Young people think they’re unlucky to be living in an era when buying a home is out of reach. Older people think young people are unlucky too, and it’s common these days for people with assets to help their offspring with a deposit so they can escape the rent trap. But if they don’t have any assets, they can’t. For those people, their kids are facing a lifetime of eye-watering rents.
The truth is that young people today are not unlucky. And the baby boomers weren’t lucky: they were able to buy housing at affordable rates because the state – the taxpayer – had spent huge wedges of cash over decades building housing. And as they teach in GCSE economics, for a given level of demand, an increase in supply will reduce the price the market will bear.
Prices were low because the taxpayer spent lots of money building homes. This was an old-school market intervention, and both major parties did it when they were in government.
But now we’re in a different position. The private and public sectors are both building fewer homes each year than at any time since World War 2. That’s right: there has to be all-out Europe-wide armageddon for Britain to build less than it is doing today.
Even worse, the baby boomers are under-occupying the homes they own. There are something like 6.5m under-occupied homes in Britain owned by people who are over the age of 45.
The supply and demand situation today means that not only are house prices unreacheable but the rents are exploitative. If you have no choice of tenure, no deposit to buy and no access to social housing, you end up in the private rented sector. While homeowners today are paying around 20 per cent of their incomes on housing, private sector renters are paying upwards of 40 per cent because landlords know tenants don’t have a choice. And yet, none of the major parties is willing to commit funding to another housebuilding boom to subsidise another generation of homebuyers.
We’re told “austerity” is the reason why the money can’t be spent. But tenants are not just carrying their own share of the national austerity agenda: they’re carrying that of their landlords too.
The baby boomers don’t want their taxes spent on sorting out the housing market. They’re also pretty good at opposing planning applications for new housing when it’s near where they live. But I don’t believe they’re enthusiastically and psychopathically shafting future generations. They seem oblivious to the collective benefit they received that put them in this wealthy position.
Even if there were a taxpayer-funded housing boom – and if planning laws were less responsive to objections – it would still be more than a decade before house prices and rents started to reduce.
This is why the baby boomers owe us their support for rent controls. And one of them, Hackney MP Diane Abbott, today published a paper with Generation Rent calling for rent caps. Landlords would still be able to charge what they like for their properties – but half of any rent charged bove the cap would be surcharged and used to fund housebuilding.
In this graceful way landlords would have the choice to either charge rent at a decent level, or to help fund a housebuilding programme which would, over time, lower rents. It’s a perfect policy that subsidises supply until the market price equals the rent controlled price.
So if you see a baby boomer, get them to pop over to our website and support our campaign for rent controls. After all, they owe it to us.
Alex Hilton is director of Generation Rent.
You can find more information on the Rent Control campaign here.
