Despite Cameron’s ambition, the ranks of generation rent are only going to swell
Daniel Bentley, 7 October 2015
There seems to be no constituency rising as rapidly up the Westminster politicians’ priority list now. Today it was the prime minister wringing his hands about the plight of the frustrated first-time buyer and ‘Generation Rent’.
The widespread distribution of housing wealth among the mass of the population that had been achieved by the end of the last century is slipping away now at a scandalous rate as owner-occupation goes into rapid decline, from about 70 per cent to 63 per cent in little over a decade. The number of people getting rich out of bricks and mortar is shrinking as the roughly two per cent of the population who are landlords muscle first-time buyers out of the market at an alarming rate.
So to hear David Cameron use his conference speech today to profess his ambition to turn generation rent into ‘generation buy’ in the remaining years of his premiership is encouraging. But once again he lacks the courage to do what is really needed: a mass housebuilding programme designed to bring prices down.
Instead there is more tinkering with the planning system, this time relaxing the section 106 requirements on developers so they can build fewer homes for social rent and more for affordable purchase. This, like so many previous measures by this government, cannot fundamentally transform a housing market dominated by a few large private sector developers who are abjectly failing to deliver the homes the country needs.
But it might help Cameron meet his target of building 200,000 starter homes for first-time buyers by 2020. This sounds wonderful but is a cruel deception against the many people hoping this administration is finally going to turn things around.
It is equivalent to a mere 40,000 homes a year when the private rented sector is increasing its hold on the housing stock by 250,000 homes a year (up from 3.4m to 4.4m between 2009/10 and 2013/14, according to the English Housing Survey). And for how long will those 40,000 homes remain in owner-occupation? In London more than a third of right-to-buy homes have ended up in the private rented sector; there is no reason why these homes won’t go the same way for as long as the same market dynamics are at work. Meanwhile, there will be fewer social housing units constructed – precisely the opposite of what is needed.
It became fashionable for a while to argue that home ownership is overrated and the country needs to get over its obsession with getting on the housing ladder. But there is a growing realisation now that the alternative of private renting is no substitute, not least for the 1m additional households with children who have come to rely on it over the past decade.
Those who still cleave to the idea that Britain should emulate the continent, where private renting is much more common, should listen to this episode of BBC Radio 4’s You and Yours last week, in which caller after caller itemised their grievances with the sector, mostly variations on two overriding themes: lack of security and unaffordability. What is clear now is that for every private renter who enjoys the flexibility that the private rented sector affords there are many more who detest living in it but have no choice. For the foreseeable future, their numbers are only going to swell.
Daniel Bentley is the author of The Future of Private Renting: Shaping a fairer market for tenants and taxpayers