Lynne Jones MP
Looking through the property pages on the Internet for the cheaper areas in inner
London, I see that prices range from £80,000 for a studio flat in Streatham to £195,000
for a 3-bed semi in Camberwell. With sky-high private rents too, no wonder record numbers
are leaving the Capital in search of a cheaper, better quality of life and there is
growing concern about attracting key workers. Even with the London allowance, most newly
trained professionals in the public service start off on salaries less than £20,000. So
raising a sufficiently large mortgage is out of the question. Experienced workers fare
little better. A family house is well beyond the means of an F grade nurse, who, at the
top of her scale gets around £23,000 and even a police sergeant starting off on £33,000
(which includes a housing addition of over £4000) would struggle to afford a decent home.
In recognition of the problem, the Government has allocated £230million to 95 starter
home schemes that will help about 4,000 nurses and healthcare workers, 2,800 teachers and
900 police officers. The assistance is in the form of either subsidised rents for shared
ownership or 20% equity loans that are repaid on the sale of the property purchased. A
further 2000 public sector workers living in housing hotspots outside London will be
provided with £10,000 equity loans.
It is good that the Government has recognised that the provision of high quality public
services depends on recruiting and retaining key staff and valuing their input. The number
of people employed in the public service has already increased by 150,000 since 1997 but
clearly this is insufficient. Seen in this context, the starter home initiative should
only be the start of a larger programme to provide additional good-quality, affordable
homes. Subsidising the purchase of existing stock is not a long-term solution and may well
have the effect of causing further overheating in the market, as demand outstrips supply.
Purchasers could be trapped in their first home as moving up becomes
impossible because of the upward drift of prices and the requirement to repay the loan.
But at least the public money put in will eventually be recouped for re-investment. In
contrast, most shared ownership schemes will provide much-needed new homes but the
low-cost benefit is unlikely to be available to future workers if staircasing
to outright ownership is permitted. This is the problem with most schemes that subsidise
home ownership. They only help the first beneficiary. We have seen this with the
right to buy:
On popular estates a large proportion of the best council homes have been sold. This is
particularly the case where purchase prices were initially modest because of low cost
floors. Even with discounts, homes could not be sold to sitting tenants for less than they
cost to provide, making newer properties unaffordable but older ones very cheap. Now, in
the SouthEast and elsewhere, such properties command high prices.
In contrast, those tenants who purchased in low demand areas have lost out and many
former council homes have been bought up cheaply by absent landlords who profiteer out of
poorly managed and maintained property that adds to the spiral into decline. So does any
policy aiming to free-up social housing by offering financial inducements to
tenants to move out to owner occupation.
The net result is greater polarisation between sink estates and more
affluent areas, promoted by the ill-conceived drive to greater home ownership funded out
of the public purse.
If the emphasis were switched towards renting, any grants or cross-subsidy (as in the
much undervalued system of council house rent pooling) can be locked in for future
generations. It makes enormous economic sense. If the Government is really serious about
combating social exclusion, the case for providing general needs council housing for
middle income groups, and not just the poor, needs to be re-visited. What is so
unthinkable about teachers, nurses, police officers (or even housing officers and MPs)
living in rented housing amongst the people they serve?