Happier to rent in a buyer's hell: The property-owning democracy has failed to recruit Andrew Marshall

THE IDEA that I am a model of financial acumen would send most of my friends into paroxysms of hysterical laughter, and cause serious grief to the heads of several large banks. But I have done one smart thing in the last five years: I haven't bought a house.

I thought about it, back in 1987. Everybody urged me to 'get on the ladder'. But prices seemed to be too high, and the market buoyed by speculation. The signs were everywhere. Houses up the road from me in Croydon were selling for pounds 250,000. A quarter of a million pounds to live in Croydon?

A taxi driver told me his scheme for getting rich quick. 'I have a mortgage on a house in the East End,' he said, 'and two mortgages on flats in Docklands. They aren't built yet. But I'm quids in, aren't I? Property prices never go down.' God knows what happened to him when interest rates surged, property prices plunged and the market went into deep depression.

I was working at the Financial Times at the time and I knew enough about the state of the British economy to know that something was going badly wrong. So I carried on renting. Since then I have paid an average rent of about pounds 400 a month to live in quite pleasant places in London, well-situated and clean. That is about pounds 24,000 in accommodation costs. I would have spent much more if I had a mortgage; I would barely have dented the interest payments; and I would probably own a crumbling wreck that I could not shift for love nor money, with a pounds 20,000 loss on it, and a list of structural faults that could fill a small paperback.

I cannot in all honesty say that my decision was entirely economic, so I can't be too smug. My finances are chaotic, a topic that my bank manager and I occasionally discuss in non-consensual terms. Of course, if I was really smart I would have invested the cash I saved. No chance. It has been blown on - well, something. I have no savings and little debt, so interest rate rises and falls affect me very little. I don't have much to show for five years of renting, but I don't have massive debts, or a house I don't want, or a heart condition caused by standing outside estate agents' windows and watching a prized investment falling in value like a stone.

If people who have lost money on their houses are to be compensated, as has been recommended, it will be nice to see that John Maynard Keynes is making something of a comeback, after a decade when market forces were supposed to be the only arbiter of social good. One of Keynes's great breakthroughs was to realise that in the battle between savers and spenders, it was not always the former who were in the right.

However, it should not be forgotten that many people who have lost out bought for speculative reasons: they over-extended themselves because they believed there were big profits to be had. For years I had to listen to dull stories about the geography of Wandsworth, and the genius of capitalism, often from estate agents. I don't much like estate agents. The last flat I rented had been previously owned by an estate agent. A nasty piece of work, he had his company car registered at the flat, and I had regular visits from the bailiffs because he wouldn't pay his parking fines. The company he worked for went out of business, and he disappeared. Estate agents also tried on two occasions in the last three years to persuade me that the market was recovering. They all tried to flog me disgusting hell-holes in places I didn't want to live, and the excuse was always the same: the price was going to rocket. I think the fact that I had not been absorbed into the property-owning democracy offended their sense of personal self-esteem.

Of course renting makes one inherently suspect. It carries associations, in this country, of instability and unreliability that are entirely absent in most countries. But it is now apparent that the scale and forms of property ownership have damaged the British economy. More to the point, the fact that so much investment has been ploughed into property distorted the economy at a key time, adding to the burden of personal debt. The Government is partly to blame for that, but so is the peculiar British vice of believing that money could be made for nothing. In fact, property prices have just about kept pace with inflation since the war. But it is a powerful idea that, through a little inside knowledge and a smart address, you could buck the market.

It is this that has more to do with the property boom than any great British penchant for domestic stability. In the post-war era, property has seemed to be a good bet; and you could always rely on the Government to come along with a nice burst of inflation afterwards, to wipe out the debts and take the price up. Now John Major says he wants low inflation, the game is up.

Or is it? There are a lot of property- owning voters out there, a lot of angry, unhappy people, and they exercise a powerful influence on the Conservative Party. In the last few weeks, in an attempt to keep the building societies happy, the Government has cut rates for National Savings. I suspect that little will change, least of all the cocktail party chat about undiscovered parts of north Kensington. And Mr Major looks a bit too much like an estate agent for my liking.

(Photograph omitted)