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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

End of a love affair?


A new report out today raises questions about the UK’s love affair with owner occupation and calls for a closer look at the implications of current housing policies.

A new report out today raises questions about the UK’s love affair with owner occupation and calls for a closer look at the implications of current housing policies.

Owning your home has come to dominate housing provision in Scotland, with successive governments for the past 30 years consistently supporting expansion of this sector under the guise of ‘responding to people’s aspirations’.

Boosted by nearly 500,000 Right to Buy sales since 1980, the percentage of homes in owner occupation has trebled from around 22% immediately after World War 2 to the present 66%.

But the study, Castles in the Air, undertaken by Edinburgh based Newhaven Research for the Chartered Institute of Housing Scotland, challenges the idea that the trend, now judged to have reached saturation, reflects some kind of deep psychological need.

The recent credit crunch, recession and rising unemployment have reminded people of affordability issues and concerns about household debt, negative equity, mortgage arrears and repossessions.

Council of Mortgage Lenders figures for Scotland for the first quarter of 2009 showed first time buyers now require a deposit of 25%, compared to 12% a year earlier, with the number of these purchasers reducing.

As the scale of ownership and mortgage lending grew, this form of tenure extended further down the income distribution, and as a result increasing numbers of households with insecure positions in the labour market have taken out loans.

There has also been a doubling of retired owners in Scotland in the last two decades, accompanied by an increase in those on lower incomes. Our ageing population means much of the household growth in future is likely to come from the over 60s. Interest in equity release schemes and the inheritance consequences for families add to the range of issues involved.

The authors say that, while capital gains tax makes ownership attractive, there are other, possibly negative, macro-economic impacts for the country as a whole and we should not just accept at face value the government’s rationale for supporting home ownership.

The study says: "The current framework of housing taxation predisposes consumer choice towards owning, to the possibly considerable detriment of the economy as a whole, and society more generally, as renting becomes generally perceived as a second best option and an indicator of failure.

"Accepting this introduces other problems. The majority of home owners in society are unlikely to welcome the prospect of being taxed on capital gains they make from their homes, however reasonable this may be from an economic perspective."

The report, published at CIH Scotland’s annual conference in Glasgow this week, says we should not shirk from facing up to ‘unthinkable’ changes of this nature, as we have in the past with the abolition of the once sacred cow of mortgage interest tax relief.

It calls on the Scottish Government to initiate a broad based debate on the rationale for current housing policy towards owner occupation and discuss with Westminster the prospect of amending current treatment of capital gains from ownership.

Other recommendations include examining when it would be more appropriate to encourage renting rather than owning in specific localities, rethinking the approach to low cost home ownership, researching the strengths and weaknesses of equity loan and equity release schemes, and auditing local authorities’ capacity to deliver increasingly demanding local housing strategies.

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