Murky Depths

News in London and beyond

Greenwich borough, Housing

Shared-ownership: How low can they go

Is there a bigger indictment of the housing crises than Shared Ownership?

On the surface it’s something that’s supposed to help first time buyers yet in reality is another prop keeping prices way above where they would be without intervention.

New Greenwich flats built on public land. Shared ownership heralded as a benefit here

As average prices have raced away from average wages over the past two decades, and governments of all types interfere in the “market” to prop up asset prices the shared ownership wheeze has grown ever larger. It started at a 75% share, then 50% and now 25% is common. Does it end up at 5%? A measly one per cent? Don’t laugh – the Tories have been mooting something along those lines. And you can add rent onto that.

For most of the past century someone earning the average UK wage would be able to buy a home at around five times average earnings. That made home ownership -true home ownership – a feasible aspiration for many. Markets would rise and fall but this was the average and gave most the hope of buying an entire share of a home. But that was before housing developers became all powerful and political influence grew hugely.

Fast forward to this brave new world. The “market” isn’t a market. Government – including the Tories who claim to espouse the free market – constantly intervene in an attempt to keep rices high and rising. Housing rises to nine, ten, eleven times average wages. In much of London the average home is now 15 times average wages of £30,000.

And because of that the vast majority of people can’t buy outright. Even those in above-average wage professions often have little chance. Without parental support it’s likely to be no chance. Now, prices could be allowed to fall to normal levels as seen over the past century or being able to buy ever diminishing shares is offered. The latter is chosen.

Instead of letting the market correct itself to give people on their own two feet the chance to buy an entire home governments get ever more creative.

It’s a mass transfer of wealth from the average citizen to powerful developers who retain much of the ownership. Add in rent on the remaining share, ground rent and service charges and some are doing well. And hope your cladding isn’t flammable.

It’s a massive charade. And all wrapped up in patronising drivel about “helping people”. It’s not. It’s helping those who own the land and build on it.

Keep an eye out for ever lower percentages of “ownership” if you can call 25% or less that. In 50 years will be end up with many people “owning” single-digit percentages of homes?

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6 Comments

  1. HK

    I agree with you Fromthemurkydepths!
    I’ve also said this t omany people about sharedownership!
    I’m nearly 39 and still live at home (along with my brother & sister) as we can not afford to buy in London despite earning a reasonable wage.

    The Government should not prop up the housing market – let the market to it’s thing and allow the prices to come down.
    Also interest rates should be raised (slowly), as many people invest in property due to the really poor interest rate return on savings (you’ll lose the value after inflation).

    You mention the Tory’s (and rightly so), but Labour are also to blame – the open door/free movement of labour (I heard it was around 350k net a year?) has increased the demand on housing (pushing prices up), while bring wages down (over supply of labour), so a double hammy from both ends!

    Labour are now saying (from their conference) that they effectively want to get rid of borders and detention centres! What do you think the effect of that is going to be from an ever increasing population growth?

    Our public services (transport, GP’s etc) are struggling as it is!

    We have no chance of building enough houses to meet the demand, and eventually we’ll have to destroy the environment to build more houses and then the infrastructure that goes with it!

    Part of the solution is reducing the population in our main cities to sustainable levels.

    • HK

      Apologies for the typo’s! Dodgy laptop keybord! 😀

    • tony g

      Haha… never heard the housing crisis blamed on immigrants before! That’s a new one. If only that was the problem.

      • anonymous201486

        Don’t you know that immigrants are also taking the jobs too.

        Really the guff that some people come out with on the subject of the housing crisis. Population growth hardly figures in the overall picture.

  2. XD

    Help to buy is help to building companies and shareholders only. People are stupid if they believe the government and housing companies are helping anyone. People will be trapped in soon to be unsaleable properties with extortionate management fees for the privilege.

  3. anonymous201486

    We desparately need property reforms in this country. Escalating ground rents and a ban on leasehold houses is the way to go.

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