NewBuy: what’s the alternative?
15 Mar 2012
As the hype around the government’s NewBuy scheme rumbles on, it’s worth pausing for a moment to contemplate why owning a home is such a national obsession, and consequently, why politicians always look to home ownership when they want to deliver a package that plays to the aspirations of Middle England.
To my mind, the real question is: what is the alternative to owning a home? For an increasing number of middle-income families their only option is to rent from a private landlord. This means short fixed term contracts, after which the landlord is free to end the tenancy for no specific reason, or the rent can be increased as high as the market allows. With rent increases eclipsing wage increases across the country, this means many people are finding themselves priced out of their own home.
My big concern is that private renting families lack the stability and certainty enjoyed by families who own their home or currently live in social housing. Our new report finds that England’s one million renting families are ten times more likely to have moved house in the last year than those who own their home.
It is hard to imagine that such a disproportionate number of renting families move each year completely of their own volition, especially when that might mean moving house during term time. If families are priced out of the area or unable to find a new rented home where their children go to school, this could mean moving schools, downsizing to a more affordable home, or moving further way and enduring a long commute so as not to disrupt their children’s education.
Yet politicians rarely seem to think that a solution for the squeezed middle could be to improve private renting as a medium to long term housing choice. With house prices as high as they are, there are almost 3 million private renting adults expecting to remain in the sector for five years or more, meaning many children will spend much of their childhood in private rented housing. There is a clearly a market there for more stable tenancies.
Growing numbers of commentators are alive to the fact that owning a home isn’t necessarily great for individuals or the economy, but the gap between the stability and certainty offered by home ownership compared to private renting is so significant that you can’t blame people for aspiring to buy a place of their own – despite the risk of negative equity that young, stretched, first time buyers face. A growing generation of squeezed families needs the government and the industry to develop a private renting offer that gives them the stability they need.