We could reconcile the housing interests of different groups, so that the market works for property owners and people who do not own houses but desperately want to.

To solve the housing crisis we need a reduction, or at least a freeze, in current house prices. This fact cannot be denied, and it makes housing reform a hard sell with Britain’s property-owning class.

Successive governments have sat back and watched house prices soar, treating housing reform as a zero-sum game whereby helping non-homeowners is destined to damage homeowners. But it doesn’t have to be this way.

Leaving aside political calculations, a simple fact underpinning the housing crisis is that more people want houses than there are houses. To solve the problem, it is usually assumed we must match supply with demand.

But building homes is a tricky business. Mass housing projects not only require substantial and sustained investment, but also an intricate balancing act between stakeholders, including developers, the market, the local community and the local council. This web of private and public, local and national, ideological and practical interests tends to produce stasis rather than action.

It is therefore strange that we do not talk about decreasing demand. The principle is simple: the reason why house prices are so high is because there is too much money in the housing market. Take some of that money out and houses prices will drop.

But why is demand for housing so high? The answer is complicated, but an obvious culprit is speculative investment. Second homes, buy-to-rent properties and “golden bricks” have distorted the housing market by turning property into a financial commodity. This has led to house prices reflecting the resources of the financial elite, rather than the needs of local communities, as homes are pushed out of the reach of local wages.

Part of the solution to the housing market, therefore, must be to suck some of the speculative investment out of the market. To do so, the government must understand why people invest in housing in the first place.

Broadly speaking, there are three reasons: the steady income from rent, the security of bricks and mortar, and the prospect of selling the house for a profit. My proposal is that the government could offer a housing-linked bond that provides all three, and more.

The process would start with the government tendering longterm, low-risk bonds. Investors, who may have previously bought a house with their surplus money, instead purchase the bond and receive a certificate in return. The certificate promises a certain monthly return and a final redemption amount determined by a housing market index, such that the return reflects current rent levels, and the redemption rate reflects the capital gain you would have made if you had bought a house rather than the certificate.

With the money generated from these bonds, the government builds social housing to meet the needs of local communities, not the housing market. Some of this social housing will be let out at an affordable monthly rate and some of it will be sold off, so that the government will start to collect a substantial pot of money generated from the new properties. This new pot is then used to pay the yield and redemption promised on the bond.

But who does the bond benefit? Well first, it directly decreases demand and increases supply for housing stock, reducing prices and making housing more accessible for non-homeowners.

But the bond is also in the interest of current homeowners who are considering speculating in property. Since it is underwritten by the government and not the market, the bond offers more security than buying a house, whilst still promising the same sort of income and capital gain. What’s more, the bond would not be subject to capital gains tax or stamp duty, making the whole venture more frictionless for the investor.

The bond would therefore suck money out of current housing and funnel it into building new housing. It allows older and asset-rich generations to help build new housing stock for younger generations, instead of buying up current stock and distorting the price of homes.

We can reconcile the housing interests of different groups. This does not have to be a zero-sum issue.

Tom Knight is a member of the Young Fabians. He is currently producing a policy pamphlet for the organisation entitled, ‘A Nation Divided: Building a United Kingdom.’

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