Tuesday, 31 May 2011

Property ladders, rent-seeking and God-given rights

A new survey has shown that two thirds of people who don't yet own their own home fear that they will never get on the property ladder. They argue that banks will "find excuses" to turn them down. As a result, we are now looking at the emergence of "generation rent." Not to mention entirely the wrong debate being had on the question of property ownership.

At the liberal end of the spectrum, Sean O'Grady writes for the Independent that "this generation will just have to get used to the idea that there is no God-given right to home ownership or, more pertinently, the large capital gains that accrued from it in the past." He offers a number of sensible reasons - from the fact that houses are still historically expensive to the fact that income is not keeping up with inflation - as to why houses are no longer affordable. However, this is not offered as a fault with the present system. Rather, for O'Grady, it begs the question: "why this sense of entitlement anyway?"

Apparently, because "nobody claims they have to own a Porsche the moment they leave college, or pester the bank of mum and dad for designer furniture," a home too is a frivolous luxury. It is "just another form of consumption." Which must mean that vagrants are just those who reject materialism.

Conversely, the Telegraph worries that we are losing our status as a "nation of home owners." This perspective looks back to Margaret Thatcher's "right to buy" initiative, seeing this right not as a privilege equivalent to owning a Porsche but an integral facet of the free market system. It is the "aspiration" that O'Grady decries, where a house is not a domicile but an investment and a potential pension fund. Thus, for "generation rent," there is a "risk [of] insufficient finances at retirement."

Neither of these perspectives are in tune with the reality and the main concerns of most of the populace. Instead, they sum up an economic debate ongoing within the elite sectors of the current capitalist system. As summed up by the Financial Times, we are looking at two rival policy positions.

One the one hand, there is the argument that "home ownership rates will fall sharply unless terms are made easier for first-time buyers." On the other, is the concern "that failure to set loan limits has contributed to the boom and bust in housing." At the heart of the debate is whether or not the Financial Services Authority's proposals to set limits on mortgage products is a good idea. The key concern, of course, is the markets and the "stability" of the capitalist economy.

On the ground there is an altogether different concern - that of human beings having shelter and a place to live and thrive. For most of us, the current economic system is simply the only means for us to secure such dwellings - whether by rent or mortgage. Meanwhile, as Daniel Knowles neatly puts it in his Telegraph blog, "each month, an anonymous company gets to collect more of my income than I pay in taxes. No one getting a share of that money had anything to do with building the house. They are simply profiting from the fact that it’s still useful." Which is exactly what the government does with tax, though so many crusaders against rent-seeking fall silent when the usury is private.

A house is not a luxury akin to a Porsche or "another form of consumption." But, by the same token, it is not simply a capital asset to be used in securing yourself a decent pension pot. It is a domestic dwelling. Or, as the comedian Alun Cochrane put it, we should "bloody live in it."

The "right" to private property not only leaves so many people renting or living with their parents for far longer, unable to take their first step onto the "ladder." It also leaves around 61,000 households homeless whilst there are around 651,000 empty homes in England alone. All for the "freedom" of a minority to seek rent and gamble on capital accumulation. Which is the more important debate we are not having.