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Death of owner occupation would herald dawn of an enlightened era

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Today, every trend that ever flourished in the hundred years from 1900 is being deconstructed, reconstructed and tuned to fit new conditions. The only exceptions are trends that have become so ingrained into our way of thinking that we no longer recognise them for what they are.One such trend is owner occupation.

The 20th century was the century of owner occupation. In 1900, less than one in 10 houses in England and Wales were owner occupied, with the majority rented from private landlords. Today, notwithstanding a near-doubling of the population and a dwindling blip on the radar screen called 'buy to rent' - better known as private sector slum creation - the percentage of owner occupation has soared to 70 per cent and private landlordism is almost extinct. This is as near to a revolution as you can get without gunfire in the streets. But we should make the most of it while we can, because home ownership is on track to be wiped out by the first great counter revolution of the 21st century.

Politicians who attribute it to mystical, if not biblical, forces have always misunderstood the rise of home ownership. Tory ministers such as Julian Amery extolled it as 'the most worthy aim for any man'. Labour ministers such as Richard Crossman sentimentalised it as 'the response to a deep call of human nature'. In reality it has never been anything other than a great example of microeconomic opportunity.

Home ownership began when thousands of small landlords started selling off houses that had become unprofitable as a result of the rent controls imposed during the Great War. It got its second big boost from the long retention of rent controls imposed again in the Second World War. The rise of public housing had nothing to do with it. That was an alternative housing policy cooked up by Liberal and 'old' Labour governments, public sector in thought, word and deed and sociological rather than economic in intention.

As the demand caused by the two World Wars receded, it became obvious that the two policies could not coexist. Sure enough, savage inflation in the 1970s led to drastic public sector cutbacks. But owner occupation was unaffected; indeed, it grew dramatically on a huge expansion of borrowing.

While owner occupiers were breaking the bank, selling and reselling their own houses tax free, local authorities were forced to sell off whole estates. In 1978, four times as many houses were being sold as being built. By 1988, this had risen to 10 times. People not only made money buying and selling homes, even with mortgage interest rates in the upper-teens, they also leeched more and more out of refinancing deals in a process known as equity leakage. They went on doing this up to the early 1990s, when the margins grew too small for high-rate borrowing, but resumed with zeal as soon as rates began to fall.

After the recession it became clear the so-called 'response to a deep call of human nature' was simply a black market in borrowed money that fed on housing scarcity. Yet its significance is still misunderstood. Concern is often expressed about overborrowing, but the inaccessibility of the vast accumulation of equity in borrowers' hands is ignored. Today, homeowners may owe a fortune to moneylenders, but they are living in an even greater accumulation of private wealth in a country that cannot even afford to maintain basic infrastructure or services.

Sooner or later the government is going to have to redress that balance by laying hands on homeowners'equity. When it does, the great 20th century boom in home ownership will be over at last.

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