In her latest blog, Thrive Homes Chief Executive Elspeth Mackenzie proposes a more radical approach to help house a generation finding themselves worse off than their parents.
The Government’s recognition in the Autumn Statement for the need for a range of tenures to address the housing crisis is really welcome. In the run up to this the NHF proposed a new ‘Buy as you go’ tenure, which enables people to buy a share in their home over time while paying 90% of market rent and taking on responsibility for their own repairs.
Details of the system are yet to be worked out but, conceptually, this is a great idea – removing the barrier of people needing to save a deposit while fulfilling the predominant aspiration for home ownership in Britain.
For some people with stable lives, this type of tenure might well work but, from the housing providers’ perspective, there would be a great deal of complexity in administering such a scheme and it does raise a number of questions.
For instance, realistically, how many years would it take to own even a small share of a house in high value areas? If the relationship between landlord and tenant breaks down, or repair bills become a problem, what happens then? And, in that case, what state could the property potentially end up in, to be returned to the social housing market?
‘Buy as you go’ is an interesting proposition and I look forward to seeing further details emerge, but I wonder if we have become too preoccupied with creating new ‘products’ – such as the new ‘Help to Buy’ ISAs which have already come under criticism from disappointed consumers – to solve the often complex issues at the root of Britain’s housing crisis.
I think we need more fundamental ways of tackling the housing problems we face. My personal suggestion would be a ‘social housing investment fund’ available to retail/institutional investors and to social housing tenants who could slightly over-pay on their rent – depending on what they could afford, if and when they were able – with the money going into a fund which would offer them a good, tax-efficient return on their savings while being invested by social housing providers into further developing their stock.
Over time, tenants would build up their investment, having the flexibility to access their savings without penalty or when ready to lock this into actual property take the opportunity to convert it into shared ownership of their home – but at a more accessible level, without the need for a deposit and mortgage, as they would be able to buy a much lower share than the 25% minimum currently offered by shared ownership schemes.
An advantage of this fund would be that investments would track performance in the wider housing market, rather than sitting in a low-interest bank or building society account, so the tenant can save towards home ownership without constantly being left behind by rising house prices. As a national fund, it would also spread investment risk and help even out the inequity between house prices in the north and south of the country.
It is abundantly clear that, currently, many people in Britain are feeling detached from what they might well have regarded as reasonable aspirations, such as home ownership – including the so-called ‘just about managing’ households who find themselves worse off than their parents’ generation, despite holding down similar types of job.
So a social housing investment fund would surely be a win-win situation – with customers given the opportunity to achieve their dream of home ownership without the need for a deposit or mortgage, by investing not only in their own future but in the future of Britain’s social housing as a whole.
There is a temptation to try to solve today’s problems with yesterday’s solutions but with the changes signalled by Brexit and the American presidential election , we must stretch ourselves to find tomorrow’s solutions.