Housing: Why David Cameron May Have Got it Wrong

Put simply, chucking bricks together and hoping for the best is no solution, even if 200,000 homes were anywhere near enough to help the millions of wannabe Gen Buy. The current housing crisis is not just a supply and demand disparity (although that is an element of it).

Within a few years, my kids could be waking up to a nightmare - they will still be living with me.

Listening to the prime minister's conference speech and announcement to build 200,000 starter homes by 2020 made me reflect on my own family's prospects. While a homeowner myself, the difficulties of getting on the first step of the property ladder means my three teenage children are increasingly likely to be joining Generation Rent - adding to the 3.4m 20-34s who are already waking up in their childhood bedrooms.

At the moment my kids' best chances of graduating from Gen Rent to Gen Buy are as a result of a major housing market crash - one that would damage my financial security considerably. And Cameron's promises this week will do little to help the millions already looking for a way out of the expensive private rental sector.

Put simply, chucking bricks together and hoping for the best is no solution, even if 200,000 homes were anywhere near enough to help the millions of wannabe Gen Buy. The current housing crisis is not just a supply and demand disparity (although that is an element of it). Instead Generation Rent are kept in rental purgatory not just because there aren't enough houses being built, but because of who owns the ones that are already here.

So what needs to change?

Buy to let and second homing mean new and existing properties are owned by people looking to get further up the ladder, rather than simply onto the first rung. Policies restricting - or dis-incentivising - this kind of ownership could be hugely unpopular with large swathes of Cameron's support, but would stem the rising cost of homes and create genuine opportunities for Generation Rent.

More than half of homes owned by over 65s are officially under-occupied, but this generation is reluctant to move due to lack of adequate alternatives and the need to cling on to a prized asset in the face of spiralling end of life care costs. Removing stamp duty for those downsizing or incentivising the building of attractive, affordable retirement homes would help tackle this problem. But the solutions are not confined to action from Government; there is also much that private businesses can do. Financial services creating products that enable older people to manage their assets and savings effectively could incentivise older home owners to move.

The strain on housing is also being created by younger groups flocking to London and the South East in search of jobs and prosperity - creating higher demand that pushes prices even further out of reach. Investment by businesses in parts of the country outside London will help close the North-South gap, resulting in lower demand in the capital. We are also seeing some companies buying housing so that they can offer an attractive package to employees - this could be encouraged by Government.

But perhaps the most alarming element of the prime minister's announcement isn't the lack of action on these issues, but the misunderstanding of why the affordable housing currently being built is inadequate. The issue is not that this is only being built to rent, but that it isn't actually affordable - at 80% of market rates, it is both unprofitable for developers and too expensive for those priced out of the rental market. Calculations by the homelessness charity Shelter suggests that the prices of the proposed starter homes means that they would be out of reach for all but the very highest earners.

The simplest solution - benefitting both those struggling with high rents and those prospective buyers struggling for a deposit - is to concentrate on building real social housing. This is the bricks and mortar infrastructure Britain's housing market needs - not so called 'affordable' housing which is unaffordable for all but the highest earners.

If we can't fix this then perhaps the dream of home ownership is one that Generation Rent - my kids included - will need to wake up from.

Only 24% of 26 year olds own their own home, while at the same age Generation X (those born from the late 1960s to the early 1980s) could boast 40% ownership. As the aspiration of home ownership has grown in the past few decades, the rental market is considered a poor (yet overpriced) relation.

For Generation Rent, this attitude may need to change. To achieve this, the government needs to consider greater regulation of the market, giving renters more security and assurances about their tenancy and fees. We also need to encourage a cultural change so that renting isn't seen as second best to owning. By promoting the notion that a transition from Generation Rent to Generation Buy would be a real sign of progress, the Prime Minister did the absolute opposite.

If we don't start to tackle the housing crisis properly, then millions of younger people will remain frozen out of the property market and Generation Rent may have to abandon their hopes of homeownership, or put up living with their parents for a lot longer.

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