Karen and Darren are much like other parents in their mid-30s; juggling work and the needs of four children. With two decent salaries from full-time, skilled jobs and help from tax credits and child benefit, they should be comfortably off. But at the end of each month, there is nothing left. Despite their best efforts to rein in spending, their aspiration to move from a rented house to their own home remains just that.
According to last week’s report from the Halifax, Karen and Darren’s story is familiar to many young people in Britain today, who cannot rely on the “bank of Mum and Dad” to get on the housing ladder. While their parents owned their own homes, half of the 25- to 40-year-old tenants surveyed have given up any hope of ever owning a home. This fits with Resolution Foundation analysis showing that the proportion of under-35s on low to middle incomes who were renting trebled between 1988 and 2008.
Generation Rent, as the Halifax study dubs them, will raise their children in rented accommodation. But by continuing to focus on support for first-time buyers, the government’s housing policy has failed to keep up with reality for many young families in Britain.
The private rented sector in Britain is dominated by buy-to-let landlords who own a handful of properties. While the flexibility of renting suits some people, the sector is insecure and the quality of homes is variable. But it doesn’t have to be this way. In the Netherlands, for example, about 60% of private rented dwellings are owned by institutional investors. They are managed by professional landlords and provide long-term security for families.
Institutional investment in the private rented sector has failed to take off in Britain. But with significant cuts to public funding for social housing, it is needed more than ever. Investing publicly-owned land in the development of new rental properties could make all the difference. Land accounts for a third of the cost of development. Investing it as a stake in a public-private venture makes private investment more viable, allows the public landowner, be it a council or the NHS, to make a return on its investment over time, and results in rented homes that are affordable for families on modest incomes. The mayor of London’s housing taskforce is leading the way, having identified enough publicly-owned land in London to accommodate 50,000 new homes. Overall, it has set a target of 67,000 new family-sized, affordable rented homes to be built in the capital in the next four years.
East London’s Barking and Dagenham council has invested its land to secure private equity funding for the development of 500 rented homes for families on low to middle incomes, as well as more traditional social housing tenants. Birmingham city council is investing its land in a joint venture with private sector partners for the construction of some 1,000 private rented homes. Manchester council is pursuing a similar approach.
With a national housing strategy due out this summer, the government should take a lead from innovative councils and incentivise the expansion of a private rented sector fit for families through the investment of publicly-owned land.
This article first appeared in the Guardian