It is a truth now universally acknowledged that a young man in possession of a fortune must be in want of a house. Even the Prime Minister accepts that the housing market is in a state of crisis, conceding in an interview with the news website BuzzFeed that the prospect of a home of one’s own is rapidly receding out of sight for an entire generation. The number of owner-occupiers has fallen to 65.2 per cent, the lowest level since 1985 and below the supposedly socialist France. The average age of a first-time homebuyer without parental assistance is now 37 and is expected to exceed 40 within the next decade. Meanwhile, tenants struggle with record rents and distant landlords.
The Conservatives’ true priorities were exposed by the Budget, which did little to address the crisis. George Osborne’s plan to raise the inheritance tax threshold for main properties to £1m, at a cost of £1bn, will do nothing to aid the growing number who are locked out of the housing market and are trapped into renting at exorbitant rates.
The treatment of tenants is one area where Labour has an appealing offer. Caps on rent increases, measures to secure longer-term tenancies and a ban on fees by letting agents will all make renting a less baleful experience. But the defining problem remains too much demand chasing too little supply.
In 2004, Tony Blair’s government asked the economist Kate Barker to investigate the pressures on the housing market. She estimated that reducing annual house price rises to just 1.1 per cent – compared with the double-digit rises that have become the norm – would require the construction of 250,000 houses per year. Just once, in 2007, has Britain come close to meeting that ambition, with 219,000 new houses. Without a major shift in policy, there will be damaging consequences for what Ed Miliband has termed “the British promise”: that each generation will do better than the last.
There must be an easing of regulation to allow development on the green belt – much of which is not the image of a rural idyll that the name suggests – and to clear the path for small- and medium-sized builders to start construction.
But if deregulation is necessary, it is also insufficient. The great housebuilding boom of the postwar period was triggered and powered by state activism. A sustained programme of slum clearance and council house-building started by the government of Clement Attlee was accelerated by the Conservative ministries of the 1950s. The construction of vast tower blocks by local authorities, which housed a generation, was made possible by largesse from the government of Harold Wilson and the zeal of local council leaders.
A programme of mass housebuilding, of the kind pursued in the early 1950s, when 300,000 homes a year were built, would stimulate growth (for every £100 that is invested in such projects, around £350 is generated in return), create employment and reduce welfare spending.
If Labour can persuade the electorate that it – and not the Conservatives – is best placed to revive the goal of a property-owning democracy, it could finally attract the popular enthusiasm that has so far eluded it.
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