As British philosopher John Gray argued in a recent article, cultural rifts in British society run deep and wide. In Gray’s view, this rift is between the big cities and the rest, between nationalists and the woke, between those with college degrees and those who don’t, but we also see the generational rift, the haves and the have-nots. We should always pay attention to the rifts between the innocent. Not. In this context, the “haves” refer to those who benefited from 20th century housing policy and, if anything, those who were helped by the Johnson government’s housing policy.
Let me be clear here: My opinions are nonpartisan. Had there been no later changes; the wage-to-mortgage ratio. Build local government-led programs to increase supply. And had it been reined in, Thatcher’s right to buy and sell would have been an unprecedented success.
Indeed, while social democratic policies increased home ownership rates from 30% to nearly 60% in a matter of years between 1950 and 1980, Thatcher’s flagship policies saw property ownership rates fall by the early 1980s. has increased to more than 70%. This was a huge success, momentarily forgetting the significant failures that followed, and could have laid the foundations for an ambitious and ambitious era of property-owning Britons.
Why is it important for as many people as possible to own real estate?
The answer to this question needs to be discussed in two parts, although both involve social benefits. First is the social value of real estate ownership. Simply put, increasing the proportion of people who own homes increases the proportion of people who are actively involved in society. In his book The Future of Capitalism, Oxford University economist Paul Collier writes:
“Owning a home increases a sense of belonging, which, as I have suggested, is an important social good. Belonging is the basis of mutual obligations. Home ownership also gives people a stake in society. Psychologists have found that once people have something, they become very reluctant to lose it. supports people.”
Once people own real estate, they feel attached to that property. They invest the majority of their effort, time, and money in an asset that, in an ideal scenario, provides physical and financial security for themselves and their families in return. So it becomes a home. If all is well, this attachment to property increases the likelihood of attachment to surrounding places and people. This sense of mutual belonging and the shared joy of owning property ultimately creates a common understanding among those who benefit from owning a tangible part of the society they call home. allows you to contribute to the structure of the community. This privilege is partly earned by people and partly given to them (through rights, laws, property prices), so that people have a right to respect society and, in turn, its people and its institutions (traditions, laws, culture, etc.). It is more likely that you will receive favorable feedback.
Second, owning real estate has several benefits for aspirations and productivity. It is important to note that too much assistance to first-time buyers will increase demand and, as a result, drive up prices. Similarly, if too many homes are built, millions of existing property owners will be left with negative equity. But the Goldilocks point of discounts and stable supply (as seen at the start of the Thatcher government) could provide a sweet spot for housing as an aspirational asset for young people on median incomes.
The advantage of this is twofold. More young people and people at average income levels will be exposed to the aforementioned social benefits and, as a result, will not only take steps to repair generational rifts, but also become active, ambitious and productive. It will likely create a generation of future property owners. The benefit of making real estate ownership not necessarily something to be taken for granted, but achievable for anyone who is willing to put in the effort, is that real estate ownership is something that can be achieved at an affordable price just like your parents. There will be a generation of young people who will not feel angry about not being able to do something. And many people were inspired, and perhaps more likely, to work hard and start families in societies they could be proud of.
However, I would also like to add that it is impossible not to discredit the hard work that ordinary people of the older generation had to put in to obtain a position on the property ladder. It should also be kept in mind that younger generations will benefit much more than their parents from larger inheritances (facilitated by broader property ownership). However, with real estate prices rising far outpacing wages, there is a growing trend that needs to be stopped, with real estate ownership being given to those who have been left behind large sums of money before those who work hard. Become. This kind of attitude takes away individual agency and discourages the industry. Instead, we should aim for real estate ownership as a reward for those who contribute and play their part in society, and most importantly, more widely accessible real estate ownership.
So what did Johnson’s government do wrong on housing?
To his credit, Johnson’s “New Deal” principles of increasing the supply of residential real estate are correct in spirit. In terms of execution, a lot can be said about the omission of quality checks to speed up development and the need to make the space habitable. But, at least in spirit, Mr Johnson’s policy of building more housing does not betray his “man of the people” narrative.
But what really punctures it is last week’s stamp duty holiday, coupled with an offer to grant British citizenship to around 3 million Hong Kongers. Once again, to correct the Prime Minister: the stamp duty holiday could save first-time buyers up to £10,000 when buying property worth around £500,000, making it available to wealthier Hong Kong citizens in the UK. The rights were first acquired more than 20 years ago, so it’s quite a stretch on an old olive branch.
Having said that, as explained in our previous analysis, the stamp duty holiday provides the biggest benefits to multiple property owners, with savings of up to £14.99 million. This is part of the stamp duty holiday, and while some may argue that the first obligation is (understandably) the most punitive for multiple property owners, it is at best This is an oversight and, at worst, a disregard for home ownership rights. The goal of this policy is clear: to reduce costs and increase liquidity in the housing market.
Stimulating demand at the expense of long-term house price inflation is a fairly cheap and unoriginal policy idea, but current conditions and the housing market present an attractive opportunity to boost national balance sheets. Considering that there are, we may be able to accept it. But the real question for us is that the biggest benefit is targeted at those looking to add another property to their portfolio. While the short-term balance sheet benefits of such a move are intuitive, those who own multiple properties are the ones most likely to take advantage of property discounts, so the impact on the costs incurred on homeownership and social structure is significant. Possible long-term effects. Don’t think about this country.
Similarly, compounding this poor policy direction is the decision to grant British citizenship to Hong Kong nationals. While neither a deeply unpopular political move nor one with any clear impact, this should be seen as somewhat insulting. While average house prices in the UK have risen by 300% in 20 years, average wages have lagged behind with an increase of 70%, but the government is now giving wealthy overseas people the right to live, work and own property in the UK. is giving. If we attribute part of the main cause of recent housing shortages in the UK to a mix of property speculation and immigration, then we should also consider property purchases by overseas businessmen, princes and oligarchs, which have increased in recent years. It is one of the greatest cases of policy negligence in the history of the United States. We should view invitations extended to Hong Kong people with the same suspicion. While I don’t think there is anything inherently malicious about this policy, the current housing situation in the UK suggests that it is misguided.
In summary
At a time when our society is divided, divisive, and engaged in large-scale, corrosive blame games, housing policies geared toward aspirational real estate ownership are a history lesson we should all learn from. , a remedy for many of society’s ills. Served on a silver platter (talk about oven safe).
I have high hopes for the Johnson administration and its future housing policy. Trying to increase the stock of residential real estate is a good start, but for now I conclude that encouraging more construction and sales of low-quality units is irresponsible and a betrayal of housing. I have no choice but to do it. Many working-class voters thought he had their best interests at heart.
A good place to start is a stable supply of social housing stock that allows for tenant right-to-buy discounts and is subject to some iterations of previous rent-to-buy and wage-to-mortgage ratio restrictions. Boris’s ‘First Home’ experiment is a good idea. We can only hope that he chooses to expand the scheme beyond the 1,500 homes currently promised by the Government.
