Homeownership-Based Welfare in Transition

Abstract

Welfare-state restructuring featuring the use of equity held in owner-occupied housing assets to offset declining public welfare resources and diminishing pension reserves-a form of 'homeownership-based welfare'-has become increasingly prominent in many developed economies in recent decades. This paper, focusing on the UK, examines the shifting position of homeownership, arguing that while the private home has become a key component of welfare restructuring, both owner-occupation and housing equity have become more polarised in the last decade, especially across cohorts. A particular concern is whether passive homeownership-based welfare switching strategies have become more active, or even pro-active, strategies to housing property accumulation as a means to compensate for welfare state retrenchment and anticipated pension shortfalls leading up to and since the Global Financial Crisis. We identify the significance of the rapid advance of a 'generation landlord' in the recent development of 'generation rent'.

Equity Inequity: Housing Wealth Inequality, Inter and Intra-generational Divergences, and the Rise of Private Landlordism

“…A counterpoint to notions of "generation rent" among young adults has been a rise in private landlordism (Ronald, Kadi, and Lennartz 2015) propelled by mortgage sector developments. In the UK, for example, BTL mortgages became relatively cheap and easy to access but only for those that had the necessary capital to meet higher loan-to-value requirements (Kemp 2015).…”

“…While entry to the property ladder became more difficult for many, investment by existing holders of (housing) wealth in secondary rental properties became increasingly easy and attractive. The British situation provides a particularly salient case with estimates of landlords in the UK growing from about 558,000 in 1991 to over 2.12 million in 2012 (Ronald, Kadi, and Lennartz 2015). Despite recognition of an acceleration of secondary property investment, the broader impacts that these dynamics of housing stock concentration on housing wealth distribution have been mostly neglected.…”

“…As the flipside to "generation rent" among younger cohorts, the British housing market has witnessed a very significant growth in landlords over the last few decades with an especially rapid increase in the post-crisis years (Ronald, Kadi, and Lennartz 2015). Many of these new landlords have been small-scale rather than large investors 17 with primary motivation for rental property investment reported as for retirement needs, tending to paint a picture of a relatively disadvantaged pensioner "landlord" whose rental income might overcome deficiencies in income or other wealth (Lord, Lloyd, and Barnes 2013).…”

“…89% of English landlords are private individuals with 78% owning only one more property (Ronald, Kadi, and Lennartz 2015).…”

Asset-based Welfare and Social Investment: Competing, Compatible, or Complementary Social Policy Strategies for the New Welfare State?

“…Taylor-Gooby 2008), it has been argued that many governments have implemented a strategy of proactive "social investment" (SIS) (Morel, Palier, and Palme 2012), which combines social policies that aim to increase labour market participation through human capital investments with policies that seek to facilitate a better balance of work and family life (Bonoli and Natali 2012). Second, there has been a concomitant shift towards an increased macroeconomic and political emphasis on ownership of private property assets in defining the economic well-being of individuals (Ronald and Doling 2012;Ronald, Kadi, and Lennartz 2015). Indeed, facilitated by the rapid financialization and boom of housing markets prior to the Global Financial Crisis, increasing numbers of households have been expected to and supported by policy-makers in taking on high levels of private debt against the promise of higher levels of residential property wealth in the future; the rationale being that such (housing) assets may function as a private welfare resource at all life stages, particularly in enduring periods of economic need and reduced income (Ansell 2014;Lowe, Searle, and Smith 2012).…”