Contribution
My Lords, before I start, I remind the House of my interests in this area, as a partner in Quoin Partners and as the chair of H4Life. I thank the noble Baroness, Lady Eaton, for bringing this debate, because it has prompted me to really think about the philosophical question of why we truly value home ownership. I commend her and all those who have made contributions so far.
As a child of the Thatcher era, I suppose I grew up thinking that the gold standard for one’s housing was home ownership. Over the past 40 years, we have also seen housing become an increasingly prudent investment vehicle: the equity in your house is your wealth. I have been a beneficiary of this thinking, seeing my £72,000 first home, a one-bedroom flat in Bermondsey, as the financial foundation for my current, fortunately mortgage-free, home. Home ownership has historically provided both housing security and financial security for those fortunate enough to have been part of that generation buying their homes since the 1980s. However, of those two, it must be right that we focus our attention on housing security. Now it seems that the era of ever-upwards house price inflation is on pause, so we have to look at pensions, savings and investments to act as the financial growth vehicles which recently we tended to look to our homes to provide.
If the most vital importance of home ownership is housing security, how can we as a society best replicate that security outside of ownership? How can we ensure that people who do not own their own homes still feel invested in and part of their communities? I should add that one of the drivers of Mrs Thatcher’s policy of right to buy, which has been discussed today, was the belief that people would take greater pride in, and care of, their homes if they owned them. Initially, that seemed to be true. However, as a consequence of the right to buy, we have seen some instances of the fracturing of those communities, such as in my experience in Southwark, as some of the first-generation right to buyers moved on and their properties became buy-to-let housing. The point I am making is that home ownership has not always demonstrated itself as the only way to achieve housing security in settled and safe communities.
This Labour Government’s Renters’ Rights Act makes a very positive contribution towards the housing security I have been talking about, with the overdue end of no-fault evictions. I well remember a conversation with a facilities management worker at Southwark about 10 years ago, where he told me that the following week his daughter would be five and that for each of her five years she had lived in a different home. They had had the misfortune that, every year, their landlord would serve an eviction notice and relet the property at a much higher rent which he simply could not afford. He asked me what I could do to help. Sadly, it took the Renters’ Rights Act to provide that help a decade later.
I would not argue that home ownership is not a valuable source of housing security. With that in mind, it is perverse that we live in a world in which someone renting for many years and paying significantly more in rent than they would on a mortgage for the same property, and having demonstrated that ability and reliability to pay over a long period, remains shut out of the home ownership market because their income, even if multiplied by five, does not equate to the purchase price of the home they are living in. Why is that the case? In trying to cure the failures of the subprime market from 2008-09, we allowed a banking and lending system to be created which too often seems to work against the interests of the public and which bears a great deal of responsibility for public disaffection with the system or the establishment. The banks were seen to get away with their failures, and the people who were punished were the Great British public, who found it harder to get a loan and impossible to get a mortgage.
What more can be done to radically rethink the approach that the banks and lenders take to those who could meet a mortgage rather than a rental liability? Essentially, whether we see an increase or decrease in home ownership in coming years—I accept that the factors influencing that are many and varied—we need to ensure that housing security is the gold standard for everyone, not just those fortunate enough to be able to buy.