Reply #20: Bank of England calls for less owner occupation. The Treasury wants more…

[xchrom]

http://www.guardian.co.uk/business/economics-blog/2011/nov/22/bank-of-england-owner-occupation

Britain is on course for a lower level of owner occupation – and that would be no bad thing. So said David Miles, one of the nine members of the Bank of England's monetary policy committee in a speech in York today.

This came just 24 hours after the Treasury announced that it would be spending £400m to kickstart private-sector housebuilding and provide a mortgage indemnity scheme so that those buying new-built homes can get a home loan worth 95% of the property's value.

So, we have Threadneedle Street saying that it would be a good idea were housing to play a less prominent part in the economy and we have the Treasury doing its best, within its limited means, to reflate the property market. Clearly, this is one of the occasions when the left hand doesn't know what the right hand is doing.

Miles makes a good argument. He notes that first-time buyers currently have to find a bigger deposit when they are buying a homes, and admits that this causes "transitional problems" – particularly for homebuilders. But in the longer term, a smaller owner-occupied sector and a larger private rented sector would increase labour mobility, make the economy more stable and make it easier for the Bank of England to calibrate interest-rate policy.