Britain’s Government Sponsored National Housing Ponzi Scheme

When it comes to housing policy in the UK, the Conservatives are a one-trick pony. They have form. It is designed around dividing the citizens of the country. This is evidenced yet again with the housing and planning bill currently before parliament that will inevitably make the housing crisis worse than it already is.

This bill will reduce the total number of affordable homes in the backdrop of a rising population, it also encourages ever more property speculation, as if it needed it. Margaret Thatcher’s housing policy legacy was to sell off over four million council homes where 40% ended up being in the hands of private landlords.

The result of all this political meddling? A housing crisis where nearly two million households (families, not individuals) are on waiting lists for a council home. Home ownership is now plunging. Debt is soaring just to keep the family above the waterline, homelessness has now risen 300% in five years, poverty is escalating, child poverty with it. One third of Britain’s children will live in poverty by 2020 — thanks in large part to housing.

In this bill, extending even further the right-to-buy sell-off comes at a cost to the housing associations who are being forced as privately owned organisations to dispose of high value units onto the open market. This scheme, forecasted to be unworkable by the Local Government Authority will cost councils another £6billion of desperately needed cash. Any ‘household’ with an income that exceeds £40k in London or £30k in the rest of the country will pay market rents or be kicked out.

Under Thatcher, the ‘Right to Buy’ scheme allowed tenants to buy their home with a discount of 33% — 50% off the market value, depending on the time they had lived there. Councils were prevented from reinvesting the proceeds of these sales in new housing, and the total available stock, particularly of more desirable homes, declined dramatically.

This proved to be disastrous and the sell-off kick started the housing crisis we have today. Rolled out during the first half of the 1980s, the selling of council stock homes was accompanied by the slashing of housing budgets and ever more draconian controls on local authority borrowing and spending. The result was large rent rises, falling house building and, by 1986, an estimated £19bn repair backlog for council homes and £25bn for private sector homes (Hughes and Lowe, pp.217-8).

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