The Global Urbanist

News and analysis of cities around the world


Thatcher's legacy and the complex demands of London's housing market

The Thatcher Government Housing Act of 1980 allowed council tenants to purchase their own homes at discounted rates. But the collapse of investment in social housing ever since, as well as a London housing industry chasing after singletons, means the poorest families in the capital, as well as the largest, are both increasingly marginalised in the city's housing market. Getting the thousands of empty homes in London back onto the market will help, but it won't be enough.

Cities: London

Topics: Housing, Property and real estate, Poverty and inequality

London's social fabric is changing. High divorce rates and an increasing number of single people mean households are getting smaller, which, combined with continued immigration to the city, has resulted in an increased demand for individual dwellings in London. Despite a Government pledge in 2007 for three million new homes in Britain by 2020, targets are consistently being missed, contributing to London's housing market no longer meeting the needs of its population.

Whilst the issues surrounding London's housing market are complex and many, a little research and analysis of the different challenges throws up a recurring issue — Margaret Thatcher's Conservative Government and the Housing Act of 1980.

This Act of Parliament gave council housing tenants the right to buy the properties they had been renting at a discounted rate, as high as 44% depending on the amount of rent the tenant had paid previously. By the time Thatcher left office in 1990, home ownership had increased from 55% to 67%, and since the introduction of the scheme, over 2 million government-owned houses have been sold to private owners.

When considered superficially, the aims of the Housing Act were admirable. Thatcher believed home ownership gave people the opportunity to increase their personal wealth, and wanted to make it easier for those with limited incomes to get on the property ladder. However, the long-term management of the Housing Act has — in an ironic twist — created a housing market that is actually more difficult to access, especially for Londoners.

The conditions of the Act meant councils were not allowed to reinvest profits made from the scheme into new housing, leading to a massive drop in the availability of social housing. The effects are still being felt, with 850,000 people in London alone waiting lengthy periods of time for accommodation.

This lack of availability meant councils began allocating housing only to those who needed it the most, unwittingly turning social housing into ghettos for the most deeply disadvantaged, further alienating and penalising those most in need.

And those previously entitled to public accommodation but no longer deemed needy enough now face a market containing the same ex-council properties they would have been entitled to, now leased privately at greater cost by former occupiers. As a result, many relatively low-income residents are forced to spend much more on their housing needs.

In an attempt to address the issues created by Thatcher's Housing Act, London has pursued aggressive housing construction, including implementing policies ensuring that 40% of new housing is affordable. This has made it easier for some to get on the property ladder, but for those living in or near poverty, home ownership remains an unachievable goal despite the new prevalence of so-called 'affordable' housing. When combined with the scarcity of government housing brought about by Thatcher's Act, the accommodation needs of London's poorest are clearly not being met.

Driven by both changing demographics and economies of scale, London is building increasingly dense accommodation. Understandably, government demands for affordable housing are further increasing the shift to more densely built developments as their economies of scale can be passed on to owners through cheaper prices.

However, cheaper buildings tend to be smaller, and whilst this is suitable for single people entering the property market, too many compact homes are being built which don't cater for new families. Anthony Duggan, director of the property consultants Drivers Jonas Deloitte, called this 'a real issue for London' in The Guardian. Considered alongside inadequate government housing, it seems that the housing market in London is not catering for the varied lifestyles it hosts.

So with both social housing and family-housing needs not being adequately met, what can London do to accommodate its population, both now and in the future?

One approach would be to reuse the 75,000 homes currently sitting empty in central London. Considering the accommodation challenges facing the city, this seems glaringly obvious; however, the fact that many of these are privately owned creates challenges. Most local councils offer grants of up to £25,000 to landlords to assist in returning properties to use, but with empty homes often requiring a much bigger cash injection, the incentive is lacking. Provided they have been derelict for at least 6 months, councils can take ownership of these buildings, but legal resistance from landlords combined with the costs involved often leads to slow progress.

Thankfully, that hasn't put off organisations like the Empty Homes Agency, whose campaigning has helped maintain this as a high profile issue for local councils. This approach seems to be working, with local councils in Kent recently launching the No Use Empty scheme, pledging an additional £2.2 million in grants for the regeneration of empty housing. This is an approach which London needs to at least replicate, if not improve upon.

However, even if every empty home in London was brought back into use, this would not be enough to meet the varied housing demands being made by Londoners. But it is the variety of these demands that indicate the approach London needs to take — providing variety. This needs to be done through replenishing the social housing stock depleted by Thatcher's Housing Act, continuing to build dense, compact housing, and providing family-friendly homes too. The average Londoner is more likely than ever before to be divorced or single, but London has a social obligation to provide housing suitable for the wide variety of other lifestyles accommodated within it.


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