More sense and sen­si­bil­ity needed to tackle hous­ing is­sues

Yorkshire Post - Property - - PROPERTY - Peter Iling­worth

IT is a truth uni­ver­sally ac­knowl­edged, that a sin­gle fam­ily in pos­ses­sion of a good mort­gage must be in want of a house. Thus a Jane Austen novel on the prop­erty mar­ket could have be­gun.

Sadly to­day there are plenty of fam­i­lies want­ing a house, es­pe­cially with af­ford­abil­ity at near-record lev­els, but few can get hold of a mort­gage.

Austen knew a thing or two about prop­erty, or at least the im­por­tance of own­ing it. Her nov­els had a great deal to do with its ac­qui­si­tion.

Al­though her pre­ferred route to own­er­ship was largely through mar­riage, she would have un­der­stood about fi­nanc­ing a prop­erty pur­chase through a mort­gage as her life co­in­cided with the ad­vent of the build­ing so­ci­ety move­ment.

Austen un­der­stood that so­cial sta­tus played a ma­jor role in own­ing or as­pir­ing to own prop­erty. Above all per­haps, she un­der­stood that an in­di­vid­ual’s or fam­ily’s fi­nan­cial cir­cum­stances played a piv­otal role in de­ter­min­ing where and how one lived – and how one was seen to live. She cer­tainly knew the value of a fine lo­ca­tion and the ben­e­fits that well-pro­por­tioned rooms and good nat­u­ral light be­stowed upon oc­cu­pants.

This un­der­stand­ing seems as apt to­day as it was when Jane Austen was alive in the late 18th and early 19th cen­turies. The de­sire to house one’s self and/or one’s fam­ily com­fort­ably, and the plea­sure that a well-de­signed house gives to its owner – both so­cially and ma­te­ri­ally – seem largely un­al­tered.

But two things have changed. Res­i­den­tial prop­erty no longer just demon­strates wealth but cre­ates it, and thus makes it even more de­sir­able. Also, the de­mu­tu­al­i­sa­tion of the build­ing so­ci­eties and their takeover by banks, to­gether with the on­go­ing credit cri­sis, is threat­en­ing the way we must think about own­ing prop­erty.

In 2011, this means that, un­less the Gov­ern­ment and the banks take ur­gent steps to re­verse the sit­u­a­tion, for the first time in more than 200 years it will only be those who are al­ready af­flu­ent who can real­is­ti­cally af­ford to buy prop­erty.

The mu­tual build­ing so­ci­eties were a fine and no­ble idea that worked for bor­rower and lender alike. With noth­ing bro­ken it is hard to see why they needed mend­ing. But the change in leg­is­la­tion in 1986 that al­lowed de­mu­tu­al­i­sa­tion al­tered all that.

Most mu­tu­als were highly risk-averse and those that didn’t suc­cumb to bank takeovers have weath­ered the re­cent fi­nan­cial storm well. Af­ter all, it was de­mu­tu­alised banks and just a few risk-em­brac­ing mu­tu­als that had to be res­cued by the tax­payer. This makes re­cent calls for the re­mu­tu­al­i­sa­tion of build­ing so­ci­eties and the re­vival of this ex­cel­lent Bri­tish tra­di­tion seem sen­si­ble.

The re­mu­tu­al­i­sa­tion of North­ern Rock could be a start. With­out the need to pay div­i­dends to share­hold­ers ob­sessed with their short-term in­ter­ests it would once again be free to add choice and di­ver­sity to an in­creas­ingly nar­row mar­ket.

Fi­nan­cial mu­tu­als tra­di­tion­ally also have strong track records in back­ing lo­cal char­i­ties and pro­vid­ing sup­port to vol­un­tary or­gan­i­sa­tions.

A re­cast North­ern Rock could con­tinue this im­por­tant civic role in the com­mu­nity it serves. This may all sound rather like Mr Cameron’s Big So­ci­ety. But in the case of the build­ing so­ci­ety move­ment his­tory speaks for it­self.

Build­ing so­ci­eties were cre­ated to al­low their mem­bers to buy prop­erty. Banks were cre­ated to make money for their share­hold­ers.

Build­ing so­ci­eties were pru­dent and fis­cally re­spon­si­ble. Banks clearly haven’t been and are a per­fect ex­am­ple of pride com­ing be­fore a fall.

To ex­tract them­selves from the trou­ble they are in the banks are now prejudiced against the very peo­ple the build­ing so­ci­eties were formed to as­sist. Jane Austen could have writ­ten a book about it.

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