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Sunday 29 September 2013

Home ownership is not the summum bonum

I am far from often in agreement with the Archbishop Cranmer blog. I do not share his unerring veneration of Margaret Thatcher, I am not perturbed by state intervention in principle and I am not slavishly tied to supporting "the market" come what may. However, despite the hagiographic title, his most recent post touches on a fundamental issue and, in the main, handles it well. The post - 'Margaret Thatcher "gave the Conservative Party intelligence and committed leadership"' - deals with home ownership and the current government's flawed attempts to boost the economy through a specific focus on the housing market.

I first touched upon the issue of home ownership back in March 2010. Here, I sought to explore pertinent issues related to whether Christians could, or should, justifiably own property. To be clear, I am not against Christian home ownership per se. However, I do think many Christians have failed to think clearly about the issues surrounding home ownership and a particularly worldly approach to property has infiltrated the church on some level. Again, that is not to say owning property is wrong per se. Nevertheless, our attitude toward home ownership may have been unduly influenced by our culture.

Cranmer's central argument concerns the government's current Help to Buy scheme. He states:
The Bishop of Manchester-designate, David Walker, said: “Help to Buy is like tackling a food shortage by issuing food vouchers rather than getting more crops planted”. And he is quite right. If any shift were needed, it is either in increasing the building of social housing or in dispelling the shame associated with renting. The Royal Family rents; the Archbishop of Canterbury rents. What is this Tory fixation with owning that which the market determines you cannot yet afford?
With this assertion, I wholeheartedly agree. Cranmer's view of this policy is ultimately correct when he argues:
It is difficult to conceive of a more peccable policy than one which lures you into a state of maximum indebtedness at a punitive rate of interest, especially when debts of such gargantuan proportions built on the shifting sand of inflated property prices were largely responsible for the global credit crunch and the state we’re in. This time, instead of financial institutions selling on the risk of sub-prime mortgages to an ever-cascading carousel of private banks, the taxpayer will act as guarantor of last resort. 
As with the bank bailouts, the shareholder (homeowner) takes the profit in times of plenty, but the poor taxpayer takes the hit in the lean years. It is even more invidious when you consider that those who take out these 95% loans will be subject to a higher rate of interest than those who are deemed to present less of a risk: the repayments will be arduous and the emotional costs very high. This is simply piling Pelion upon Ossa. At these thresholds, the ‘dream of home ownership’ can rapidly become a nightmare trap of negative equity and unsalability: the Englishman’s castle becomes his dungeon. House prices are not guaranteed to go on rising in perpetuity: the easier-credit bubble will surely burst, just as it has always done.
On all this, I agree with Cranmer.

However, it is difficult to support his view that Margaret Thatcher understood this issue well given that he ignores the fact she was centrally responsible for creating this very shame culture. For Thatcher, as with most Conservatives, home ownership represents the highest good whilst renting is for failures, identifiable principally by their lack of earnings and/or savings. Just as Thatcher responded with the words "what a luxury" having asked a student studying Ancient Norse Literature what she was reading at university, the Conservative mindset on home ownership is to justify all things in terms of money. That is, things are only of value if they can be quantified monetarily. Thus, if you do not have enough money to own property you must be of no value, a failure, because achievement is measured in monetary terms both in education (the earning power of your degree is its sole value) and in terms of income (you are of no value if you fail to earn). Indeed, Cranmer argues well that the central shift needed is "in increasing the building of social housing". However, he says this without irony having stated "Margaret Thatcher heralded a revolution in the property-owning democracy with the sale of council homes to tenants".

Underlying this whole argument is the understanding that all people need to live somewhere. The rental market is awash with private landlords covering the cost of second mortgages through the rents of those who cannot afford to buy their first home. Property prices have risen well beyond the rate of rising salaries and the average age of the first-time buyer is steadily increasing. The government's answer to this problem is to loan people a deposit, which must be returned, on a 95% mortgage with unfavourable terms in order to allow property prices to rise even further. A far more simple solution would seem to be the building of more houses, flooding the market with property which would naturally drive prices down. Sadly, successive Tory and Labour governments have singularly failed to build enough housing (social or private). Prices remain high because demand exceeds availability and the government answer, not by increasing house building projects but, by plunging would-be home-owners into ever increasing levels of debt in order to achieve the only thing assumed to be of any value - owning a home. Certainly the Bible has much to say about where we plough our money, the storing up of treasures and the placing of people into debt. 

In truth, we need to move away from the view that property ownership is the ultimate good. We do need to increase social housing - a problem exacerbated by the sale of council housing - but we also need to increase the number of private homes being built too. Moreover, we need to move away from any concept of shame in renting and value inherent in home ownership. Why should housing not be treated in the same way as any other good? Why is a house about the only piece of property to increase in value in perpetuity when almost every other depreciates? This culture - seen almost nowhere else in Europe - causes people to take themselves into untold debt in order to own property they cannot afford whilst simultaneously reducing their living standard and impeding their ability to move freely. At heart, the question we are left with is 'are mere bricks and mortar really worth it'?

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