Tuesday 14 February 2012

The Onward March of Home-Owner-Ism

From the BBC:

Home ownership in England continued to decline last year, according to the latest English Housing Survey. The proportion of households living in their own homes fell in 2010-11 to 66% (14.45 million), from 67% in 2009-10...

Owner occupation has been in decline since 2005 after reaching a peak of 70.9% in 2003. The proportion of English households that own their own homes has now fallen back to where it was in 1989.

This trend has gone hand-in-hand with a decline in council housing and a more recent surge in private renting. In 2001, just 10.1% of English households rented from private landlords. With a rise in mortgage lending to buy-to-let landlords, this proportion has risen steadily to 16.5% of households.


Yup, it looks like the UK government's drive to concentrate land ownership as much as possible (via subsidies to pre-existing land owners and extra burdens and barriers for outsiders, primarily younger people) is really coming up trumps! Owner-occupation, which everybody pretends they want to encourage, has fallen from 71% to 66% in a mere nine years.

They have to be careful here; if owner-occupation levels fall much further, they will be in danger of losing their natural electoral majority (the élite need all those footsoldiers to keep voting for them), and we might get such unspeakable things as more new construction or, Heaven forbid, a shift from taxing incomes to taxing the rental value of land.

12 comments:

Old BE said...

Nano-anecdote. At work I was talking with two middle-aged colleagues and saying (the context is too boring to repeat) that given the choice I would much rather rent my flat from the council at cheap rent than pay the interest on the market price. They both looked aghast at me as if I had offered to boil their cats.

I explained that the rent in my block is half the mortgage interest I pay. They still didn't understand.

richard said...

I am a home-ownerist. I wouldn't like to rely on my pension to pay rent in the future - a 7% yearly increase in rates - for instance - means that the rent will be double in ten years. Apart from that, the cheap council rent means that someone else is subsidising it, which is not particularly ethical.
I don't vote - I believe in the right of property which is why I bought a freehold plot and built a house upon it.
I have been dipping into this blog now and again and have been hoping to prove myself wrong, but so far without success.

JJ said...

Just slightly off topic Mark...if I set up a company, could I buy a bungalow cash, and include it in the assets of the said company without revealing that I owned the bungalow?

Mark Wadsworth said...

BE, yup, people are horrified when I tell them I sold to rent and am in no hurry to buy again.

R: "I wouldn't like to rely on my pension to pay rent in the future - a 7% yearly increase in rates - for instance - means that the rent will be double in ten years."

Yes, rents increase slightly faster than wages, but largely because the Home-Owner-Ists want them to and engineer it so; that enables them to screw money out whoever comes next (if a 28 year old struggles to pay the rent today, how is today's 18 year old supposed to manage in 10 years' time??).

So the Homey argument boils down to "we have to screw money out of young people (by owning land) because we screw money out of young people (by continually hiking the rents)".

With a full-on LVT system, firstly rents wouldn't go up as fast as now and secondly, even if they did, the Citizen's Income/personal allowance would go up in line with LVT rates anyway, so most people's net payment would be low.

Mark Wadsworth said...

JJ, of course. As long as you can conceal that you own the company, or else the exercise is pointless.

Old BE said...

And of course council rents aren't subsidised per se, councils just choose not to make a fat profit. Yes I understand opportunity cost, etc. but I wonder if we would all be rather better off if we all lived in non-profit housing and spent/invested the difference in something more productive like car factories or whatever.

As MW says, the reason rents go up is because we have engineered this vicious circle. The point is that it is totally unsustainable for housing costs to go up exponentially.

I will be glad when I have a nice house in a nice plot and have paid off the mortgage, but I can't help thinking that as a first time buyer during the bubble I wouldn't have been better off not buying...

Mark Wadsworth said...

BE: "of course council rents aren't subsidised"

By and large they are not, for the reasons you give.

Funnily enough, it's the Homeys who keep wailing on about council rents being subsidised (while welcoming below-market value sales of council housing??) while at the same time refusing to admit that owner-occupation is MASSIVELY subsidised because there is no LVT.

I'll concede that council housing is subsidised as soon as the Homeys admit that they are being subsidised ten times over, and say "Fair enough, we'd like to increase council rents but we are happy to pay LVT ourselves."

DBC Reed said...

Homeownerism always had a limited lifespan: it was just a matter of time before house prices got completely out of reach of newcomers to market and its time was up.
It will be interesting to see how they re-group.Not that we should help them!Some cargo cults existed for years after the cargoes (from WW2) dried up.The opportunity for the careerist conformist MP lies in wait: to save the Party from the failures of its mainstay policy by appearing the Land Tax firebrand.

Bayard said...

"Home ownership in England continued to decline last year, according to the latest English Housing Survey."

Hurrah! Why is this not good news? The proportion of households owning an overpriced, depreciating asset fell in 2010-11 to 66% (14.45 million), from 67% in 2009-10... Fewer people over their ears in debt.... Fewer people giving large proportion of their income to the banks every month.... OK, I can see now why this is not supposed to be good news.

Mark Wadsworth said...

DBC, the Homeys know that they need about 70% owner-occupiers to keep their electoral majority. That's why the government is so desperate to get a few more young people on the ladder with loan guarantees, part-buy and so on; that way there'll be a safe majority who go along with the myth that "rising house prices make us richer".

B, see my reply to DBC.

Bayard said...

"So if reducing homelessness is your thing,..."

But it isn't really, is it? If there were no homeless, they'd be out of a job and, as we know, there are already not enough homeless to go round all the charities dealing with them.

Mark Wadsworth said...

B, occasionally, I permit myself a touch of light irony...