Helping 'Generation Rent': Not Just About Homes to Buy

Our own rental market has long been seen as unattractive to institutional investors, with high entry and maintenance costs, relatively short-term tenancy periods and a lack of sufficient stock for purchase.

Two cheers for the Government as it finally prioritises the desperate need for more affordable homes, particularly in London and the South-East.

But we should save the third cheer until such time as additional homes have actually been built, and the selling off of Council and Housing Association stock through the Right to Buy scheme has been halted.

Here in the UK we fetishise home ownership, and have become blind to the value of renting. We should take a leaf from Germany, a wealthy economic powerhouse where ownership is far less common and renting is seen as a sensible long-term option.

Our own rental market has long been seen as unattractive to institutional investors, with high entry and maintenance costs, relatively short-term tenancy periods and a lack of sufficient stock for purchase.

Tenants also complain of insufficient (sensibly priced) stock, inconsistent standards, and a lack of security of tenure.

They need homes suitable for their working and family lives at affordable rents, with the right to remain as long as needed, and the flexibility to move easily as their circumstances change.

Meanwhile, there is little doubt that the three per cent Stamp Duty Land Tax premium announced by Chancellor George Osborne on the sale of second homes may help slow rising values.

But there are no guarantees as to the money that will actually be raised. The additional cost may also hurt those trying to trade up the property ladder, or translate into increased rents.

Osborne has also pledged 400,000 new homes by 2020 for those struggling to get on the property ladder. A start. But given that there is a shortage of about 1 million homes now, hardly a resolution. We have had - and failed to meet - similar targets many, many times before.

The crucial test of whether George the Builder can really fix it is not just the number of houses built, but where they are. The affordability crisis is largely concentrated on specific areas, particularly London and southern England.

Following the recent hike the tax payable for a second home in many parts of London will be more than the cost of an entire house in some other parts of the country.

Good for the Treasury, perhaps. But London desperately needs to see a return for the quite staggering amounts of money already being extricated through Stamp Duty Land Tax, not to mention what is likely to be raised via the intended forced sale of Housing Association stock through "Right to Buy", which the Chancellor doggedly refuses to ring-fence.

It is vital because otherwise London will struggle be a place where people of differing levels of wealth can live and work. It is already next to impossible for teachers, health workers, police officers and many others to afford the capital.

The new "London Help to Buy'' scheme is a start. In return for a five per cent deposit, first-time buyers can borrow 40 per cent of the value of a new-build home, interest free for five years. Developers and buyers will be happy, but the scheme props up already eye-watering prices and generally just kicks the can down the road.

More needs to be done to ease the problem in the capital. London is both a place and an idea. The idea is that it represents the heart of the nation, its spirit and enterprise. A place that is open to all.

It will not continue to be the city it is without the people at all income levels who make it function, and give it energy and identity.

More affordable houses are part of the solution, along with making the rental sector an attractive first choice, rather than an unwanted last resort. Different types of homes that appeal to tenants at different stages of their lives and careers, and plenty of them, should be the sole priority.

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