In 1914 90 per cent of British householders rented their homes from private landlords. Today two-thirds own them. Home ownership grew from the 1930s and expanded rapidly after the war. In 1951, 3 out ten people were home-owners. By 2000 this had risen to 7 out of 10. Today it has slumped to under 65% with thousands of teachers unable to get a foothold on the property ladder. How and why?
For the sociologist Peter Saunders in his 2016 book ‘Restoring a Nation of Home Owners’ buying your own house is a uniquely cultural British Phenomenon. It’s become the most popular housing tenure in the UK and is comparatively recent.
Government papers in the 1970s noted that the desire to own property is “natural”. It gives people control over their immediate environment. For some it gives them dignity, responsibility, social status, but also a considerable degree of independence and wealth. Owning a property in a desirable neighbourhood amounts to an appreciable asset which can be used to part-fund later retirement.
One piece of legislation that boosted home ownership was the Housing Act 1923. This provided subsidies and discounted loans for builders to construct cheaper homes, guaranteed building society mortgages and allowed councils to provide mortgages too. Home ownership, with low interest loans, boomed amongst middle-class professionals like teachers and white-collar workers and a growing section of the skilled artisan working class also during the inter-war period.
The post-war Labour Government brought in the Town and Country Planning Act in 1949 which was intended to guard against the widespread uncoordinated development on the outskirts of large towns and cities (the green belt) that had taken place in the 1930s. With the election of a Conservative Government in 1951 planning controls were swept aside and home-ownership was actively encouraged.
The 1960s boom in house-building was fuelled by a policy income tax relief on mortgages so that the interest payable on a mortgage loan was given tax relief. By 1990, the cost of these subsidies and other benefits to owner-occupiers came to £10 billion each year. The impact of these subsidies coupled with full employment and the rising incomes of “affluent workers” led to an explosion of house buying. Homes were cheaper. Throughout the sixties home-ownership became accessible to more and more educational professionals in schools, colleges and universities.
By the 1970’s Conservative administration housing policy was to extend home-ownership further. The Right to Buy legislation in 1980 (initially a Labour Party idea in 1959) enabled local council tenants to buy their own homes at generous discounts. Since 1981 over 1.9m tenants have exercised this right.
The Building Societies Act 1986 heralded further changes. Building Society lending was deregulated. These and other financial institutions like banks had a much freer hand in lending money for house purchase. This meant that people were allowed to borrow a very large amount in relation to their income – in some cases to borrow as much as 100% of the mortgage. Of-course this made economic sense if interest rates remained low, or rose less than wages, and if house prices continued to rise. But this proved to a false assumption.
The 1960s-80s boom was fuelled even further by sharp increases in mortgage interest tax relief. By the mid- eighties this alone amounted to £5b a year. By 1989 it was becoming clear that the whole house buying situation was out of control. House prices were rocketing and increasing inflation. Although the Government edged away from its generous support to owner-occupancy, the cost of benefits to home-owners reached £7.6b in 1991.
As house prices rose, they became out of reach of lower-income groups. By 1993 house prices had crashed. Interest rates had climbed to an eye watering 15%.
Many who had entered the housing market were left in a situation of “negative equity”. This meant they owed more than the house was worth. According to the Bank of England 1.3m people were trapped in negative equity in 1994. This in turn led to a serious increase in homes being “repossessed”. By the early nineties repossessions reached over 75,000 a year according to the social policy academics Pete Alcock and Margaret May. Hundreds of thousands were caught up in mortgage arrears without adequate mortgage protection.
The impact of the property crash hit marginal groups hard. As the recession deepened unemployment rose sharply and wages stagnated. Lone parents, some BME groups and those on low-incomes not only lost a lot of money, but their homes too. Most were unable to obtain mortgages again. Some became homeless while others were pushed into the private rented sector. Few were able to get a council home due to its scarcity and long-waiting lists in many urban towns and cities.
Government support for people to purchase their own homes has gradually declined, with tax benefits for owner-occupiers ending in in April 2000. For Labour, the Coalition and Conservative governments of the 21st century housing policy lay primarily with owner-occupancy rather than building new social homes. Since 2015 Central Government now requires planners to include low cost shared ownership schemes and “affordable housing” in new developments. This usually means cheaper ‘starter homes’ for couples and young families.
For millions, owning your own home is still an aspiration. 29% of people including thousands of teachers, known as “generation rent”, are trapped in costly, insecure and too often grotty private rented accommodation up from 11% a decade ago. One in four adults, aged 20 to 34, are still living with their parents.
In the mean-time house prices have soared by 75% since 1995 overtaking both inflation and wage increases. The average house price in the South-east of England now eight times the average salary of a teacher - £38k.
In FE the average salary of a college lecturer is less than £30k.
For the housing charity Shelter a growing number of teachers and public service professionals like nurses and social workers could be “locked out of homeownership potentially for ever”. In some, more severe cases, teachers are finding themselves without a permanent home at all. Shelter now estimates that as many as 41% of homeless households are now in work, rising even higher to 47% in London. At the charity, Education Support Partnership, they have seen a marked growth in the last two years among education professionals accessing their confidential grants service in relation to significant housing problems, often compounded by other difficulties.
According to the English Housing Survey in 2007, 72% of those aged 35 to 44 owned their homes. By 2014, this had fallen to 52%. Despite the “housing crisis” only 184,000 newly built homes were completed in 2017 – a long way off the estimated 250,000 new homes required to keep pace with demographic change and household formation. And even some of these are still out of reach for many working in education. Home-ownership is no longer expanding. In fact, it’s shrinking. We’re becoming less of a nation of home-owners today than a decade ago.
There’s a pressing need to get to grips with the crisis. The housing market is broken. It needs fixing so that it delivers high quality homes for educational workers and families to buy or rent. Perhaps we should be talking about homes rather than houses if we’re to meet the challenges of the future.
Stephen Lambert is a Newcastle City Councillor and Educational Practitioner.
He writes in a personal capacity.
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