I’ve written before about the impact of headlines on the property industry. Interest rate speculation. Market booms and busts. Demand vs supply. And, of course, Stamp Duty Land Tax – don’t get me started on that one!
But there’s one, often used and seemingly innocuous, phrase that really grates…. ‘Generation Rent’.
Two simple words that all too often come laden, in my opinion, with negativity. Yet when one takes a step back and considers the bigger picture, this negativity is ludicrous.
Our government has itself acknowledged, in its white paper released earlier this year, that the UK has a housing crisis and that the market’s current condition is one of our greatest barriers to economic progress and growth.
Indeed, they’ve proposed numerous solutions in response to this and we must trust that they’re well-meaning and intended to get the market moving.
Yet, what progress do we see?
I’ve spoken before about the need for housing to stand above politics; for policy to not be restrained by frequent rotations of those in power. A long-term, cross-party approach to housing policy is required. However, it’s more than just that and simply, I can’t help but think that our broken housing market requires not only this shift in our thinking and our approach, but ultimately in our culture, too.
Here in the UK we’re almost unique amongst Western nations in experiencing a housing crisis of such depth. We have created a scenario whereby there is a severe lack of decent housing located in the right locations to facilitate economic buoyancy, at affordable levels.
The aspiration of home ownership is at the heart of this problem. From an early age, we almost all aspire to one day owning ‘a place of our own’. This harks back to days gone by when land and property were reserved for the privileged few. Post-war Britain, however, with its ambition and opportunity put home ownership within the grasp of the many and whilst I certainly don’t want to knock that, I do think we should question its continued worth.
Take Germany and Switzerland as examples. In these markets, over 60% of residents rent their homes. In these markets, there exists incredibly well functioning private rented sectors that provide genuine choice and value for money – there really is little reason to own in these markets.
Yet our culture has developed in such way as to promote property ownership as the ultimate investment asset – something often reinforced in political messages by endless successions of governments in order to secure votes.
Having a goal and a desire to make wise investment choices is certainly not something I want to knock. I do, however, wonder if in its current form, centred around property, it’s in fact working to the detriment of our overall housing market.
Let’s again consider Germany. While home ownership there is comparatively lower than it is here, do we ever think of Germany as anything other than a mostly successful economy? Germans may not be investing in bricks and mortar, but they are, nonetheless still investing - it’s just in assets other than property. It’s often in business.
Here in the UK, meanwhile, for every pound that is lent to a business, £35 is lent to someone buying a property. What that means is that our obsession with home ownership is, in fact, inadvertently affecting business productivity within our economy.
So, whilst I applaud the government’s acknowledgement that we have a problem with our housing market, I continue to doubt that our short-term model of policy development will ever really change this significantly.
Instead, I’m increasingly sure of that fact that rather than seeing ‘generation rent’ negatively, we should be better supporting it and even actively encouraging it. Perhaps once we can culturally break down our obsession with property ownership and its ability to create personal wealth, and instead simply see the value in having a place to call ‘home’, then we’ll start to mend our broken housing market.
*David Westgate is Group Chief Executive of Andrews Property Group