Selling The Stock From Underneath Us
15 Dec 2005
In our nostalgic world we have overlooked a significant anniversary: that of Right To Buy. Why?
Right up there with the Beveridge Report, which formed the basis of our Welfare State, the legal provision for holiday pay, which created the so-called leisure class, and the formation of Britain’s comprehensive education system, Margaret Thatcher’s keynote vote-winner – that offered ordinary council tenants the right to buy their homes at massively discounted rates – changed Britain beyond all recognition.
Since its launch in 1980, Thatcher’s Right to Buy legislation has seen over six million council homes in England and a further 400,000 homes in Scotland transferred to private ownership. Almost everywhere Right to Buy discounts fuelled demand for aspirational home ownership at every level of Britain’s housing market.
In the 25 years since then it’s turned Napoleon’s mythic ‘nation of shopkeepers’ into a nation of property-speculating equity addicts. Even in staunchly public sector tenant areas such as Strathclyde, home ownership has grown from a mere 14 per cent in 1980 to over 50 per cent in current times.
In many areas of the UK more than 75 per cent of locals now own their own homes – a phenomenon that could not have happened without the kick-start that cheap council housing gave to a traditionally sleepy UK housing market. Indeed, as the home bug hit in 1980, the average age of a British first-time buyer plummeted to a remarkable 20 years of age – 15 years younger than the equivalent first-time buyer in France or Germany.
While the Right to Buy scheme was sold on the back of emancipating voters, its political genesis seems much more obscure. Labour’s parliamentary secretary Joe Haines trumpeted it as a key strand of a dynamic “new Labour strategy” in the 1970s but elsewhere it is widely rumoured to have been the brainchild of former Tory education secretary Keith Joseph. Joseph, quite cynically, saw his “regressively modern” version of Gordon Brown’s “home-owning, share-owning democracy” as sounding the death knell for socialism, the trade unions and Britain’s institutions of collective action and ideology through the creation of a society of atomised, self-absorbed, free market-inspired individualists.
Unquestionably, the strain of ensnaring ordinary people to keep up monthly mortgage payments during industrial action crushed the miner’s strike in the 1980s and it also paved the way for a new kind of society that was anti-collectivist, antisocial and individualistic in tone. On the plus side, Right to Buy rewarded responsible tenants and created a new constituency of stakeholders, a newly aspirational UK middle class, a greatly improved and maintained property stock, and the basis for one of the most buoyant and secure economies anywhere in Europe.
Twenty-five years after its inception, however, this incredible cultural revolution that saw millions of everyday people owning their own homes for the first time is still a site of controversy. Right to Buy may be an accepted tenet of policy across the spectrum of Britain’s mainstream political parties but for academics and housing professionals alike it remains a thorny source of conflict that is still championed and reviled in equal measure.
Sheer weight of numbers ensures it’s impossible to over-emphasise the cultural significance of this trailblazing policy. To date, 400,000 Scottish homes have been purchased with Right to Buy discounts and the ripple effect of this infrastructural change is being felt at every level of the housing market. Prior to the legislation, 75 per cent of Scots lived in public-owned housing; today that figure is wholly reversed and 75 per cent of Scots now rent or own homes within the private sector.
That massive sea-change in ownership, inspired by Right to Buy discounts, is directly responsible for fuelling house price growth from the bottom of the market up to the point where even top-end agents such as Knight Frank’s Andrew Johnston confirm that: “The property boom that takes in everything from rural properties, to penthouse flats and grand town houses would not have happened without the influx of first-time owners that entered into the market through Right To Buy.”
Paradoxically, despite Scots buying into the scheme with relish, there was never any reflection of its popularity at the ballot box. Douglas Robertson, of Stirling University’s Housing Policy and Practice Unit, says: “I suspect the Tories must have known that would be the case and pursued their agenda for broader cultural aims. It was an attempt to break up the public sector, to reduce the power of local government and address the drain on the public purse that accrued from the maintenance of Britain’s council house stock.”
According to the Stirling academic, Right To Buy was successful as an income distribution policy but as a piece of housing legislation its merits remain open to debate. He says: “Receipts from the sale of council houses did give councils additional funds to spend and relieved a significant ongoing financial burden for maintenance from council budgets but as the best houses were removed from the council stock they were never replaced. As a result, the status of council homes slipped from being a great socially-owned asset and a badge of pride for tenants to the worst kind of palliative. A low-grade, last-gasp solution for the desperate and the marginalised.”
In Glasgow’s Knightswood, where an ex-local authority three-bed goes for £142,000, in Ayrshire, East Lothian, Fife and throughout the Central region, council house discounts continue to mean fast-track profits. In the golfing and student mecca of St Andrews the biggest ex-authority sale recorded is the £190,000 paid for a well-appointed three-bed semi earlier this year but even ten years ago council tenants were still turning massive profits. As Pagan’s Linda Black explains: “In 1990, a two-bed ex-local authority terraced property would have sold for £46,000. With a maximum 70 per cent discount, the tenant’s purchase price would have been around £13,800. That same house in 2005 fetches around £113,000, a return on investment of nearly 900 per cent. This same sort of pattern is repeated all over the country.”
In Haddington, East Lothian, Edinburgh architect Ian Arnott created one of the great successes of Right to Buy as early as 1964. Forty-one years on, the subtly modelled Amisfield Park estate, popular for its progressive brick villas and irregular terraces, is no longer a staging post for Scotland’s urban overspill but rather home to a second generation of proud owner-occupiers. Arnott says: “I think it’s a lovely testament to the work of our practice, Campbell Arnott, that people still actively want to own the homes we designed.
In that sense, Right to Buy has been a great arbiter of lasting design quality. However, it’s also true that there are so many less opportunities for architects to design great houses now. The quality of private speculative housing in Scotland is abysmal and with the public sector eroded there just isn’t the same volume of work. Wimpey’s contracting of Gareth Hoskins and Miller Home’s patronage of Malcolm Fraser are two rare examples of large-scale house builders employing architectural talent.”
For Gwillym Price, of Glasgow University’s Urban Studies Department, the key consequence of the 1980 policy change has been a growing wealth disparity between homeowners and tenants. “There’s been a real intergenerational effect. Children bought their parents’ homes and once they inherited them they sold them, often for profits of as much as £100,000, and reinvested their lump sum in buy-to-lets or in larger, private-sector family homes.
Twenty-five years on, these now late middle-aged parents are passing on this ‘bequest effect’ in great lumps of their equity to help fund their own children’s first forays onto the property ladder. For families who’ve been living within the rental sector for generations there just isn’t the family wealth to fund a deposit that would allow a switch to home ownership.”
Indeed, Price contends that spiralling property prices, fuelled by Right to Buy cash, have created a “pseudo grammar school education system”, where league tables and the glass ceiling of property prices have conspired to create a network of highly prized comprehensive school catchments that reflect a largely private school pupil profile.
Perhaps surprisingly, even agents, who profited from the sales commission, now look on Right to Buy nowadays as something of a mixed bag.
Industry veteran Gary Scott, formerly of Your Move, says that Right to Buy unleashed a previously hidden venality within the populace. “There was lots of mean-spiritedness, greed and no little skulduggery. I remember hearing of sons buying their dad’s house in Knightswood without their parent even knowing, in pursuit of a killing when he died. There were a lot of conversations about auntie or granny snuffing it so the kids could divvy up the profits from a sale. For better or for worse, homes that had served their owners well suddenly became assets to be argued over and sold off for an overnight profit. As a policy it talked to people’s greed and brought out the worst in them.”
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