Outlook for UK housing and the implications for policy: are we reaping what we have sown

Purpose – The purpose of this paper is to present a brief analytical summary of the current downturn in the UK housing sector. It then aims to ask whether the severity of the slowdown and its eventual consequences have been exacerbated by key aspects of housing and welfare policy. Design/methodology/approach – The paper examines: the promotion of property as an investment by successive UK governments since the Second World War; how the investment emphasis of policy enabled the promotion and growth of private rental partly funded through buy-to-let mortgages – a new financial product that allows individuals to take out a mortgage on a property for letting purposes; the expansion of cheap credit, due in part to the burgeoning securitised lending sector drawing heavily on housing equity (the decline of which is implicated in the current economic downturn); and reforms of the welfare system in the mid 1990s that have severely weakened the safety net for low-income mortgage borrowers who are most vulnerable to market turbulence. Findings – It was found that there are wider questions to be asked of the current downturn than how deep or how long the current recession will be. More important questions relate to the role that housing policy has played in exacerbating volatility and the future implications for modernizing housing policy. Research limitations/implications – The paper identifies a number of key research questions that follow from the analysis regarding the winners and losers of homeownership and the concomitant implications for policy. Originality/value – The paper identifies areas of government failure relevant to the current crisis and knowledge gaps that need to be addressed in order to develop a coherent evidence base on which to base future reform of housing policy. As such, the findings will be of interest to policy makers and housing researchers.