Thatcher’s housing legacy

No doubt readers aren’t interested in my general views about Margaret Thatcher. You can assume that they aren’t as rose-coloured and sycophantic as everything that’s been on TV this evening (thank goodness for Kevin Maguire providing a smidgen of balance). So what did her 11 years as Prime Minister mean to housing?

The only housing reference made so far in the media’s extraordinary obituary-fest has been to the right to buy, as if it was the only housing policy at the time. The policy was wrong on so many levels and has been a long-term disaster, but it is hard to think of a political phenomenon like it (possibly until Boris Johnson came along). It steamrollered over Labour and touched an aspirational nerve in working class Britain that no-one at the time was prepared for or could explain. It became the iconic Thatcherite domestic policy (alongside destroying the trades unions) despite the fact that it was barely mentioned in the 1979 Tory Manifesto, where it was hedged around with caveats about sheltered housing and re-sale restrictions.

It always feels as if the Tories stumbled across this rich seam of political gold quite by accident, without realising what they’d done until they’d done it.

Thatcher’s impact on housing came in other ways as well. Her support for rapid deregulation and unfettered financial markets – notably the ‘Big Bang’ in 1986 – led inexorable to the banking boom, the easy money culture, and the crisis 20 years later. It is hard to remember the days when banks did not provide mortgages and building societies provided mortgages but not other financial products, and everyone operated under strict rules. Deregulation has bedevilled the housing market since.

For those of us at the sharp end of housing in the 1980s, we watched as housing investment by councils plummeted as councils were effectively prohibited from building and buying property on anything like the scale of the 1970s. We were told that council housebuilding would be replaced by the new ‘third arm’ of housing associations, but it was a lie: despite their success, they never filled the vacuum left by the councils. And attempts to revive the free market in housing led to the introduction of shorthold tenancies and a new generation of insecure tenants.

Rising housing demand, boom conditions in home ownership, and the ending of council housebuilding had an inevitable outcome: the galloping homelessness crisis of the 1980s. Areas like Bayswater in London changed in a few years from a residential district with quite a few budget hotels into the homelessness capital of Britain. Sticking homeless families into B&B for years became the new scandal.

It wasn’t all bad. Nearly, but not quite all. The 1980 Act gave us the right to buy, but it was added into a Bill inherited from Labour that also gave council tenants security of tenure, and a whole ‘tenants charter’ of rights, for the first time after years of campaigning. These are the same rights that Cameron is now busy removing. And I suppose the first steps on the shared ownership road were taken during her decade.

There is a straight line from Thatcher’s legacy – right to buy, end of council housebuilding, letting housing benefit take the strain of rising rents, rising homelessness, encouraging sub-prime lending for property purchase – to the housing crisis we are experiencing today.

And, before our very eyes, we see Cameron making the same mistakes all over again.

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7 Responses to Thatcher’s housing legacy

  1. Pingback: Buy, buy, buy | Jules Birch

  2. Anon says:

    This is a rather convinient view of history. What about the recession which followed in the late 80s and the property price crash?. Coming out of the 90s, the banks have a huge load of repossesed homes and the economics were telling us there would be no booms in house prices. How wrong they were. In fact no one was interested in buying property. This is why the market was clam.

    Under Blair / Brown, the economy started to boom and it lead to boom in house prices. Blair / Brown did nothing to stop house price boom. Rent were not going up. In fact rental returns used to be 14% and now they are 6%. In other words, housing prices have gone up faster then rents.

    Secondlly, as a Landlord, it was near impossible to get a mortgage on buy to let uding the 1990s. Prices were cheap, but we had no money. The first trickle of BTL mortgages were came out in 1998.

    Blair / Brown failed to stop all the cheap money coming from the banks to get into housing. Evertytime this country has a boom, it does straight it causes a boom in house prices.

    Blair / Brown did nothing to stop the housing price boom. This is why you have a lot of young people who cannot afford to buy.

    When they say Northern Rock handing out 120% mortgage they did nothing. It has been convinient for Labour to blame Landlords, but most landlord could only get a mortgage of 70% or 80% during the boom years.

    When Abbey increased the income multiple on mortgage from 3 x earning to 5 times earnings, all it did was drive prices upwards, it did not make homes within reach.

  3. Dave Levy says:

    The discount in the right to buy makes funding new builds hard, even when councils could borrow they have to borrow for those they have to sell as well as those they let

    The Thatcher government abolished double mortgage interest relief, causing a massive rush to buy, which caused the boom in prices. (The slump and the introduction of the phrase negative equity to the British household lexicon started in 1990)

    Any review of Thatcher’s housing policies should also take into account the demutualisations of the building societies, non of which now exist reinforcing the counter cyclical nature of housing finance intermediaries and easing the entry of foreign capital into the UK housing market.

  4. Pingback: Margaret Thatcher’s housing legacy: Buy, buy, buy | Keep our Council Homes

  5. martinwicks says:

    It wasn’t ‘aspiration’ it was self-interest. You could understand people who weren’t very political snapping up a home on the cheap. But even some of those who new it was wrong didn’t want to be left out. They all placed their own interests above the social consequences of the sell-off. New Labour picked it up and taked about ‘aspiration’, abandoning the collective aspirations of the labour movement for personal ‘aspiration’.

  6. Thatcher destroyed social housing and left us with a huge legacy of homelessness. The ‘right to
    buy’, continued under Major and New Labour but we were not allowed to spend the receipt on
    new build. Cameron is continuing with the same policy with the same result, a diminishing source
    of social housing. Ed Miliband must promise to build one million social houses and end the right
    to buy to preserve the stock for future tenents. This will get Britain working again.

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