Don't leave house building to the house-builders

Give people a driving seat in housing investment, writes VMC Rozario.

The reality is mortgage finance is never going to get back to the heady days of the early 2000s, nor should it. But with rents rising, saving for a deposit when a lack of supply keeps prices overinflated seems impossible.

I'm part of Generation Rent, a generation unable to access social housing or mortgage finance and left paying more per month for housing than any other group. But I'm also part of a growing generation of people that, unlike their parents, need to find our financial security in something other than the bricks and mortar of their own home.

Whatever the larger debate, we need more homes all sorts of homes, for rent, socially and privately, and to buy.

The question becomes where will this investment come from?

The London Mayor wants a £1.3bn rebate in stamp duty from the Treasury to build 1 million homes by 2050. Yet with the banks holding back on lending and the Government set against going back to a pre-2010 situation of more public subsidy for capital investment in social housing (despite the economic evidence that it could be the short-term kick the economy crucially needs).

Political parties are desperate for a quick fix to this investment problem. Institutional investors, like pension funds, have been incredibly slow to come to the table to kickstart building.

Perhaps we would be better off crowd sourcing investment from the public directly.

There are a growing number of success stories of start-ups who have gone directly to large groups of ordinary savers/investors through websites like Kickstarter. Although the model isn't directly transferable, the principle is. Get people to invest in housing other than their own. Around 1 million plus private landlords in the UK are doing and making a profit out of it, so why not make more of us landlord investors?

That doesn't mean becoming a country of buy-to-let investors, but if more people want to invest in housing other than their own why not tap into that?

Some might scoff at the idea given the economic climate but actually there are two things that mean we should look at it seriously. Firstly we already have a model of public savings that has grown in sufficient volumes to take seriously.

When Premium Bonds were created by Harold Macmillan government in 1956 the aim was to control inflation but also to encourage saving in post-war Britain. On their first day £5 million worth of bonds were sold and by 2006 improvements in accessibility and a desire for safer investments than the stock market saw 23 million people (then around 40 per cent of the British public) hold premium bonds.

The ability to bring together savings from such a broad section of society (1.6 million of those bond holders had saved only a reasonable £5,000) should be something to replicate in housing investment, especially as housing is relatively stable and long-term investment.

Now National Savings and Investments manage over £100 billion in ordinary people's savings. Imagine if a separate housing fund was launched. There is something powerful about the idea of a family growing into habit of saving, with the added bonus that their investment has helped a housing association deliver them a home and keep house prices and rents down is a bonus. Unlike dead rent, in time those savings could fund a deposit on their own home, university fees or even retirement costs.

The second indicator that this general idea, people investing in housing other than their own, needs closer inspection is that where housing associations have dipped their toes in retail bond issues they have generally had their feet bitten off. Steve Binks, Places for People's Finance Director told the Communities and Local Government Select Committee last year about their experience of reaching out to private investors:

We went out with a relatively small issue, or ambitions for a relatively small issue of £25 million to £50 million. That was our initial asking and we were surprised-almost overwhelmed-by the demand. We ended up raising £140 million in two weeks from people who would invest money with us for five and a half years, put it into an ISA at-I think the interest rate was 5 per cent.

Moreover there's enormous scope of innovation and creativity in this space to give ordinary people a stronger say in housing investment. More work should be done to think and test how this could help communities fund more housing locally, how housing associations could come together to utilising the wealth of savers in the south east (who unsurprisingly save the most) to fund affordable housing across the country and how investments could be made as easy to buy and manage as a premium bond.

A sign marks a plot for sale on a housing construction site on in Swindon, England. Photograph: Getty Images

V M C Rozario is a pseudonymous former housing professional and a member of Generation Rent.

Photo: Getty
Show Hide image

Labour's trajectory points to landslide defeat, but don't bet on a change at the top any time soon

The settled will among Jeremy Corbyn's critics that they need to keep quiet is unlikely to be disrupted by the result. 

Labour were able to tread water against Ukip in Stoke but sank beneath the waves in Copeland, where the Conservatives’ Trudy Harrison won the seat.

In Stoke, a two-point swing away from Labour to the Tories and to Ukip, which if replicated across the country at a general election would mean 15 Conservative gains and would give Theresa May a parliamentary majority of 40.

And in Copeland, a 6.7 per cent swing for Labour to Tory that would see the Conservatives pick up 52 seats from Labour if replicated across the country, giving them a majority of 114.
As the usual trend is for the opposition to decline from its midterm position at a general election, these are not results that indicate Labour will be back in power after the next election.. That holds for Stoke as much as for Copeland.

The last time a governing party won a by-election was 1982 – the overture to a landslide victory. It’s the biggest by-election increase in the vote share of a governing party since 1966 – the prelude to an election in which Harold Wilson increased his majority from 4 to 96.

To put the length of Labour’s dominance in Copeland into perspective: the new Conservative MP was born in 1976. The last Conservative to sit for Copeland, William Nunn, was born in 1879.

It’s a chastening set of results for Ukip, too. The question for them: if they can’t win when Labour is in such difficulties, when will they?

It’s worth noting, too, that whereas in the last parliament, Labour consistently underperformed its poll rating in local elections and by-elections, indicating that the polls were wrong, so far, the results have been in keeping with what the polls suggest. They are understating the Liberal Democrats a little, which is what you’d expect at this stage in the parliament. So anyone looking for comfort in the idea that the polls will be wrong again is going to look a long time. 

Instead, every election and every poll – including the two council elections last night – point in the same direction: the Conservatives have fixed their Ukip problem but acquired a Liberal Democrat one. Labour haven’t fixed their Ukip problem but they’ve acquired a Liberal Democrat one to match.

But that’s just the electoral reality. What about the struggle for political control inside the Labour party?

As I note in my column this week, the settled view of the bulk of Corbyn’s internal critics is that they need to keep quiet and carry on, to let Corbyn fail on its his own terms. That Labour won Stoke but lost Copeland means that consensus is likely to hold.

The group to watch are Labour MPs in what you might call “the 5000 club” – that is, MPs with majorities around the 5000 mark. An outbreak of panic in that group would mean that we were once again on course for a possible leadership bid.

But they will reassure themselves that this result suggests that their interests are better served by keeping quiet at Westminster and pointing at potholes in their constituencies.  After all, Corbyn doesn’t have a long history of opposition to the major employer in their seats.

The other thing to watch from last night: the well-advertised difficulties of the local hospital in West Cumberland were an inadequate defence for Labour in Copeland. Distrust with Labour in the nuclear industry may mean a bigger turnout than we expect from workers in the nuclear industries in the battle to lead Unite, with all the consequences that has for Labour’s future direction.

If you are marking a date in your diary for another eruption of public in-fighting, don’t forget the suggestion from John McDonnell and Diane Abbott that the polls will have turned by the end of the year – because you can be certain that Corbyn’s critics haven’t. But if you are betting on any party leader to lose his job anytime soon, put it on Nuttall, not Corbyn.

 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.