Our Young Mouse is only 25, but is far better with money than his slightly feckless dad.
He announced a few months ago that he’d saved up enough money to leave the family nest and buy his own flat in west London. ‘It’s shared ownership,’ he said. ‘You buy a quarter of it and rent the rest.’
I sounded a note of fatherly caution. ‘Isn’t that where you get those horrible service charges?’ I asked.
I’d read an article about the huge costs of shared-ownership schemes. ‘And who is running this scheme?’ I asked.
‘Something called Peabody,’ he replied.
At the mention of Peabody, concerns evaporated. George Peabody (1795-1869) was the philanthropic American banker who founded the Peabody Trust, a prime example of Victorian social housing that really worked.
We consulted Granny Mouse and Grandfather Mouse. They both have some expertise in property. Grandfather Mouse was a protégé of Harold Samuel, who founded property empire Land Securities in the 1940s. Granny Mouse has what she calls a ‘property empire’, consisting of a one-bed flat in Shepherd’s Bush and a studio in Oxford.
They both approved of Young Mouse’s plan, because the Peabody name just seems so trustworthy and good.
George Peabody, who lived in London, retired in 1864 with a fortune of £2 million (£200 million today), largely derived from lending to US states and large companies. He set up his eponymous housing trust with a gift of £150,000 in 1862.
The Trust built blocks of flats in central London and moved the poor out of Dickensian slums. Peabody’s aim, he said, was to ‘ameliorate the condition of the poor and needy of this great metropolis, and to promote their comfort and happiness’.
The poor and needy had to be deserving sort: there were rules such as night-time curfews and prompt payment of rent.
The trustees promised ‘the construction of such improved dwellings for the poor as may combine in the utmost possible degree the essentials of healthfulness, comfort, social enjoyment, and economy’.
In this they were successful. The FT describes his buildings, designed by architect H A Darbishire, as ‘handsome, well-built barrack-like tenements, many of which would sell for a fortune if they were on the market today’.
They’re not exactly beautiful but are determinedly low-rise – and they still stand, in contrast to many later developments, since knocked down. A similar project is the Guinness
Partnership, which used its vast beer fortunes to invest in social housing. It was founded in 1890 when Sir Edward Cecil Guinness gave £200,000 to set up the Guinness Trust.
The Guinness Partnership thrives today and runs homes for more than 160,000 people. It’s a century since Guinness, now Lord Iveagh, bought Kenwood House in London and two years later gave it to the nation, with its extraordinary picture collection.
The Peabody Trust in London, which now owns more than 100,000 flats and houses, was not Peabody’s only philanthropic venture. In the US, he left $3 million to fund the Peabody Fund for the Advancement of Education in the South. This included a school for teachers in Nashville, Tennessee.
Nor were they his only legacy: in 1854, he took on a young partner, Junius Spencer Morgan, father of JP.
Peabody was one of the founders of modern capitalism, yet he also tried to help the people who were arguably rendered poor by the system. And the criteria for buying a Peabody flat are admirably conceived, excluding, as they do, serious capitalists.
You must have an income in the £35,000-to-£80,000 bracket. You must not already own property. You must be local. It must be your first purchase.
Through these rules, speculators are kept out and the flats are sold to those who need them and also can afford them.
Feckless freelance layabouts such as me would have been detected and excluded by the moralistic overseers at Peabody. But Young Mouse fitted the bill brilliantly, being a hard-working lad with prospects.
Shared ownership scemes have been criticised for short leases. Young Mouse’s flat has a nice long lease of 250 years
He made his application, got a mortgage, passed all the tests and now lives in a lovely brand-new one-bedroom flat on the fifth floor of a purpose-built block. It has its own laundry room and a roof terrace, planted with herbs. The whole deal costs him far less than renting an equivalent place though a conventional landlord.
So Young Mouse has brilliantly avoided the terrible fate that befalls most young people in London: being stuck in an absurdly overpriced and grotty house-share for years, giving all your cash to a greedy landlord.
And it’s all thanks to George Peabody, the capitalist who helped people escape the brutalities of the open market.
