Has the government given up on homeownership?
Russell Quirk asks if the government has given up on homeownership and if we could be happy as a nation of renters.
February 16, 2017
Has the government given up on homeownership?
On the face of it, it would seem very much so.
The recent housing statement amounted to little more than regurgitated ideas from past statements – ideas that have had an insignificant impact and will no doubt continue to do so, despite their fresh new coats.
It is easy for many of us to sit behind our keyboards and criticise the failure of the current government in addressing the housing crisis, and it is Government, not just the Conservatives but Labour before them.
It is a monumental task – there is no doubt about that – but rather than tackle it head on, the Government have shown little ambition in their attempt to remedy the situation. For example, I strongly believe that there is a case for building on marginal greenbelt land. About 1% of the greenbelt land has been classified incorrectly and could be better used to feed the demand for housing.
But this was one area where the Government insist on digging their heels in. It is simply as a result of them managing their own reputation, nothing more.
Could we be happy as a nation of renters?
The Government certainly seems to think so, with various reforms aiming to improve the rental system in the UK and make it more attractive from the point of view of the person renting.
As a nation of aspirational homeowners, we very much view homeownership as happiness, the end game and the ‘I’ve made it’ mark in life, when you can call a little piece of the UK your own.
But does owning a property really equate to happiness?
According to Quartz, some of the lowest nations for homeownership rates are Switzerland, Germany, Denmark, Austria, France, the Netherlands, Finland, Italy, America, Canada, Luxembourg, Australia and finally the UK.
But in the United Nation’s latest World Happiness Report the UK ranks as the 23rd most happy nation. Of all of the nations with a lower homeownership rate than the UK, only Italy (50th) and France (32nd) rank lower in terms of ‘happiness’. The rest rank within the top 20 and the majority of those are within the top 10.
Denmark and Switzerland are the happiest nations of all, but have the third and first lowest homeownership rates respectively.
So why are we not more enthused about a shift towards long-term renting?
Well, the average proportion of household income spent on rent in the UK is one the highest across Europe, if not the highest.
On top of that, UK rents are predicted to increase at a faster pace that house prices over the next five years, an increase of 25%, according to the Royal Institute of Chartered Surveyors.
Despite Buy-to-Let remaining a lucrative investment as well as a strong demand for rental properties, many landlords are expected to scale back their stock. The additional stamp duty charge could deter more venturing into the sector.
So with fewer properties to choose from, rental misery will inevitably increase. Together with a historic low of housing stock for sale, it is abundantly clear that the Government has given up on homeownership and no, we would not be a nation of happy renters. Not until Government addresses the imbalance between wages and rental prices, which they haven’t done for quite some time and are unlikely to do anytime soon.
Written by Russell Quirk, eMoov
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