Common Weal Policy continue our Spotlight on Housing election briefing sheets, with researcher Leah Aaron looking at the cost of housing for those with mortgages and renters in Scotland
DESPITE the UK economy's sluggish pace in recent years, the cost of housing has continued to rise sharply. We tend to think of housing unaffordability as mostly a problem for London and the Southeast, but it is increasingly an issue in the North & Scotland too; Glasgow saw some of the fastest rent rises in the country in 2015, according to the property website zoopla.
A shortfall in supply (Glasgow's much talked about tower-block demolition spree having played a role) has meant that house prices have risen, and continue to rise, to a remarkable degree - they are up 7.9% in Scotland in the first three months of 2016 alone, according to the Halifax House Price Index. This makes those who already own their home richer, and makes it harder for those who don't to obtain what most in this country would regard as the average person's most valuable asset.
Historically low interest rates, and increasing demand in the rental market, has made buy-to-let mortgages an attractive option for the middle-aged and middle class, exacerbating an economic bulge in the population pyramid (the government's reluctance to control this section of the market may stem from the fact that 153 of our 650 Westminster MPs rent out property). In a market free from rent controls, this leaves many renters at the mercy of private landlords who are at a total liberty to put the price up at the end of short (by European standards) 12-month tenancies, or else happily evict their tenants.
With wage stagnation, unprecedented debt-levels, and a more flexible, global and volatile labour market than ever before, being tied into a mortgage for twenty years is an increasingly unattractive option for those under 30. Recent changes in mortgage regulations, designed to encourage responsible lending, mean it is much harder to obtain for first time buyers- and many in the industry fear the day (pushed forward to 2019) when interest rates finally start to rise again.
It is perverse then, that the day-to-day cost of renting is 23.6% higher than a mortgage, according to Santander mortgages. Added to this are often extortionate deposits and agency fees as well as the high costs and little recourse to settle disputes. In an overheated rental market, it is not unheard of for tenants to sign a lease based only on images seen online, and at prospective tenants will often bring the deposit in cash to a viewing in order to secure the property there and then.
The inexperience and poor financial literacy of many young people often leaves them vulnerable to the vagaries of landlords, letting agents and loan companies. Most people have no idea what their rights are, and with funding to places like the Citizen's Advice Bureau being drastically cut, there is very little support available when things do wrong. In a society that sees property ownership as the thing to aspire to, the power remains firmly in the hands of those 'on the ladder'.
A national system of rent controls. Common Weal and the Living Rent Campaign have advocated rent controls based on a points system judged on the value of a property, and a Scottish Living Rent Commission to oversee the changes. This would regulate Scotland's rental market and tie cost to quality.
A strategy to (slowly) reduce house prices. Politicians shy away from addressing the problem of rising house prices and the inequality it drives because no one individual wants the value of their home to reduce. But rising house prices increase personal indebtedness and create a property bubble, that only really helps the banks. A government strategy to reduce house prices - slowly so that they don't crash - is sorely needed.
Rethink models of housing ownership. It is almost taboo in Britain to admit that you actually don't want to buy a house- if you listened to the Tory government you would think that all anyone ever aspires to is the ownership of 85m 2 of space. This is insane. We need to accept that what people want and need is changing. Many countries, including the US, have looked beyond the simple buy/rent dichotomy that characterizes the UK housing market, with great success. Through shared ownership, housing co-operatives, housing associations and community living, we can help people to live sustainably and affordably in places they actually want to be.
Questions for candidates
- Do you think Scotland has 'escaped' the housing crisis?
- Do you think rising house prices is a problem?
- Do you support a national system of rent controls?