Pricing people in, not out

From our founder, Katharine Hibbert

For people who rent their homes, finding a nice place in a convenient location for a price you can afford has been a challenge in the UK for a long time.  This issue was a key reason why Dot Dot Dot was launched in 2011, and the situation has become worse over the past ten years.  This contributes to a wealth and an opportunity gap as well as making life more difficult on a day-to-day basis for those who struggle to house themselves.

The problem

Over the past decade, the price of a property in London has nearly doubled, while the proportion of younger adults renting or living with their parents rather than owning a home of their own has grown.  This has created a widening wealth gap as those priced out of home ownership have got poorer and those who already owned homes have got richer, recent research by the Institute for Fiscal Studies has shown.  This gap broadly falls along generational lines – by and large, older people are homeowners, whereas millennials have been unable to buy.  

As rents have gone up, saving for a deposit or for any other reason has become harder – at the beginning of the coronavirus crisis, one in five people who rent their homes had no savings at all.  Then, when the lockdowns came, renters saw the biggest hits to their incomes, according to the Resolution Foundation.  As a result, 6% of renters are now in arrears whereas only 2% of home owners are behind on mortgage payments.

Meanwhile, many homeowners have seen the value of their homes rise.  The low cost of borrowing for those with substantial deposits and the government’s decision to cut stamp duty has pushed house prices to an all-time high in December, up 6% from a year ago, according to mortgage lender Halifax.  

This has made those who already owned their homes wealthier, but has put home ownership even further out of reach for the young, especially as mortgage lenders pull back from lending to those without large deposits.

Buying is particularly difficult in London.  First-time buyers in the capital paid an average of £420,618 for a home at the end of 2020, the equivalent of more than nine times their earnings, according to Nationwide Building Society – a level which is almost impossible for those without very large savings or money from families.

Long-term solutions

Just as we at Dot Dot Dot have seen the situation get worse for renters, we have also seen growing calls for solutions.  Suggested options for improvement abound – the centre-right think tank Policy Exchange last week launched a report recommending a form of blended mortgage product that would deliver 95% loan-to-value home loans.  The loans would be provided by three different financial institutions, with the riskiest bit – the part of the loan between 95% and 85% of the home’s value – would be provided by an investment bank.  Retail banks would provide a middle slice while the last part would be delivered by long-term investors such as pension funds.  The economists behind the paper argue that this – in combination with a land value tax and the abolition of stamp duty – would create a house-building boom.

Meanwhile, politicians on the left and in the centre argue for greater government intervention to stimulate house building.  Ahead of the 2019 election, Labour’s housing manifesto promised to build 150,000 new council and housing association homes a year.  At the same election, the Liberal Democrats promised “New direct spending on house building to help build 300,000 homes a year by 2024, including 100,000 social homes.”

How Dot Dot Dot’s work fits in

Any solution to the housing problems faced by those in the private rented sector will take time to agree and even longer to put into effect.  So until the political will is found to get on with building more houses at sensible prices in the right places, we at Dot Dot Dot are committed to creating as many inexpensive, well-managed homes as we can by using property that would otherwise be empty.  By working with property owners, we’re able to prevent the blight void buildings can cause, provide homes that otherwise wouldn’t exist and support volunteering.

In fact, even if the housing crisis was solved and everyone who wanted to own a home could afford to buy one, there would still be a need for inexpensive, flexible accommodation that property guardianship is perfectly set up to provide.  Home-ownership isn’t right for everyone – some will always want a place to live with less long-term commitment, and guardianship is a good chance to try new areas or live in quirky buildings.  And meanwhile property owners will always need buildings looked after on a temporary basis while they prepare for regeneration projects or to sell.  

So property guardianship is not only useful due to the housing crisis – but for as long as it lasts, we’re glad to be here providing options.

If you’d like to find out more about property guardianship and whether it’s the right option for you, you can read more by visiting our FAQs, or you can apply to become a property guardian with us.