRS though in his speech and the Government’s consistently damaging and misguided policies towards the sector, the grand plan is to drive landlords into evicting their tenants in order to sell.
The most vulnerable to this would be those in cheaper rental homes; people who before successive governments’ sell-off of social housing would have been accommodated by that sector. The majority of these would not be in a position to buy; they couldn’t save a five per cent deposit, they wouldn’t meet mortgage criteria, millions rely on benefits, are on low pay, have a poor credit rating, are foreign nationals, or are of an age which would disqualify them. Home ownership is not on their radar; something I know, coming from this segment of the population myself.
If in this ridiculous scenario, these people were evicted, they would find no refuge in the social sector. Supply has been restricted here for years, for obvious reasons. Even handing over a gift-wrapped council house to many lower-paid people would not guarantee a Conservative vote. I have previously written about the Conservatives’ problematic relationship with social housing.
The PRS is the only possibility for them; but available homes in this fantasy world would presumably be reserved for FTBs (as that would be the whole point).
Incidentally, what is not mentioned is how hard it would be to sell; the Government has extended even non-payers’ rights to remain for up to two years in properties which therefore cannot be sold with vacant possession.
The CPS paper concludes that an increase in home-ownership ‘is deeply, urgently necessary.’ I find that a highly emotive way to put it. In fact, a roof over everyone’s head trumps the type of tenure. It would plainly be immoral to evict tenants in order to create new owners.
Although this policy has been promoted with the acknowledgement that private landlords will be affected, with the CPS stating they must be persuaded or forced to sell, it is evident that tenants would bear the brunt in what would constitute a type of social cleansing.
In terms of emotive language, this is not unusual in housing discussions, of course, with Boris Johnson saying it is ‘disgraceful’ that people can’t buy their own homes. This was a curious word to use and, looking it up, I found one definition of ‘disgraceful’ is ‘scandalous behaviour.’
So, who exactly has behaved scandalously? Developers for not building enough homes? Why should they? Or is it private landlords for the crime of meeting the housing needs of more than nine million people by financing new-builds and buying old housing stock to refurbish for rent, while the Government took a back seat? If the Government wants to blame anyone, it can start with itself.