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Assets, Opportunity and Inequality
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This seminar was lead by Caroline Flint MP (Minister for Housing and Planning), with Graeme Moran (Metropolitan Housing Trust) as a respondent, and chaired by Tim Horton (Fabian Society Research Director). The seminar addressed the political and policy issues surrounding homeownership, shared equity schemes, buy to let, as well as links to wealth, assets and opportunities more widely.
Discussion initially focused on general societal attitudes to housing
and home ownership, and the fact that aspirations for homeownership in
the UK are much greater in comparison to other European countries,
which have higher rates of long term renting. Home ownership was seen
as important in providing a sense of stability and well being, and long
term security, as well as a sense of belonging within a community -
there is a deep psychological link between home ownership, achieving
aspirations and building up assets - the one substantial thing that can
be passed onto family. Therefore rational policy must tap into
emotional needs.
However it was also argued that as home ownership has become exclusive
to those who have the necessary means to get onto the property ladder,
it has played a role in increasing inequality, and for many it is now a
largely unachievable aspiration. Priority therefore needs to be given
to ensuring that both new and existing stock is genuinely affordable,
and to lowering the barriers to entry into the housing market. It was
argued that a fall in house prices could be seen to have a largely
positive effect in allowing access to the housing market for huge
numbers of people currently priced out.
On a practical level it was argued that there is also an important
trade off between the stability that home ownership gives v the
possibility of future risks. This is particularly pertinent given
current concerns over the housing market, which has followed 10 years
of unprecedented growth in house prices, and individuals taking out
mortgages well beyond their means in order to get their foot onto the
ladder.
It was argued that support systems must be put in place for those
likely to get into negative equity, and that the promotion of
constructive and responsible individual behavior is vital. In addition
to this, lenders must exercise more restraint and responsibility in who
they lend to. Post sale support was also seen as critical, as well as
access to comprehensive and coherent information. It was noted that
currently there are good market signs that responsible sellers and
builders are exercising restraint on selling therefore allowing fewer
people to get into difficulty.
Concern was raised over the impact of the current economic climate on
housing building and supply - it was noted that the current market
situation is largely finance driven and due to a lack of transactions
in the market place, and a loss of capacity in the industry. It is
therefore critical that supply is maintained and that house building
targets are still met. It was argued that reinvestment in the market
is important in the long term for affordability, and that we must
ensure genuine affordability through lower entry points into the
market.
In conjunction with this it was argued that the provision of different
housing options was important, through shared equity schemes for
example, and it was noted that there are currently a wide range of
products available for buyers. Flexibility, affordability and
sustainability were seen as important if confidence in home ownership
is to be maintained, and although there is much focus on new products
and innovative approaches, it was noted that there are already tried
and tested products available which should be further utilized. There
are now opportunities to explore new methods and options, such as
Community Land Trusts.
When looking at housing options it was argued that renting is still an
important component, and that there will always need to be access to
safe, quality social housing for rent. The role of the private rented
sector was also seen as important in providing access to affordable
rented housing, and in providing flexibility, especially given the
likelihood of increased scarcity of social housing. Questions were
raised over whether the private rented sector is really meeting needs
given widespread problems around quality and tenure – lack of security.
Affordable sub market rents are also important, as well as quality and
minimum standards in all housing options.
Flexibility is also necessary, with a move beyond the owner occupation
v renting framework as individuals need the capacity to move both
horizontally and vertically, depending on what their needs are at
different times in their lives. It was also noted that considering we
have a largely ageing population we must address housing needs across
age groups, with options within which people can interchange throughout
the life course.
Following on from this, different methods of asset building/saving were
also seen as crucial, with a move away from home ownership as the sole
focus of saving/preferred way for saving for later life. It was argued
that a rise in house prices has not really created additional wealth,
and people will not be able to live in their house AND have sufficient
equity release to finance a pension, despite the general belief that
this will be a possibility. In addition, it was noted that people are
currently using their house as collateral for increased consumer
spending therefore getting into increasing debt. This therefore needs
to be addressed through the promotion of more responsible behavior both
on the part of individuals and finance providers. Other possible
methods of asset building were discussed – examples put forward
included rewards for tenants who always pay their rent on time, and the
exemption from capital gains for first time buyers.
Other issues raised in the discussion included:
The importance of fairness when looking at the allocation of housing,
with the current framework arguably dysfunctional and leading to
perverse outcomes such as requiring individuals to present as most
needy. The process was seen as degrading, therefore must be linked to
wider issues of self esteem and promoting positive outcomes, as well as
fair allocation.
Linking in with the societal psychology surrounding home ownership is
was argued that home ownership is now seen largely in terms of wealth
acquisition, as opposed to gaining a stake in society. Furthermore, it
was noted that there is a sense that individuals enfranchise themselves
through home ownership (become fuller citizens), however this is
problem in the exclusion of those who aren’t able to buy a home.
It was argued that local authorities need to be more proactive in
making the case for house building given that they represent the
interests of their communities. Better apparatus for the planning
framework was needed to facilitate this, and it was argued that there
is an integral link between economic development and planning which
must be linked to in better to housing. It was noted that people don’t
oppose housebuilding in itself rather the behaviour/perceived behaviour
of those likely to move in.
Residualised social housing was also seen as particularly problematic,
and the need to diversity monolithic estates was see as central to this
– through diversifying tenures and increasing employment opportunities
for both existing and new residents. Linking in with this, is was seen
as important that housing providers are inventive in involving tenants
in the choices in their community, and that housing management is able
to provide a conducive environment to empowerment.
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