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In 1997 the average cost of buying a home was 3.7 times annual earnings. Just 25 years later, this has risen to 9.1 times annual earnings. The gulf between wages and house prices has made it all but impossible for single people to buy a home, and has stretched young couples to the limit of their capacity to borrow.
As a direct result, the number of middle income 25 to 34 year olds owning their own home has plummeted from almost two thirds in 1997 to barely a fifth today. Inheritance is now the most effective way to get on the housing ladder, a fundamental challenge to the idea that work is the route to prosperity in a capitalist economy.
According to research from the Centre for Policy Studies, “It is clear that home ownership is one of the biggest factors - and possibly even the single biggest - in terms of determining how someone votes”. Their research shows that at the 2019 General Election 57% of owner-occupiers voted Conservative and only 22% voted Labour.
Bim Afolami MP, Hitchin and Harpenden
Young people understand that the home ownership that was open to their parent’s generation is now closed to them. From the budgeting impact of high rental costs to the stalling of personal development, the housing crisis is an issue that younger generations feel acutely in their day-to-day lives.
It's vital that Conservatives build a fresh consensus that champions homeownership and delivers on the promise of the 2019 manifesto. Giving young people an opportunity to own their own home is key to empowering this section of society, who need to be offered their own stake in society. A strategy to build significantly more houses must be combined with serious reform of mortgage financing, which ensures that younger people can not just find a home, but afford one.
In contrast, only 31% of private renters (who are far more likely to be under-45) supported the Conservatives with 46% supporting Labour. If this long term trend continues, the Conservatives will be locked out of government by the millennial generation who are unable to get on the property ladder.
If younger voters save enough for a property they are ‘buying high’, entering the market once it has already soared. This means even the highest earning of younger voters are spending huge proportions of their income to get on the ladder. Some of these more typically Conservative-leaning voters are therefore drifting away from the party.
Conventional political wisdom is that NIMBYism is an electoral asset to political parties, but this well-worn notion is simply out of date. For the party brave enough to grasp it, there is an opportunity to enfranchise a fresh generation of homeowners without losing the support of those already on the ladder, but this requires a party focussed on that mission.
It has always been necessary for the Conservatives to attract new voters to the party. To do that, the party has to create the conditions for young people to put down roots, generate capital, and build a life they wish to conserve. If the Conservatives fail to address the UK’s massive housing deficit¹³, there is a serious risk to the long-term survival of the party.
Increasing the rate of house building will enable young people to build their stake in the UK. At present the UK is at the bottom of European league tables for both house building starts and homeownership. A proclivity for NIMBYism is risking the future of the party. Many residents’ planning concerns are valid, and getting the wrong developments in the wrong places has hardened public opinion in some areas, but their combined weight across the country has stifled housebuilding and built resentment in younger voters subsequently locked out of home ownership.
It is now politicians’ role to build a fresh consensus, approaching the challenge with renewed vigour. Reforming planning laws, ensuring buildings are built to high standards and rebuilding trust in the planning system through sensible reforms is essential.
The concerns of voters in suburban and rural areas do not need to constrain our entire planning system. Delineating planning in inner cities and rural constituencies through zonal planning would make it easier to streamline our overly complex planning process. City centres have the most acute demand for housing so, logically, policymakers should focus on increasing density in these areas.
Greater density in cities would alleviate the worst aspects of the rent crisis whilst also growing the economy. The UK is a fairly densely populated country, but that density is relatively evenly spread, meaning we have very few areas with high levels of urban density, unlike many other European countries. If we were to reform planning laws to encourage greater density in new building projects, whilst protecting important positive attributes like access to outdoor space, we could significantly increase housing stock in the UK’s major cities.
Lower housing costs and higher levels of home ownership will reduce the Government’s spend on housing benefits. The savings can be used to build more social housing, thereby reinvigorating the rental market’s only meaningful competition.
Reform will be politically challenging, but by neglecting these hard decisions the Conservatives are failing to sow the seeds for a future generation of its own voters. This threatens the Party’s very existence. We need to build more houses and we need to build them now.
It is critical that reforms to planning policy do not take place in isolation. The challenge of homeownership for the under-45s is not isolated to supply of housing, but also to the market for mortgages and the conditions of ownership. Reforming these would have a significant impact on under-45’s ability to get on the housing market.
Three obstacles remain for first-time buyers: the difficulty of being able to get a deposit; the loan to income (LTI) limits on borrowing; and access to high loan to value (LTV) mortgages.¹⁸ To overcome these hurdles and increase homeownership rates, we need to better support the mortgage market in offering more loans at higher LTV mortgages (up to 100%) and support the creation of a mortgage insurance market that would allow banks to take greater risks and provide more innovative products.
These small changes are unlikely to create any new systemic risks for the market yet have the potential to support as many as 3,000,000 access mortgages.¹⁹ It is, however, critical that these reforms are not pursued in isolation or else they risk inflating demand and driving up house prices to even more unaffordable levels.
Approximately 20% of English housing stock is leasehold - a condition of ownership which 58% of people regret entering into²⁰. The Government’s first stage of leasehold reform is to be welcomed; it will improve many tenants’ experience of leaseholding. However, the Government must introduce its promised second stage of leasehold reform, making it easier for leaseholders to buy-out their tenancies²¹. These reforms can significantly improve the condition of many young people’s property ownership.
If the experience of buying and then owning a home is unpleasant, fewer people will seek to own a home. Similarly, negative experiences of home ownership are not going to give people the stake in the UK they wish to conserve.
Changes to housing supply, the mortgage market, and leasehold reform will all take time to have the effect young voters need. The rental market must also be reformed to better work for the majority of young people who are unable to get on the housing ladder or are working hard to save deposits. The Government’s White Paper, A Fairer Private Rented Sector, is an important first step and the sooner the Government passes legislation, the better.
While the White Paper proposes measures that will make living in rented accommodation more pleasant, it will do little to tackle spiralling unaffordability of renting in the UK’s major cities. Since 2015, UK rental prices have increased 13.9%. In London, where the crisis is most acute, rental asking prices increased 15.9% in the 12 months to the end of 2022.
