We've all heard the saying “An Englishman's home is his Castle.”
Homeownership in Britain
Britain's property programmes and newspaper headlines are a testament to our national fixation with owning our own property, even when soaring house prices have made this ambition impossible for many. But why is our attitude so different to many parts of continental Europe, such as Germany and Italy, where private renting is the norm?
The answer begins with the notion that home ownership confers aspiration, status, and success - one that is shared among other English-speaking countries such as the USA. In recent decades, this uniquely cultural idea has been linked to Britain's favourable tax treatment of home ownership. As Lesley Matthews, from the School of the Built and Natural environment at the University of Northumbria explains: “Until the year 2000, there was income tax relief on mortgage interest, and homeowners had capital gains tax exemption on their only or main home. This has meant that housing is seen as a more attractive asset than many other potential ways of holding wealth, such as stocks and shares. The building society movement that exists solely to offer mortgages and to allow households priority for a mortgage is also unique to the UK.”
The Right-To Buy
The Right-To Buy policy of the Thatcher government famously allowed council tenants who had been living in their homes for more than two years to own them. This was accompanied during the mid-1980s by a set of wider financial incentives to homebuyers, brought about by financial deregulation, which increased the finance available for mortgages and widened the market. Greater competition among high street banks meant more generous loan-to-income offers and a lower deposit requirement.
In the USA, this has controversially created a sub-prime market of low-income borrowers, which caused the global credit crunch of 2007. In the UK, these financial and tax incentives have also led to the expansion of the buy-to-let market, where homes are bought in bulk and rented out as investment properties. This has arguably seen housing costs rise to a level which has priced many out of the market, and created a boom in the private rental sector, particularly among young urban professionals. But can Britain's privately-rented accommodation live up to this demand, or do or our cultural attitudes to home ownership mean privately-rented accommodation will always be second-best?
Although Lesley Matthews believes the abolition of strict rent controls in the mid-1980s has generally improved both the quality and quantity of privately-rented accommodation, along with the size of landlord budgets, tenants often beg to differ, with tales of shoddy landlords and letting agencies dominating consumer forums. This is sometimes linked to the short tenancy lengths in UK rental properties.
Renting vs Buying
In the UK, the average rental contract period is six months – in parts of Europe, it is five years. The regulation of letting agencies in the UK has also historically been lax compared to other European countries. There are no qualifications required to set up an agency, and a licensing scheme for letting agents, led by the Association of Residential Letting Agents (ARLA) was only introduced in 2009. Similarly, the Tenancy Deposit Protection service has only recently stopped accepting deposits from unregulated agents.
Saf Ali, managing director of letting agency Key Properties, believes a culture of reluctance to seek better quality is behind this, and that rental provision will improve with demand: “Brits are not renowned for their expectations of service in general. They need to set their expectations higher. As the lettings market expands, lettings agents are going to have to be at the top of their game to fulfil the growing demand for property and with competition from other agents,service will have to step up to the mark, thus encouraging the British public to only accept top standards of service when looking for a new home.” Saf, whose agency is based in Manchester and is currently expanding throughout the North West, also believes rising house prices are gradually changing British attitudes to renting. Though the bulk of his clients are young professionals, he seen an increase in demand from across demographics, particularly among young families. He defines a successful agency as being willing to do “that bit extra” such as a operating a 24/7 call out policy and arranging viewings outside of 9-5 slots so that people do not need to take time off work for them. But does the term ‘extra’ imply this level of service is optional rather than standard?
In a climate that excludes many from home ownership, it seems that only changes to Britain's traditionally-poor service culture will end our equally-traditional obsession with climbing the property ladder, and stop British renters from feeling they are settling for less.