Magazine article The Spectator

All Right for Some

Magazine article The Spectator

All Right for Some

Article excerpt

I LIVE on a council estate in the East End of London. It's not my dream home, but my income won't stretch any further. The property sections of the local papers are dominated by `luxury riverside homes' down the road in Docklands. So it felt like a godsend when, just before Christmas, among the apartments selling for the price of Gloucestershire mansions, I saw an ad for Chessum House, a converted schoolhouse in an up-and-coming part of Hackney, with prices starting at 57,000. The deal is that the buyer provides 60 per cent of the property value and rents the rest from the housing association.

Delighted at finally finding a place I could afford to buy, I got straight on the phone to find out more. My hopes were dashed, however, when the lady in the marketing department found out that I was a journalist. She didn't have anything against hacks in particular, but this oasis in a sea of six-figure prices was reserved for nurses and teachers. I was a victim of the Rise of the Key Workers.

Ten years ago, when my landlord Martin bought the house I live in, things were very different. Tower Hamlets had decided to fill in the space between two Seventies tower blocks with a row of terrace houses. The council sold them at well below market value, and Martin had to bide his time on a waiting list before snapping up one of the last properties available. He wouldn't be able to do the same thing today because he, like me, is not one of the fortunate minority who can claim key worker privilege.

So who are these people who go to the head of the queue for subsidised housing while everyone else is left to fend for themselves on the open market? Announcing the 250 million Starter Home Initiative in December 2000, John Prescott said that it would help `key workers who contribute so much to the quality of life' in London and other areas with high property prices. In practice, that means special treatment for three professions: nurses, teachers and the police. If they work in the right place and aren't employed in the private sector, the government will help them to buy houses.

The government initiative has so far allocated 230 million to various companies promising to create homes for key workers. A consortium named Keys to the Capital grabbed the largest slice of the pie: 1125.5 million to provide equity loans for the house-hunting fonctionnaires of London. Here is how equity loans work. Suppose a policeman wants to buy a flat for 100,000. He puts up 75,000, probably through a mortgage. Keys to the Capital provides an equity loan for the remaining 25,000. If the policeman sells the flat, he has to pay back 25 per cent of the sale price; so if the property doubles in value, he keeps 150,000.

The Housing Corporation has published a meticulous list prescribing the exact configuration of each scheme. For example, Moat Home Ownership Limited is to accommodate 15 teachers and 14 nurses in Canterbury. This is not micromanaging the property market so much as nanomanaging it; they practically stipulate who lives next door to whom and what colour to paint the front door. Discrimination in favour of key workers is wrong for three reasons. First, it means that the government is giving preferential treatment to employees of the state. Private nurses and independent school teachers, not to mention countless others in the same income bracket, are treated as second-class citizens. …

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