The passing of Baroness Margaret Thatcher on Monday 8 April 2013 proved that, even in death, she continues to divide the nation. No-one in the UK is unaffected by her political legacy, despite the fact that she left power almost 25 years ago.
During an 11-year leadership, which saw her win three consecutive general elections, Margaret Thatcher's policies and political decisions spanned many areas and had effects that were felt worldwide. Today, we will examine the effect that her tenure as the UK's first female prime minister had on the country's housing, particularly in three prominent areas – Right to Buy, the rental sector and the 'Big Bang'.
Right to buy
When she became the Conservative Party's Housing and Land spokeswoman in 1964, whilst in opposition, she began to advocate the party policy of 'Right to Buy' – the right of council house tenants to buy their homes. Though this right had always existed, it was legislated and incentivised in the first year of her premiership with the passing of the Housing Act 1980, which introduced discounts for council tenants depending on the length of their tenancy.
Right to Buy touched upon a nerve of aspiration in working-class British people, and was contributory to the 53.4% conservative majority that won the party the 1979 general election. Home-ownership increased from 55% to 67% in the UK during her leadership, with 1 million council houses sold by 1987, and it is thought that some 2 million council houses in total have since been sold.
Labour leader Ed Miliband commended the policy when speaking at the Labour Party conference in 2011, saying "it was right to let people buy their council houses... and we were wrong to oppose it at the time."
However, Right to Buy is not universally lauded, and can be seen as being a contributory factor to the housing crisis we face today. Between 1980 and 1990, at the same time as hundreds of thousands of new people became home owners, total public spending on housing decreased in real terms by 67% due to public spending limitations. Though every house sold was meant to be replaced, this did not happen.
At the expense of housing, Margaret Thatcher was able to implement a total spending increase of 150.2% on law and order, employment and training, health, and social security. Her government saw economic growth, but a housing shortage and mass unemployment (which peaked in 1984 at 3.3 million) contributed to a large rise in homelessness and feelings of disenfranchisement among the poorer classes.
The private rental sector
Right to Buy has also been criticised for an indirect outcome; speculative property developers and private landlords have since been able to purchase council homes. Until 2005, when Right to Buy legislation changed, council houses were placed immediately on the open market if their owners decided to sell, meaning that anyone – including businesses – could buy them. This is argued to have contributed to a rise in house prices, as well as the fact that many ex-council assets are now privately rented. Research undertaken earlier this year suggested that around a third of ex-council homes might now be owned by landlords.
Proponents of the rise of buy to let that has occurred since the introduction of the Housing Act 1988 have argued that, due to the massive inflation of house prices, many ordinary people have been denied home-ownership. Buy to let investment has led to a booming private rental sector and allowed many people frozen out of the property market to have a home.
The private rental sector now accounts for around one tenth of the total housing stock in the UK.
Financial services and mortgage lending
In 1980, building societies became allowed to provide financial services other than mortgages, and in 1986 the Building Society Act was passed. This act allowed building societies to 'demutualise' (become a limited company) if a certain number of their members voted in favour.
This was part of a mass deregulation of the financial sector in 1986 called the 'Big Bang', which created a largely self-regulated free market motivated by competition.
London had been lagging on the global financial stage, having been supplanted by New York and under threat from other emerging financial capitals. The Big Bang propelled it back into the spotlight, where it remains today as one of the world centres of finance.
The free market attitude enabled mortgage providers – now against significantly more competition – to offer their lowest rates since the 1970s, giving rise to a swathe of increasingly competitive products (much as is happening now).
Unfortunately, the now-infamous boom in mortgage lending was insufficiently regulated, leading to a large amount of 'sub-prime' lending to high-risk borrowers. Because the increased demand had also caused a sharp rise in house prices, the recession and house price crash of the early 1990s left a large number of people in negative equity. This, coupled with high-risk borrowers defaulting on mortgage repayments and unable to sell, resulted in a large number of repossessions. In five years over 450,000 possession orders were issued and nearly 300,000 homes were repossessed.
Margaret Thatcher's legacy for the housing market in particular is a mixed one. Seemingly, for every criticism there is a valid accolade, and vice versa.
Invigorating a generation of council tenants with the aspiration to own their own homes was of undeniable benefit to hundreds of thousands of people; however, the inability of the government to replace the sold housing stock led to a housing shortage and rising homelessness. It is thought that some five million people are now on waiting lists for council houses, and those council houses that remain are often in less desirable areas, leading to stigmatisation of council tenants that prevails today.
Choice is an important part of life in the UK, and people should be able to choose between renting and home ownership. Similarly, people have the right to invest in property as a business. On the other hand, the demand for housing and high house prices has made home ownership unattainable for many. The promise of good returns has attracted a minority of unscrupulous landlords and letting agents to the private rental sector, and has led detractors to vilify the sector as a whole.
It is also of inarguable benefit to have a diverse and competitive mortgage market; however, events of the early 1990s proved that careful regulation and assessment of risk is vital for the market in order to decrease the danger of default.
It seems pertinent to suggest that we celebrate Margaret Thatcher's victories and learn from her mistakes. Regardless of your opinions – on the politics or on the woman – it is certain that her legacy as one of Britain's most influential leaders will be long-lasting, controversial, and very much deserved.