‘NO, no, no’. Legions on social media seemed to be channelling Margaret Thatcher’s voice as news emerged that the government was thinking of extending the ‘Help to Buy’ scheme.
Reports said the government was in consultations with the house-building industry to pump more money into the market to ‘kickstart housebuilding’ after the end of the coronavirus lockdown. Cynical guffaws promptly resounded all over social media. No wonder, the cynics jeered, that the mass-builders of those shoddy, over-expensive housing developments which disfigure our country, as highlighted by Margaret Ashworth in TCW on Saturday, are eager to join in such consultations; they’re the ones who will be first in line for the hand-outs of dosh from this misguided initiative. ‘Please no’, tweeted the financial journalist Merryn Somerset Webb, to which one of the respondents on her Twitter feed accurately responded, ‘It isn’t Help to Buy: it’s Help to Keep Prices Up’.
All agreed that the thoroughly predictable results of this approach will be to drive up overall housing market prices yet further; push yet further down the ladder those multitudes of young families who can’t afford to buy new homes; and inflate yet further the moneybags of the builders of dismal housing trash. It is an entirely wrong-headed policy which will produce pernicious social consequences; and it ought to be resisted and defeated.
The political and economic motives for this move are obvious. Like Cameron and Osborne with the original 2013 Help to Buy scheme, Johnson and Sunak are primarily concerned to prop up the housing market and fend off a potential collapse in prices. As with the printing of untold trillions of state money around the world which are intended to buoy up share prices and banks, supporting the property market is an essential plank in maintaining economic stability and the appearance of prosperity. With mortgage lending, household debt and personal unsecured debt all at record levels in January 2020 – even before the lockdown and the freeze on the economy began – the real prospect looms that the end of the coronavirus crisis will bring a tsunami of personal insolvencies if house prices collapse.
Avoiding this catastrophe for both humanitarian and political reasons must obviously be a priority for a government that depends on the property-owning classes for its support, but the proposed remedy is almost worse than the disease.
There is an alternative.
If the state is going to interfere in the housing market (as it did through Mrs Thatcher’s Right to Buy), it ought to be using its powers to help young families and, simultaneously, to encourage the regeneration of rundown town and city centres by sponsoring and backing the conversion of neglected and abandoned commercial premises into cheap accommodation.
Plenty of supply and demand exists to make this business work. More than a quarter of all young adults aged between 20-34 are living with their parents. Meanwhile, more than a quarter of all shops and commercial premises in town centres were said to be empty before the coronavirus crisis began. Heaven knows how many we will find abandoned when we finally crawl out of our burrows to set eyes on the post-apocalyptic landscape.
The meeting of those willing parties could be engineered through a government partnership with councils, housing associations and building societies. This would result in people who are currently squeezed out of the housing market owning their own properties, and it would breathe new life into our dying towns.
The UK has about 2,000 towns. If each of those towns could provide new accommodation for 100 people through the conversion of redundant shop and office buildings, the national total would add up to 200,000 new property-owners.
In and of itself, that number will clearly not provide a complete answer to the UK’s housing crisis; but it certainly would bring a mighty big improvement both to the lives of those tens of thousands of individuals and to the disfigured faces of our town centres.
Here’s how it might work:
A new government agency would act as the guarantor or lender of last resort and would provide funds for the acquisition and refurbishment of vacant town-centre properties. The buildings would be acquired by groups of lower-income people who had clubbed together in Residents’ Associations for the purpose of combinining their slender financial equity and, perhaps, their labour (their ‘sweat equity’) to create accommodation, probably flats, for their own use. Preference would be given to married couples, especially those who have or want to have children.
The agency’s funds should be managed by local authorities and housing associations, of which there are 1,700 nationwide, covering almost every town in the UK. Those housing associations have the resources to survey and assess buildings for conversion and to oversee the renovation process. They will need to take a fee for those services which would be included in the overall cost of refurbishment.
The government’s funds would be repaid by the new owners, through the housing association, on completion of the conversion and when they acquire separate building society mortgages on their individual properties.
Since, in Adam Smith’s words, a free exchange is a transaction from which both parties benefit, sceptics would ask of these transactions: ‘What’s in it for the public bodies who are supporting them and the taxpayer who is contributing?’
The answer would be that, all across the UK, renovated buildings would improve the appearance of our towns and a larger resident population would bring new life to the town centre amenities that are now in such steep decline, such as shops, cafes and restaurants, libraries and churches. It would incidentally prop up housing prices from below by placing the feet of new purchasers on to the lower rungs of the property ladder.
If he knew the term, Adam Smith might describe these benefits as a win-win.
Neil Lyndon, Chairman of the Scottish Family Party, originally outlined this idea in detail in an essay for the Institute of Economic Affairs’ Breakthrough Competition in 2016. It is now under consideration by the Scottish Family Party’s Policy Forum and may be adopted as party policy for the 2021 Holyrood elections.