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Housing Markets better facilitate renting rather than ownership. How do we swing the balance back toward ownership?

 

Housing markets have changed over the last thirty years. Today we witness huge disparities between markets driven principally by  finance availability. Private rented housing has increased, public housing has changed and now some 50% of private housing by value is equity. Mortgage funding is at a lower level than it has been for years, making entry into markets difficult for new buyers.

 

Nine out of ten people feel that it is harder for them to buy a house than it was for their parents. They feel that it will be harder still for their own children. The problem is getting worse as demand outstrips supply.

 

Mortgage funding for ownership used to be available principally from Building Societies set up to lend for housing. Indemnity insurance was available to cover the risk on the top slice of a mortgage so that the borrower had to find a limited deposit. There was Mortgage Interest Tax Relief At Source (MIRAS), that helped so many buy a first home. Grants were available from Local Authorities to those wishing to restore certain homes. These favoured those willing to put in a good deal of effort themselves.

 

Renting a home was however constrained by security of tenure and controlled rent whereby few homes became available to let privately as there was insufficient return for Landlords. With the introduction of the Assured Shorthold Tenancy on 15.1.1989 tenancies became available at market rents and for fixed periods. This has transformed residential lettings markets and released a potential for institutional investment into this sector that will expand rented housing availability and choice.

 

Today council housing stock has been largely taken over by Housing Associations with a percentage bought by tenants under the Right to Buy scheme introduced in 1985.  Many Housing Associations are seeking to bridge the gap between ownership and rental by shared ownership schemes where tenants have an opportunity to increase equity in the home over a period but the majority of their homes are rented.
 
So today housing markets better facilitate renting rather than ownership. How do we swing the balance back toward ownership?
 
Our tax payer backed banks could lead the mortgage markets with products that include Indemnity insurance policies to lower deposit requirements.
 
Grants to the young and energetic willing to take on specific Retrofit projects could be made by Local Authorities. These would help us green our aging housing stock.
 
We must avoid futile envy taxes on high end housing and development. These do not raise revenue but suppress transactions and confidence in Housing Markets.
 
We could bring back MIRAS. An effective subsidy to those in work.
 
We could incorporate in planning permissions a requirement for subsidized sales rather than affordable housing to encourage first time buyers.
 
The energy of home ownership must be encouraged to ensure our economic recovery. 

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