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2 August 2016

The property-owning democracy is dead – so build one for renters instead

Politicians need to face reality. 

By Julia Rampen

Labour’s leadership challenger, Owen Smith, is full of new ideas, but when asked about the housing crisis he reached for an old one. He wanted to see a “property-owning democracy”, he told journalists at his campaign launch in Orgreave

The idea of the property-owning democracy has deep roots. Indeed, it is tied up with British constitutional thought. The right to vote was traditionally linked to property ownership. The extension of the franchise in the 19th century was focused on groups who owned land or long term leases (ironically the reforms disenfranchised the few female property owners who had previously had a right to vote).

Even after the franchise was extended to non-homeowners, the concept kept its powers. The Tories first used the phrase “property-owning democracy” in the 1920s, as a bulwark against the spectre of socialist collectivism. 

It was resurrected after the war by another Conservative, Anthony Eden, but it was the zealous Margaret Thatcher who did the most to put it into practice. In 1971, half of families in England and Wales owned their own homes. Twenty years later and post-Right to Buy, seven in ten did.  

These days, it is barely disputed that British should buy their own home. But this is not the reality, as a new Resolution Foundation report shows. In London, just one in three residents are homeowners, down from a peak of 40 per cent. In Greater Manchester, homeownership has plunged 14 per cent since the early 2000s. Other areas with fast-declining homeownership levels include Yorkshire and the West Midlands. 

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The usual reaction from politicians is to bemoan the figures and pledge to build more homes. The first is not helpful – the second will take years. And unless enough homes are built to dramatically flood the market, renters will not be able to afford them. According to The Equality Trust, 86 per cent of renters have less than the £8,838.65 needed to take out the maximum mortgage on an average first home. 

Those dealing not in political promises, but in cold hard cash, recognise renting is here to stay. The financial services firm Legal & General has launched an investment fund focused on building largescale rental accommodation. Aldermore, a mortgage lender, said the Resolution report “reflects the changing nature of the British housing market”.

Given that a growing pool of voters aren’t going to be part of the property-owning democracy any time soon, it is surprising that Labour politicians haven’t done more to woo them. Smith’s 20 policy pledges does not include any for renters. Jeremy Corbyn, as befitting a London MP, has the right instincts about improving conditions in the private rented sector. But given the landlord lobby any policymaker will be up against, his policy wording is vague. 

Ed Miliband, in his doomed 2015 campaign, was the closest to come to a credible policy for renters. He promised three-year tenancies with a six month probation period, and a cap on rent hikes during that time. Nearly two in five private renters voted for Labour, compared to one in five owner-occupiers.

Labour could be bolder still. Housing in the UK has become an investment asset, not a roof over your head. Millions of property owners have a vested interest in ensuring that house prices remain almost out of reach for first-time buyers. Hundreds of thousands of landlords are relying on Generation Rent for their pensions. Why should a party sceptical of unbridled capitalism be encouraging voters to aspire to such a broken model?

Radical change will not be easy. But Labour could start by trying to sidestep these vested interests. Embrace professionalised renting of the Legal & General model – then regulate it. Bring back the demands to scrap letting agent fees. Come up with a more convincing model of shared ownership. Spell out the link between low wages and the cost of mortgages. Change a culture where not owning your own home equals social embarrassment. Take up the cause of the families forced into temporary accommodation simply because they can no longer afford local private rents. Outside the mad world of the UK housing market, these are achievable policies. Germany has a culture of renting rather than owning, and its centre-right government introduced moderate rent controls

In changing the culture and economy, it could take the moral highground. Why should property tenure denote the quality of a nation’s democracy? Are we still in thrall to an idea of citizenship in which non-property owners are invisible?

For years, politicians have tried to connect with the working family with a mortgage. But increasingly, the working family has rent to pay instead. The dream of a property-owning democracy is over. Let’s have a right-to-a-roof-over-your-head democracy instead.