'Any social housing tenant, under certain conditions of tenure and behaviour, would be able to sell their property and retain a proportion of the equity, reserved for investing in a shared equity programme, giving them a first step onto the housing ladder. The remaining equity would be used to build more affordable housing to meet demand. In this way, dead equity of around £4 billion could be unlocked, creating a new generation of home owners.'
It’s easy to see why the ‘right to own’ is attractive. Shared equity can seem good value for the government as it’s a cheaper way to subsidise housing, and it’s supposed to be the route into full ownership for residents.
But we should question expanding home ownership in such a volatile market. We’ve been used to rising prices over the past 15 years, but historically we’ve had epic booms and busts – 4 major crashes in 40 years. Just a month ago, Standard and Poor’s said that negative equity had increased by £17billion in a year. Owning a home is not a one-way bet. And Fraser’s already examined the macroeconomic risks: an artificial focus on home ownership skews policy towards cheap credit. We all know how that ends.
And this idea also suggests landlords would use that equity to build more. Cash for development is welcome, but it’s a mistake to see that £4 billion as ‘dead equity’. It’s part of landlords’ balance sheets, and part of their long-term business planning. Reducing the value of their assets would limit their ability to raise finance.
This is difficult territory, particularly for the Conservatives: there’s real pride in Right to Buy in the 80s, and letting go of the natural instinct to promote a property-owning democracy is hard. But there’s no point owning or part owning a home if it drags households into debt, and exposes them to our volatile housing market.