Future of the welfare state: thinkpiece
How a greater focus on ‘last time buyers’ and meeting the housing needs of older people can help solve the housing crisis
As one of the key challenges facing the nation, successfully tackling the housing crisis is a critical litmus test for politicians and policy makers. The consequences of failing to build enough homes for decades are already keenly felt by millions of people.
The effect of the crisis is felt most heavily by the young and, without a change in course in house building, will become increasingly severe for future generations. The cost and scarcity of housing means many young adults are unable to establish independent households of their own. One in four adults between the ages of 20 and 34 are still living with their parents. This is hardly surprising when the typical first time buyer needs a deposit equal to 65% of their income and the average household spends 40% of their income on rent.5 We have the bizarre situation in which a generation of graduates who have benefited from the significant investment in high quality student housing that has taken place in recent years, now find themselves forced into lower quality accommodation and living conditions as they begin their working lives as a result of the high cost of housing and substantial student debts.
All this explains why the Government and indeed the opposition have been focused on helping ‘first time buyers’. However, perverse as it may seem, we might make faster progress in helping these younger generations if we devote as much of our energies to meeting the housing needs and aspirations of their parents and grandparents.
The key themes we explore in this chapter are how a greater focus on meeting the housing aspirations and needs of older generations will directly increase the overall supply of housing. This can make a contribution in three ways: by releasing capital tied up in existing homes unlocking new market demand; by increasing the range of tenures and type of homes so not competing with existing developer models; and by releasing much needed family homes, increase movement in the whole housing chain. In addition, it would deliver significant value to the public purse by helping people to remain independent for longer, therefore improving health and wellbeing.