Wednesday 9 December 2009

Healey: We don't want all housing eggs in one basket

Britain may be moving towards a European model where home ownership is placed on a more equal footing with other forms of tenure, Housing Minister John Healey told the Fabian Society in a major speech tonight, as he asked what the "new normal" would look like in housing policy beyond the recession.

Healey noted that home ownership had fallen, from 71% of households in 2003 to 68% today.

Some had attributed to the recession shaking people's confidence in investing in bricks and mortar. Yet the fall had begun two years before the recession, with opinion surveys from 2007 also picking up shifts in public attitudes about whether to own or rent.

Nor did Healey think this was necessarily a bad thing, once home ownership had risen to around 70% following the Thatcher era right-to-buy.

"You don't need to be a grocer's daughter to know that it is not a good idea to have all of your eggs in one basket", he said.

Indeed, nearly one-third of people rely on their home to top up their pensions - "the property piggybank is unsustainable and unfair", he said.

That was strikingly strong language for a government minister, as respondent David Walker noted, suggesting that some things may have been different had ministers used such language a few years earlier.

Healey stressed that a more equal status between forms of housing tenure, as in Europe, did not mean any hostility to home ownership, and should be combined with finding new ways to support those who wanted to become home-owners too.

"Home ownership is here to stay. It should certainly not be the preserve of the rich. We need a new model", one with greater flexibility, he argued.

Healey identified several fairness challenges for future policy in a wide-ranging speech, addressing social housing, the private rented sector, owner occupation and environmental challenges. The pre-budget report included commitments to consult on some key areas of policy, including how to increase the supply of housing for private rent, where decisions "about new institutions through tax changes and incentives" were likely to be made in time for the budget.

* Almost four out of five first time buyers now relied on some support from the "bank of mum and dad" to get onto the property ladder. The age of first time buyers who did have such support had risen from 33 to 37 years old, he said.

He criticised Conservative policy on a major rise in inheritance tax thresholds because it would "make Britain increasingly more unequal as time goes on" over the generations,

* In addition to developing models of shared ownership and equity stakes, "I would like to see it as just as easy to sell equity back", said Healey. "people may choose to release equity when it suits them, and seek to build it back up when they want to".

This could include "allowing people a flexible tenure in the same property", he said, so that "changing your tenure may not mean changing your home - conversion from owning to renting with government support".

* Healey also suggested that those renting, or seeking to save for a deposit, should be able to build up savings tax-free:

"One great advantage of home ownership is it allows us to build up an asset, and benefit from it tax-free. If we want to make renting of equal status and an equally privileged option for those who want to rent, we need to think about how to offer similar opportunities", he said, floating ideas about where that could lead, though making clear that he was not committing to any particular approach becoming government policy.

"That might mean tax-free savings for those building up savings for a deposit, or a savings bond for renters to build assets and store wealth as home owners can", he said.

* Healey foresaw a stronger role for local councils, as well as support for emerging models of cooperatives, mutuals and community land trusts.

'I want councils to be major builders of public housing again", he said, noting that 2007 had seen the highest level of house building for two decades, and

"The principal problem with right-to-buy was that when council houses were sold, the proceeds were not made available for councils to reinvest"

Healey had changed the policy so that councils who built houses would keep the proceeds when houses were sold, instead of giving three-quarters to the Treasury, and could keep proceeds of renting for new build.

UPDATE: Jonathan Calder has a report at Liberal England: "Disappointingly, I found I agreed with much of what he had to say", writes the LibDem member and ex-councillor.


Newmania said...

Are you buying or renting then Sunder..? Care to answer that ?

I think I can guess. Why should the sale of Coucil property go to the government .The Government did not create the value ,it was created by mortage buyers who have increased the demand for the site. The bricks are worth feck all.
Holding the property off the market increases scarcity and thereby the cost of housing .Its a hidden tax and the end of it is a good thing for working people not of course the sort of lackey dependents you would prefer. The money should have come straight off taxes .

Colm said...

Taking away land prices, the cost of the actual build is generally going to be in the high tens, it not hundreds of thousands, so the bricks are not worth "feck all". In the South East the land price might dwarf the build cost, but this certainly isn't the case in a lot of the country.

Your point about the government not taking the proceeds of a sale of one of its own assets is just bizarre.