The cost of renting or buying a one bedroom flat here in the UK appears to be at parity. Buy or rent, the monthly financial commitments are the same, give or take a few lonely quid (or dollars). I strongly suspect this translates globally as an economic truism of our time?
On more focused consideration entry level property buyers, most often young people, have only a few options realistically open to them when thinking about how best to live independently. These are rent a room elsewhere, rent a small dwelling or buy a property with a mortgage. The options open to our young, if based on principles of inclusivity, will translate beneficially through a persons life and provide enormous social wellbeing for us all.
Tracking through those last two options that are open to a single young person or couple the following provides a fair view of the numbers involved:
- The median one bedroom property (e.g. flat / apartment) rental in South East UK as of March 2022 is £700 per Month according to the UK Office of National Statistics. Although, having sampled our own area over the last few months, as of August of this same year there’s not much for less than £795 per Month rental.
- The average flat (i.e. apartment) to buy in our town over the last year has been £178k ( https://www.rightmove.co.uk/house-prices/basingstoke.html?propertyType=FLAT&page=1 ). To buy that same property with a 10% deposit, at a fixed interest rate for 5 years at 3.3%, over a 25 year repayment term will cost £785 per month.
It’s not hard to initially see from the above that the first option is dead money for the tenant and the other has the potential to provide long term housing security for our children. Note here that the benefit, should a property purchase be made lasts well into older life or retirement. This is because the mortgage is likely to have been paid off in full and as such there are no accommodation costs to be incurred in those twilight years. This then places a person or couple head and shoulders above the demeaning prospect of the poverty line in later life. A win-win for citizens and the state given an individuals positive economic wellbeing due to that initial and enlightened property purchasing opportunity.
Looking at this another way from the future wellbeing of individuals. If we do a broad loss / benefit analysis we see that the cost over 25 years of either buying or renting that same one bedroom flat comes at a cost of -£70k (buying) versus -£390k (renting). That’s a whopping -£320k saving if a person or couple are given the opportunity to buy over the same period ( https://smartmoneytools.co.uk/rent-vs-buy/ ).
In practice if all were given the option to buy as a natural societal right and afforded the opportunity to move up the property ladder then private housing landlords would be a thing of the past, which isn’t the end of the world. Allowing people to buy their own property to live in is an expression of real freedom which all libertarians should take note of. This contrasts dramatically with the pseudo freedoms offered up by the political right who only offer false opportunities and prospects of personal betterment.
Buying rather than renting a property wouldn’t adversely affect the demand for housing stock long term as all we are changing here is the means of payment. There would be less need for government social monetary intervention in the form of benefits throughout a persons life, freedom of choice would be realistically maximised and more money would be economically active. What is there not to like here unless inequality is your guiding mantra?
I’m always deeply saddened at how society organises itself in such obviously detrimental ways. The practical realisation of a property owning democracy is shown to provide an unambiguous benefit to individuals and wider society. If only governments would just drop the word free from the idealised free market and started to act more responsibility and in sympathy with the needs of its citizens. All it takes is political imagination and in no small part courageous leadership centred around the principle of liberty and individual freedom based not on unrealisable idealisms but rather practical responses to social needs.
What the world needs is a shift back to the centre, to take the middle way with pragmatic and not idealistic sound bites, where we can all benefit most from the fruits offered up by organising around a people centric society. At present we appear no more than hunter gathers organised as economic marauders in pursuit of socially adverse forms of banditry.
If we are serious about social inclusion and wellbeing then we should aim to not facilitate property ownership through socially dubious economic means but rather should enable our children with pragmatic government housing policies. Our children deserve better access to affordable housing through realisable right to buy schemes, just like we as the older generation enjoyed through that glimmer of hope offered to us by the now largely stalled property owning democracy revolution.