30 April 2008
Shelter's annual affordability index, published earlier this month, shows how disastrous the house price increases have been for most people in the UK. It indicates that the price of a first home has risen from £52,674 to £159,494 over the past ten years, with house price to income ratios rising from 1.72 to 3.4. Mortgage repayments now represent 21 per cent of household income compared with 12 per cent a decade ago. This cash is returned as interest payments to wealthier home-owners and bank shareholders - another redistribution of wealth from poor to rich.
Many years ago, Spencer Fitzgibbon, a former external communications supremo for the Green Party who has now retired to write novels, came up with a brilliant policy which he called 'housing entitlement'. The idea was they we chose a day and made it law that, wherever people were living on that day became theirs.
This was a brilliant stroke - a thought experiment that requires you to question what home ownership means, and whether something as fundamental as the need for a roof over your head should ever be subject to the vagaries of the market.
So what would it mean for different groups in society? Those with mortgages would lose them instantly - no need for the stress of working to pay for housing. Those who were renting would suddenly gain home security and an asset to allow them onto an equal footing with the more prosperous members of society. These would be the winners.
And what about the losers? Mutual building societies would no longer own assets and would have to begin again by taking deposits from savers before they could lend. Private banks would also lose their assets - which would impact severely on the indirect absentee landlords who make up their shareholders. Landlords and landladies would also lose assets - the more they owned the more they would lose.
The great thing about this thought experiment is that your reaction depends entirely on where you find yourself in the present housing hierarchy, but the reality is that the majority of this people would, on average, find their well-being improved by such a policy. The overall losers would be quite a small number of very rich people.
Every now and then the government could name a new housing entitlement day. It could be about every 40 years or so - like biblical jubilees - about the amount of time it takes the greedy and unscrupulous to distort the ownership system enough for goodly citizens to really be suffering. Tweet