Finance for housing
An introduction

Eight: ‘Marginal’ owner-occupation


Political discussion about owner-occupation has usually focused on the supposed positive attributes that ownership brings: a sense of independence, security and feeling of ‘paying your own way’. Margaret Thatcher was fond also of asserting that citizens needed a stake in society, hence she promoted the right to buy with the idea of the ‘property-owning democracy’. In turn, Tony Blair and Gordon Brown believed that extending homeownership would spread ‘wealth’. There can be no denying that owner-occupation is popular in the UK, but the attributes claimed for it are not universal across the tenure. The positive view needs to be tempered with an awareness of the financial implications of extending owner-occupation down the income scale at a time when the ‘safety net’ for owner-occupiers who run into difficulties paying their mortgage is minimal.

Different aspects of owner-occupation at the margins will be considered in this chapter in order to demonstrate this darker view, as well as wider points. These are:

  • moving into owner-occupation: first-time buyers and the implications of large deposits; shared ownership and equity sharing as a way into owner-occupation; council tenants and discounts under the ‘right to buy’;

  • staying in owner-occupation: paying for repairs and maintenance;

  • leaving owner-occupation: ‘prime’ owner-occupation, mortgage rescue and the likelihood of repossession; sub-prime owner-occupiers and the likelihood of repossession; ‘spending the home’ on long-term care.

First-time buyers have found it increasingly difficult to buy. In the early 2000s, the price of property increased by over 60%. However, before 2007 it was possible to obtain 100% mortgages or mortgages with a very high ‘loan to value’ ratio, generated from calculations of four, five or even six times the household income (see Box 2.2).

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