Theresa May’s main response to collapsing levels of homeownership among young people has been to tell the generation of permo-renters not to worry – that they’re “not any less of a person” for renting. It seems our PM believes that British obsession with home ownership, as summed up by the old adage, “An Englishman's home is his castle”, can be flipped through a few calming words.
But painting Britain's obsession with home ownership as some kind of weird kink completely ignores its practical benefits – as a refuge away from our vicious rental market. Across the UK, first time-buyers are on average £900 better off per year than renters; in London, this jumps to £2,191 a year. Over a mortgage term of 30 years this would leave buyers in London £66,000 better off than those who had to rent over this same period, and that’s before you get to any appreciation in house prices they benefit from.
Home ownership doesn’t just benefit the bank balance each year: it also provides security for the future. With pension provision looking increasingly wobbly, from Carrillion and BHS to university staff, a secure income post retirement is far from certain. A valuable asset such as property can offer protection when you want to finally put your feet up.
So the desire to buy over rent is ultimately practical, rather than social – and if Theresa May wants to make the country comfortable with declining home ownership, then this is where she should start. Looking to Europe isn’t the most fashionable thing to do at the moment, but there’s a lot to be learnt from our mainland neighbours in terms of tenant protection.
In Germany, which has one of the lowest home ownership levels in Europe, there are far more renter friendly regulations. In large cities, rent is tethered to comparable properties in the local area, and cannot rise by more than 15 per cent over three years. Fees get pushed onto the landlords, and not the tenants; and the latter can only be evicted if they really mess up, or in a few exceptional circumstances. As Article 14 of the Basic Law of the Federal Republic states: “Property entails obligations. Its use shall also serve the public good.” A country’s housing actually helping its people? Now that’s radical.
In Paris, where prices have gone down across the city, there are similar rent controls. In Switzerland, the country with the highest levels of renting, landlords are only allowed to increase rent if they can prove that their costs in maintaining the property have also increased.
Britain is not far behind Germany or Switzerland in terms of renting levels – yet we’re miles behind in terms of rental protection. Renting in the UK leaves tenants far worse off compared to home ownership – and this will be true even if the government tells us that renting is cool.
Actually regulating the market would ensure that rental property isn’t just an investment: it’s somewhere people can actually live.