Conservatives must rediscover the power of home ownership - Bill Carmichael

A wise old sub-editor, who doubled as the newspaper’s personal finance correspondent, took me to the pub to explain my problem was I was spending what he called “dead money” on rent, and I’d be better off buying a property, because at least then I would eventually have a saleable asset to show for my efforts, rather than handing over cash to a landlord each week.

On the back of a beer mat he sketched out a few figures, including what I would need for a deposit and how much I could expect to pay in mortgage payments.

To my astonishment it turned out that even with interest rates at well over 10 per cent, as they were back then, I could still buy a house for a monthly outlay that was only a fraction more than I was paying in rent for a grotty bedsit with sticky carpets, an often-filthy shared bathroom and a growing family of mice that ate my breakfast cereal faster than I could.

A few months later I took the plunge, borrowed the deposit from my parents, and bought a three-bedroom, semi-detached house, with a small garden, a garage, some rotting window frames and a bit of a mould problem in the back bedroom.

Total cost – read it and weep Millennials! – was £24,000.

I mention this anecdote not out of nostalgia, but because it contains a startling statistic that helps explain the current housing crisis that is impacting on a growing number of people – particularly the younger generation who go by the name of “generation rent”.

Back then in the early 1980s the average salary was around £8,000 a year, and the average property price was about £24,000. So, the average worker could expect to pay three times his or her annual salary to buy a property, and with payments spread out across a typical 25-year mortgage, this was entirely doable for most working people – including even poorly paid cub reporters.

The contrast today is striking. The average price for a domestic property in England is over £295,000, while the average salary is about £29,000 a year.

So average buyers are going to have to pay more than ten times their salary to get a foot on the property ladder.

And of course, in addition they are going to have to find a deposit of around 10 per cent of the purchase price.

How many young families have almost £30,000 sitting idle in their bank accounts I wonder? Very, very few I would suggest. So, most young people, even those in reasonably paid jobs, have very little chance of getting even a toe on the property ladder.

Why has the property market become so much more difficult for young people in the last 40 years?

One possible reason is explained by our old friend “supply and demand”.

We simply have not built enough houses to keep up with demand, and this has driven up the cost of both buying and renting property.

Some blame this on the planning system, operated by local authorities, and criticised by many as cumbersome and time consuming and preventing new housing being built.

But in this week’s Queen’s Speech the Government appears to have abandoned plans for a radical overhaul of the planning system and gone slightly soft on hitting a target of building 300,000 new houses a year.

Instead, more modest reforms will give residents a greater say in planning by allowing street-by-street votes on new housing developments. A two-thirds ‘‘super majority’’ would have to support the plan before it could go ahead.

The new Bill will also set a locally set levy on developers that residents would be able to spend on new schools, GP surgeries and other facilities to benefit the neighbourhood.

Interesting ideas, no doubt, but the crucial point is will it increase the supply of good quality, affordable housing. I remain to be convinced.

Margaret Thatcher recognised the virtue of a “property owning democracy” when she gave tenants the right to buy their council homes back in the 1980s. It gave working class families a tangible asset they could pass onto their children, probably for the first time.

I know this from personal experience – my parents were one of thousands who bought their council house and quite late in life were delighted to become property owners and not to have to pay rent anymore. Mrs Thatcher understood that providing working people with such a physical stake in their neighbourhoods provided a glue that built strong communities.

The Conservatives need to rediscover the power of home ownership. Until they make it as easy for my children to buy a house as it was for me, they are missing a trick.