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Housing Act 1980

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History

The 1980 Housing Act came into effect on 3 October 1989, and it gave council house tenants the legal Right to Buy their council homes at a discounted price. The Right to Buy policy was a vital aspect of the Conservative Manifesto for the 1979 general election and a critical Thatcherite policy.

The Act caused a boom in council house sales, which was a success for Thatcher, who was otherwise highly unpopular in her first term due to the mass unemployment her income tax cuts caused.

Background: council housing

Council housing

Council housing is a type of social housing owned by local councils rather than private landlords. Council houses are rented out to working-class people who cannot afford private properties leased on the open market.

The post-war consensus governments successfully built hundreds of thousands of social houses. For example, the One-Nation Conservative housing minister Harold Macmillan oversaw the completion of 318,000 council homes in 1953 alone.

First sale of council houses

Local councils had been granted the ability to sell council houses to tenants in 1936, and the first sales of council houses happened during this period, although sales were limited. This was because the process was complex and off-putting. As the government subsidised the construction of council homes, councils had to seek out permission to sell to tenants. It was also difficult to secure reasonable prices, as the state was adamant about obtaining the best price at sale.

Sale of council houses 1980

The 1980 Housing Act was rooted in Thatcherism, carrying the economic Neoliberalism so central to the ideology. The Act promoted the Thatcherite principles of:

  • Small government.

  • Individual responsibility.

  • Hard work and thrift.

By encouraging people to buy the council houses they rented, Thatcher was pushing towards the increased privatisation of the public sector, which is a critical Thatcherite economic policy.

Thatcherite economics: privatisation

Privatisation

The sale of nationalised, government-owned industries, services and assets to private buyers and investors; the transfer of industries, services and assets from the public to the private sector.

The Act demonstrated a push toward privatisation of public services, as it facilitated buying houses that the state owned.

Thatcher believed that the role of government in people’s lives would decline if they owned their homes. Such an approach was beneficial because people relied too much on the government to solve their problems in the days of postwar consensus governments, which exacerbated economic problems.

If privatisation were instead pushed through the sale of public housing, this would benefit the economy because it would relieve the government of the financial burden of maintaining these properties over the long term. More money would flow into the Treasury with each sale.

Thatcherite values: individual responsibility, hard work and small government

Therefore, maintaining these properties does not lie with the state but with the individual homeowners. If people owned their own homes, they would not have to rely on the state to pay their rent when they grow old and retire.

Thatcher believed that ownership of one’s own home brings stability and is an investment in one’s future, as:

  • A property owner does not run the risk of being kicked out.

  • They can renovate and decorate the property as they wish.

  • They can pass on the house down to their kids.

With the Act, the Prime Minister tried to demonstrate the importance of Thatcherite values: if you work hard and save, you will have a much better and safer life than if you rely on the government.

Objectives of the 1980 Housing Act

Therefore, the objectives of the 1980 Housing Act were:

  1. To give individuals the Right to Buy, thereby promoting control and autonomy over their own lives.

  2. To make Britain a property-owning democracy.

Property-owning democracy

A government initiative to make property ownership accessible to everyone.

Housing Act 1980: Right to Buy

The Act came into force on 3 October 1980. The sale of council houses was a critical section of Thatcher’s 1979 general election manifesto; the attractive prospect of democratised property ownership aimed to win over working-class members of the electorate.

The 1980 Housing Act stipulated the conditions underpinning the Right to Buy and how discounts were to be calculated.

Conditions

Under the Act, tenants who had lived in a council house for three years or longer had the legal right, that is, the entitlement, to purchase that home.

Discounts

The legislation laid out that the government would subsidise an amount of the total cost of a property:

  • The minimum discount would be 33 per cent for tenants of three years.

  • For every year above three years of tenancy, an additional one per cent would be accrued.

  • The maximum discount could not exceed savings of £50,000.

These were seen as very generous discounts, and many people bought their homes. The discounts provided made buying council housing much cheaper than buying property on the open market.

Open market

An economic market where the government imposes no barriers to market activity. Prices are based on competition between private businesses.

Outcomes and impact

In 1981, there was a boom in council house sales: the legislation led to 66,321 Right to Buy purchases of council homes in England, a figure which skyrocketed in 1982, with 174,697 council houses being sold that year. By 1988, around 2 million buyers had taken advantage of the scheme.¹

Considerations for the evaluation of the 1980 Housing Act

The Right to Buy remains a controversial policy, and the positive and negative impacts of the 1980 Housing Act remain up for debate.

Successes

The 1980 Housing Act is said to be successful as it led to a boom in council house sales and gave many people the ability to buy their own homes, which they otherwise would not have been able to do on the open market due to high prices.

The success of the 1980 Housing Act also contributed to Thatcher’s win of the 1982 general election, as the policy tangibly improved many individuals’ lives. Beyond this, the Act made Thatcherites of many working-class buyers, as they believed her policies had tangibly improved their lives.

Problems

Criticisms of the Act point to its consequences. The revenue from the sale of council houses was not put forward to constructing new ones, and construction slowly declined. As so many houses were sold, the availability of council homes for those in need also decreased.

Unfair discounts

Discounts were not adjusted according to the quality of the homes. The discount rates remained the same regardless of the quality of your home, which means that some tenants got lucky and got a great deal.

Housing supply shortages and increased rental prices

The Act is also said to have contributed to the current housing crisis facing Britain. As so many people could buy houses, they could also resell these for higher prices and rent them out privately for higher prices. The Act made council housing more sparse, which drove up rental prices. By 1991, renting was 55% more costly than before the Act.

With less social housing available, many working-class people were forced to turn to private rentals, even though they were less secure and less affordable than council housing. As no new social housing was built, this drove up prices in the real estate market. House prices now largely exceed wages, forcing many to rent.

Problems with the property-owning democracy

This undermined Thatcher’s goal of creating a property democracy, as the law’s effects meant that future generations would no longer have access to property that is now priced out of the market.

The post-war consensus and the sale of council houses

Others have argued that, for all Thatcher’s criticisms of the post-war consensus governments, Thatcher’s Right to Buy housing revolution was built off the backs of their accomplishments. Sustained adherence to the post-war consensus meant that post-war governments committed to rebuilding the nation and building new homes new council homes the same that Thatcher’s government would sell, creating a substantial profit for the Treasury.

Housing Act 1980 - Key takeaways

  • The Housing Act of 1980 gave council house tenants the legal Right to Buy their homes at a discounted rate.
  • The Act was the product of Thatcherite principles of privatisation, individualism and small government.
  • The Act’s conditions were: tenants who had lived in a council house for three years or longer had the legal right to purchase their home. The minimum discount was 33 per cent, increasing at a rate of one per cent per extra year of tenancy.
  • The Act led to a boom in council house sales, with two million buyers taking advantage of the scheme by 1988.
  • The Act is said to be successful as it gave many people financial security, contributing to Thatcher’s popularity. However, the Act is also criticised for the supposed unfairness of the discounts and its impact on housing supply shortages and increased rental prices.

¹Andy Beckett, The right to buy: the housing crisis that Thatcher built, The Guardian, 2015

Housing Act 1980

Margaret Thatcher introduced the Right to Buy with the 1980 Housing Act. Margaret Thatcher was Prime Minister of the United Kingdom from 1979 to 1990. The Right to Buy policy featured in the Conservative 1979 manifesto and was a key Thatcherite policy.

The sale of council houses started in 1936 when councils were granted the right to sell to tenants. However, it was not until Margaret Thatcher’s 1980 Housing Act was introduced on 3 October 1980 that council house sales skyrocketed, as tenants were given the ‘Right to Buy’ their council homes at a discount rate.

Around 1.5 million council houses were sold by 1990.

Final Housing Act 1980 Quiz

Question

Which Thatcherite principles did the Housing Act promote? (Choose three.)

Show answer

Answer

Small government.

Show question

Question

How would the privatisation of public housing benefit the economy?

Show answer

Answer

It would relieve the government of the financial burden of maintaining.

Show question

Question

Name two objectives of the 1980 Housing Act.

Show answer

Answer

1. To give individuals the Right to Buy, thereby promoting control and autonomy over their own lives.

2. To make Britain a property-owning democracy.

Show question

Question

How many years did tenants need to have lived in a council house to be entitled to purchase the property?

Show answer

Answer

Three years.

Show question

Question

Around how many buyers had taken advantage of the Right to Buy scheme by 1988?

Show answer

Answer

Around 2 million.

Show question

Question

What were the successes of the Housing Act? (Choose three.)

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Answer

It made renting cheaper.

Show question

Question

Why did the construction of new Council houses decline?

Show answer

Answer

The revenue from the sale of Council houses was not put forward to constructing new ones.

Show question

Question

Why were the discounts regarded as unfair?

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Answer

Discounts were not adjusted according to the quality of the homes. The discount rates remained the same regardless of the quality of your home, which means some tenants got lucky and got a great deal.

Show question

Question

How is the Act said to have contributed to Britain’s current housing crisis?

Show answer

Answer

As so many people could buy houses, they could also resell these for higher prices and rent them out privately for higher prices.

Show question

Question

Did the Housing Act achieve a property-owning democracy?

Show answer

Answer

Although many people were able to become homeowners at the time, the Housing Act ultimately led to higher housing prices because of a lack of social housing. This forced, and still today, forces many to rent.

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