Wednesday 9 October 2013

Big Landlord is watching you

I've been listening to a programme about a man from East Germany bursting through the Berlin Wall in an armoured car in 1963.  It reminded me of a good test of Liberalism, which is this: where would you rather live?

Despite the sympathy from the left in Western Europe that East Germany occasionally managed to conjure up, I am not aware of any examples of people from the West trying to escape to the East across the Berlin Wall.  It was all the other way.  Ask yourself: where would you rather live?

I try and use that simple question for deciding - just to conjure a question out of the hat - whether we ought to support home ownership or home renting for the mass of the population.

The reason I choose this example particularly is because I was on the receiving end of a particularly thoughtful review of my book Broke: Who Killed the Middle Classes? by the doyen of Lib Dem bloggers, Mark Pack (thank you, Mark).  In it, he says that I am "not easily categorisable on the left/right spectrum" - which I take as a huge compliment.

But he also says this:

"It would have been interesting to hear more about whether or not David Boyle wants to make renting become a middle class norm and if so,the policies to make this a good outcome..."

The answer is that I don't.  Not because I believe that the current method of distributing homes to people works - it patently doesn't, plunging people into 25 years of indentured servitude to their mortgage provider.  But because I tend towards John Maynard Keynes' enthusiasm for "the euthanasia of the rentier".

For all the effort by the Fabian left to enthuse people about a life of renting, it is only too obvious why - generally speaking - people want to own homes rather than rent them if they possibly can (there are obvious exceptions to this, but you get the point).

It means there will come a time when they are not paying out rent.  It means they can have funny wallpaper or pull down walls or do strange things to the garden.  It means that, once the mortgage is paid off, they have an asset which nobody can take away, even when they fall on hard times.  It means they can work as authors or artists or  poets without worrying where the rent is going to come from.  In short, it underpins their independence.

Of course people want to own.  It makes them that much more economically independent, and in an uncertain world that is enormously important - it means that their home will not be taken away either by state authority or by the power of the market.  That is why people like G. K. Chesterton supported small-scale property ownership as the radical solution - and why I do.

To suggest that people should embrace renting because it might be good for them may not be a lordly 'let them eat cake!'  But it is a lordly 'let them live in rented accommodation!'.

It really makes no difference if the landlord is the public or voluntary sector.  As yourself: what would you prefer?  Especially as the public sector has an appalling record since 1960 of designing homes for their  poor tenants.

But don't let's muddle this up with the wholly indefensible housing market, which - far from underpinning independence is now actually hastening slavery.  It spreads indebtedness, undermines our ability to choose a career (we have to work in financial services) and looks set to impoverish our children.  It also raises rents. 

And it excludes an increasing proportion of the population.  So much for a property-owning democracy.

The decision to press ahead further with the Help to Buy scheme this week is a particular disaster.  It makes homes more affordable without doing anything to bring down prices, which can only push them up further.  If prices rise in the next 30 years in the UK like they have in the last 30 years, the average UK will cost £1.2m - a kind of debt bondage for nearly all of us.

So what should we do?  The answer has to be create parallel home ownership schemes which makes homes available to more people on a different basis, and which also brings down prices in the market.

Community Land Trusts are one way forward, dividing the ownership of the home itself from the ownership of the underlying land, which is then held mutually.  But that relies on getting hold of the land affordably.

My own priority would be to shift money from regeneration into building homes for sale at a nominal price - an end to the lie of 'affordable' homes at £350,000 - on condition that the home can only be sold on at the same price it was originally sold for.

If we can build enough, and if it provides a genuine alternative, a parallel housing market, then it may offer a lifeline out of the bizarre and tyrannical pyramid scheme that our homes have become.


BruceK said...

Does capping a house's sale price in this way perhaps raise issues of moral hazard or disincentivisation?

For example, it might deter the owner from investing in, say, improved insulation if that would not be recouped at all in the eventual sale price.

David Boyle said...

I think that's a very good point. You would need some kind of mechanism whereby people could recoup money spent on improvements - and actually, I believe that community land trusts have some kind of system that allows this.

David Boyle said...
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