Homeownership-Based Welfare? Pathways to family wellbeing

Homeownership-based welfare? Slide 1 Pathways to family wellbeing Adriana M Soaita Centre for Housing Research, University of St Andrews Beverley A Searle University of Dundee Mind the (Housing) Wealth Gap, PI Beverley A Searle, Leverhulme Grant Slide 2  What are people’s views and strategies towards the paradigm of ‘homeownership-based welfare’ (HBW)?  What are the opportunities and limitations for this for different socioeconomic groups?  What alternative provisions for welfare do people who rent make? Mind the (Housing) Wealth Gap, PI Beverley A Searle, Leverhulme Grant Asset-based welfare Slide 3 The power of assets is not just that they can be deployed productively or tapped to weather unexpected events, but that owning assets have behavioural effects that can change the manner in which people think about and plan for the future (Cramer and Shanks, 2014:2) To tackle poverty To address inequality  Prevent poverty  Complement traditional welfare  Historic land reforms  Subsidized saving  Progressive taxation of wealth not just income  A post-war political project? Asset-based welfare Slide 4 The power of assets is not just that they can be deployed productively or tapped to weather unexpected events, but that owning assets have behavioural effects that can change the manner in which people think about and plan for the future (Cramer and Shanks, 2014:2) Key pathways to asset-building     Saving and investing Acquiring a home Receiving an inheritance or a gift Increasing one’s human and social capital Asset-based welfare Slide 5 The power of assets is not just that they can be deployed productively or tapped to weather unexpected events, but that owning assets have behavioural effects that can change the manner in which people think about and plan for the future (Cramer and Shanks, 2014:2) Criticism      Regressive ‘asset-agenda’ Pretext to undermine traditional welfare Behaviour change? Can the poor afford to save? Risks to market volatility Homeownership-based welfare Slide 6 Pro’s and con’s An owned home may confer a stability that facilitates the development of other assets. Yet, the initial high expense may put households at risk with regard to liquid assets which inhibit the development of other assets, leaving households exposed to a volatile market (Key, 2014:48). Owned home as an asset      Forced saving Means for wealth building Financing retirement or self-employment Rent-free living Leaving an inheritance Homeownership-based welfare Slide 7 Pro’s and con’s An owned home may confer a stability that facilitates the development of other assets. Yet, the initial high expense may put households at risk with regard to liquid assets which inhibit the development of other assets, leaving households exposed to a volatile market (Key, 2014:48). Inequality 4,500 4,000 3,500 3,000 2,500 Billions (£) 2,000 1,500 1,000 500 0 1st 2nd 3rd 4th 5th -500 Property Wealth (net) 6th 7th 8th 9th 10th Deciles Financial Wealth (net) Physical Wealth Private Pension Wealth Data Slide 8  112 phone interviews (Family Resource Survey 2012)  Stratified by  region  age 19  tenure - 8 5 6 10 7 16 5 8 17 Cohorts 35-49 50-65 Total 11 Outright Outright by Mortgagors Re- Social Private by cash mortgage paying off mortgagors tenants tenants Total 5 0 11 9 7 12 44 12 21 11 11 11 2 68 17 21 22 20 18 14 112 Data Slide 9 Participants’ financial situation Social Private Outright Outright by Mortgagors Re-mort- Social tenants tenants by cash mortgage paying off gagors tenants Comfortable or alright Just getting by Very difficult or difficult Total Total 14 18 14 14 33 5 68 1 3 6 4 77 4 25 2 - 1 1 88 5 17 17 21 21 19 18 14 110 North West (estimated at £40,000) Data Slide 10 South East (estimated at £800,000) 80 homeowners Age group 35-44 45-54 55-65 Home values (£000) median min - max 147 40 - 400 202 60 - 800 185 84 - 600 Equity (£000) median min - max 48 6 - 400 175 14 - 500 167 78 - 500 Households’ views and strategies Slide 11 Home versus Asset 12% It’s more an extension of me than it is a piece of wealth. It has got me written all over it, so it is an extension of me. (f, 65, owner) 18% 70% primarily a home equal home/asset primarily an asset I raised my son in this house, it’s love! It’s my love, my memories… I was offered an exchange this is my home so I had to… I’m forced to pay the Bedroom Tax. (f, 54, social tenant) Households’ views and strategies Slide 12 Home versus Asset 12% 18% 70% primarily a home equal home/asset primarily an asset I look at property as investment. I live in one property but I can also leverage its appreciation to buy other properties. It so becomes an investment and generates revenue. (m, 55, re-mortgagor) Households’ views and strategies Slide 13 Home versus Asset 12% 18% 70% primarily a home equal home/asset primarily an asset When I think about the future, I think of it as an asset but if I think about the present is my home. So it is equally balanced, they go hand in hand. Luckily they both go the same way. A better place to live is more expensive and is also a better investment. (m, 54, outright) Households’ views and strategies The affluent (9%) Slide 14 Homeownershipbased welfare?  Total wealth more than £1m  No need (savings, investments, pensions, insurances) n= 10 n=32 n=15 n=55 The affluent Asset-builders Marginal homeowners Non-homeowners I am very secure now, Adriana. Touching wood, I cannot foresee any financial disaster that would cause me to utilise any of my property wealth. (m, 53, outright) Households’ views and strategies Asset-builders (49%) Slide 15 Homeownershipbased welfare? n= 10 Major extensions (n=20) Successive properties (n=1) Letting out n=32 n=15 Moving up Buying to develop n=55 The affluent Asset-builders Marginal homeowners Non-homeowners Buying to let (n=14) Downsizing into 2 properties (n=1) By inheritance (n=1) Letting out when moving up (n=2) What for? A comfy home, better returns plus: Retirement Elderly care Inheritance In-vivo gifts Safety-net Households’ views and strategies Marginal homeowners(13%) Slide 16 Homeownershipbased welfare? n= 10 n=32 n=15 n=55 The affluent Asset-builders Marginal homeowners Non-homeowners More likely to:  be self- employed  be eligible for social housing/RTB  proud to leave an inheritance Alternative welfare strategy:  family solidarity  1-3 month on-goings  marginal landlords Households’ views and strategies Non-homeowners(29%) Slide 17 Homeownershipbased welfare? n= 10 All tenants (14 private, 18 social) prefer to buy rather than rent:  8 private hoped to (4 in the UK)  3 social applied for RTB n=32 n=15 n=55 The affluent Asset-builders Marginal homeowners Non-homeowners Private tenants  Divergent group: (ex)-homeowners/ mortgagors (4); migrants (n=8); with children (n=8) Polarized welfare strategies  Homeownership  Social welfare / tenancy Households’ views and strategies Social tenants (n=18) Slide 18 Homeownershipbased welfare? n= 10 No alternative welfare provisions  four affected by BT  four previously homeless n=32 n=15 n=55 The affluent Asset-builders Marginal homeowners Non-homeowners I’ve just moved from a private landlord… We’ve had to keep moving, it wasn’t stable, secure tenancy. So we’ve just moved into social housing, which is so much better, absolutely brilliant… Thank goodness! (f, 45 plus four others). Tentative conclusions Slide 19 People views/strategies  A dwelling = an hybrid between a home and an asset  Participants prefer to buy rather than rent  A majority were engaged in asset-building via homeownership Opportunities and limitations  Potential for property gains: Relies on the structural conditions of the UK housing system Increasingly regressive & exclusionary  Raises many questions, for instance: Risky: ‘all eggs in one basket’ Increasing demands on housing wealth Marginality & inequality Tentative recommendations Slide 20 Tackling poverty?  Tenure neutral housing support  An appropriate degree of protecting the family home  More generally: stable and affordable alternative tenures subsidized saving instruments ? Addressing inequality  Develop progressive wealth taxation (including property & land) Thank you