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Tuesday, August 02, 2016

The end of the Thatcher social revolution?

The 1980 Housing Act was arguably one of the most radical pieces of legislation in the second half of the twentieth century. Its objective was to transform the pattern of home ownership in the UK by giving millions of social housing tenants the right to buy their own home.

By 2003-04 just over 69% of all homes in the UK were owner-occupied. In England that figure was 71%. Many tenants were able to live the dream of owning their own home thanks to generous discounts. There was though a downside to this picture with a substantial decline in the numbers of social housing and the growth in council waiting lists.

The major flaw with the policy was affordability. The success of the UK economy has always been tied to house prices. The drive for home ownership saw a growth in demand from the 1980s onwards but relatively limited growth in supply as the house-building sector struggled to cope with rising costs, limited land supply and the fluctuating fortunes of the UK economy.

As a result house prices have been increasing, and first time buyers have been finding it more difficult to get on the property ladder, whilst home ownership among younger age groups generally has declined. With the UK population continuing to grow, the demand for affordable housing has increased exponentially and the private rented market in particular has seen a proportionally greater growth.

Now the Guardian reports that home ownership in England has fallen to its lowest level in 30 years as the increasing gap between earnings and property prices has created a housing crisis that extends beyond London to cities including Manchester.

The paper says that home ownership has fallen to 64%, which is the lowest since 1986, when the number of people getting on the housing ladder was on the way up, due to a housing market boom fuelled by the deregulation of the mortgage industry and the introduction of the right-to-buy policy for council homes by Margaret Thatcher’s Conservative government.

The problems faced by first time buyers in particular in getting mortgages, the continued sluggishness of the housing market following the 2008 credit crunch and the continuing rise in house prices have all combined to price many people out of the market.

Advocates of Thatcher's home ownership revolution  have discovered that you can only buck trends for a short time by selling off state owned homes cheaply, but that once the available stock is depleted market conditions will reassert themselves and levels of home ownership will level off to a more natural level, reflecting current economic conditions.

The crisis in housing now is in supply and in particular the provision of affordable homes to rent. We need a state-sponsored house building programme to match that of the post-war years if we are to cope with demand and allow people to have a home of their own. That may mean suspending the right to buy on new build, effectively finishing off Thatcher's social revolution.
If house ownership is a barometer of how successful the economy is, we are in decline.Re the young unable to buy unless with support. Thatchers ideology but no replacement houses is coming home to roost. Macmillan in the 50s got it right. If a government really is concerned about its country and people then councils should be able to borrow money to build and brownfield site policy should be altered.
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