If you have found yourself here without reading Part I, you can find that here.
Thatcher set out creating her game a year after she came to power in 1980, the year when her Tory government passed its landmark ‘Right to Buy’ legislation through parliament. The new law granted anyone living in a council house the right to purchase it from their local authority for an enormous discount. Despite the objections of many, the scheme was wildly popular and resulted in a bonanza of tenants acquiring property for bargain bucket prices. Hundreds of thousands of council house tenants took full advantage of the scheme, with the vast majority of them getting their feet on the property ladder for the very first time. Home ownership levels soared, and Thatcher was satisfied that the days of government providing housing for the masses were well and truly over.
And while all the people that did take full advantage of Right to Buy began to think of themselves as empowered individuals that had earnt the grand prize of home ownership, not everyone felt like a winner. For one, even with the fire sale pricing many tenants were still locked out of ownership because they didn’t have enough money. And as for the councils themselves, the new law was the rawest of deals – not only did it force them to sell off the homes in their portfolios at well below their market value, but it also prohibited them from using any of those proceeds to reinvest in building new homes to replace the ones they’d lost. As a direct result, by the end of the 80s the number of new council houses being built had plummeted by a staggering 85%.
The impaired ability of local authorities to replenish their housing stocks and be able to meet demand for social housing meant long waiting lists and tough decisions over who had priority for the properties that remained. No longer able to provide for everyone, councils directed their dwindling resources towards housing those on the lowest incomes, the unemployed and people with disabilities. To add to their woes many of the houses that were in the best nick were the first to be snapped up, leaving councils with the lowest quality homes with which to allocate to new applicants. It didn’t take long at all before people began to singularly associate social housing with the poor, the disadvantaged and the troubled, and to see the estates where these homes were situated as very undesirable places to live.
It wasn’t always this way. Right to Buy’s damaging legacy was the way it managed to corrupt people’s ideas of what public housing was intended for. It may come as a surprise to hear that in the year Thatcher first came to power a full fifth of Britain’s richest households (in the top 10%) lived in council housing. To anyone living in 21st century Britain – accustomed to the very word council being synonymous with second-rate and cheap, or used to the stereotypes of ‘the scheme’ and all the deprivation and social detachment that spring to mind – it can be hard to reconcile council housing’s present with council housing’s not-so-distant past. This speaks for just how efficiently Thatcher managed to reengineer people’s attitudes in such a short space of time.
By the point she was forced out of office in 1990 1.3 million homes had been bought over from local authorities, and another 1.3 million more have been sold since. Right to Buy was, in effect, a gigantic transfer of homes from public ownership into the hands of individuals, and this was only the starting gun of Thatcher’s new game. Because now that loads more people owned their own homes, they could then sell those homes on. Homes that had been built and ringfenced for the purpose of providing affordable housing had been converted, not just in ownership but also in the minds of those who lived in them. Your home was no longer simply your home but rather a tradeable asset, an investment whose worth was not decided personally by you and your family but instead by what other people were willing to pay for it in pounds. Turning a profit was the object of the game.
In order for the game to work it needed to get people to start believing in the idea of a property ‘ladder’, and in the necessity of getting ‘on’ the ladder as soon as you were able. Ladders of course have rungs, and people can climb up those rungs and progress to bigger and better homes, or maybe they’ll slip down a bit, and if they’re unfortunate they might fall off altogether. As previously mentioned, the really unlucky ones that had to continue to rely on council housing never made it onto the ladder to begin with. Wherever you found yourself in the pecking order, you were still a player in the game. All of these vertical movements up, down, or off the ladder were in line with Thatcher’s neoliberal beliefs about what society should look like: individuals in charge of their own destinies and punished for their perceived failures.
The magic behind the mythical ladder, and the reason so many people came to share in Maggie Thatcher’s beliefs, was that it acted rather like an escalator. With minimal effort needed if you were at least clinging to the bottom rung the steady and certain increase in house prices would gently carry you upwards. This meant that wherever you were on the ladder, so long as you were on the ladder, you were winning at the game – and winning big. The trouble was many of the would-be players of this game hadn’t started playing it; most of them hadn’t even been born yet. When it was finally the time for this new generation to attempt to scale the ladder themselves, they would soon realise that the lowest rung was already too far out of reach, and that the game was fatally rigged against them.
Even with Thatcher gone, the ladder and its guaranteed upwards trajectory has managed to become firmly embedded within the psyches of British people and how they perceive the housing market. Any government that has since followed hasn’t bothered to revive social housing, choosing instead to direct all their housing policy efforts towards protecting and expanding the ownership ladder at all costs. The reason for this is straightforward: homeowners, who now make up the majority of voters post-Thatcher, love seeing the value of their property go up. It makes them feel richer (on paper at least), which in turn means they spend more money in the economy. That feelgood factor is what every government attempts to tap into in order to win re-election, and any politician who threatens to not uphold this pact does so at their own peril.
This pact is largely what is behind the astronomical growth of house prices in the last few decades. As homeowners are the largest bloc of voters, politicians answer to them and look after their interests, and in turn home-owning voters make sure politicians get to stay in office. This preferential treatment has meant that average house prices are sustained at what are fundamentally unsustainable levels in terms of affordability for first-time buyers. Where historically house prices roughly stood at 4 times that of average incomes, in recent years this has climbed to a ratio of 8 nationwide, reaching an astounding 12.5 in London’s notoriously overheated market. For all but the most privileged of young people, such prices are now prohibitively expensive without taking on colossal amounts of debt.
Rather than address this affordability crisis directly by trying to deflate prices, successive governments have continued to prop up the ladder to keep the game running. Most recent attempts at fixing things have centred around persuading banks to widen people’s access to riskier credit, with smaller required deposits so that more first-time buyers can get a leg-up onto the bottom rung. Not only do schemes like these work to push that bottom rung even higher due to piling on more demand, but even with the introduction of government-backed loans affordability still remains a barrier due to how inflated prices have become. Despite new mortgage schemes asking for just a 5% deposit prices have ballooned so much that single buyers on a median wage still fall short of being able to afford a starter home in over half of England and Wales, while in London they’re completely priced out. Increasingly, in most of the country the dream of home ownership now requires two combined incomes to have a chance at becoming a reality.
The best route to fixing the problem would be to increase supply, but most politicians have neglected to do anything about this beyond paying it lip service and pushing out empty promises. In 2015 the Conservatives promised they would build 200,000 starter homes and ended up building a grand total of 16. Depending on who you ask, you will get various different answers for why the UK’s housing supply is so restricted. Some will blame green and brown belt restrictions; others point the finger at planning laws, red tape, developers or ‘Not In My Back Yard’ residents (also known as NIMBYs) who don’t want the sweeping views of the countryside from their new extensions interrupted by a block of flats.
Who or what is at fault may remain unclear, yet one thing is for certain: there is too much skin in the game on the part of homeowners for politicians to do anything meaningful about prices. Increasing supply would bring to an end the enormous gains to be had from clinging to the ladder and playing the game. Since the year 2000, homes that were bought under Right to Buy have been sold on for returns totalling £6.4 billion, and no doubt tens of billions more have been made (and will continue to be made) by more properties being flipped for a tidy profit. In the absence of any genuine growth in people’s wages in the last couple of decades – especially post-financial crisis and beyond Covid-19 – wealth creation based on inflating property prices has presented itself as a handy way for the government to convince people that the game is still worth playing. In some parts of the country, increases in home values now outpace annual incomes. As we have come to rely on this new system of prioritising wealth over income, we have developed a troubling dependency which nobody in power seems able – or willing – to confront.
Of course, there’s no such thing as a free lunch in the world of economics, no such thing as a game with no losers. Those gains being reaped by older, wealthier property owners are sown in the hopelessness of young people and the working class that realise the entire deck of cards is stacked against them. When Thatcher left power young people were in fact more likely to own a home than pensioners. Yet now, three decades on and as a result of the crisis she set in motion, 25-34 year olds own homes at under half the rate of people aged 65-74 as those not on the ladder struggle to front up the ever-growing amounts needed to call a home their own. Locked out of the game altogether, those that have missed out have been totally abandoned: having either to live with their parents into their 30s to save a deposit or surrender themselves to the exploitation of the private rental market.
A quarter of young adults now live in their family home, many of them returnees after stints in higher education. They have come to be known as boomerangs, living at home with their parents precisely at the time in their lives that they should be staking out their own independence and exercising the freedoms that come with adulthood. As prices continue to bloat, so too does the amount of time it takes them to save for a deposit, which entails an extended stay at the casa de los padres. Far from being empowered as individuals as Thatcher had intended, as a direct consequence of the game she created the people born after she came to power are having to spend most of their early adulthood in the same home they grew up in as children.
There are statistics galore that could highlight the unfairness of the current system, but in many ways these don’t do as much justice as the real human cost inflicted on young people by the housing crisis. Irrespective of their relationship with their parents returning to the family home having struck it out on their own before can feel like a step backwards for many. People in their 50s and 20s live very different lives, and all the usual trappings of life as a twenty-something can lead to serious run-ins with parents. The age-old milestone of flying the nest and making your own way in the world has been upended by sky-high house prices, clipping the wings of ambitious young people that value their independence.
These stunted living arrangements, which have become the new normal, are in an ironic twist the fruits of the ladder many of those same parents have profited from. It’s a zero-sum game, especially when for the privileged the quickest route out of spending your 20s tiptoeing in after a night out involves securing help from the Bank of Mum and Dad to afford a deposit. Middle class parents that have seen healthy returns on their ‘investment’ in a family home now find that they have to plough most of their ladder-derived wealth right back into ensuring their children can play the game too.
And what of the young people that can’t for whatever reason move back in with their parents? Or those that, despite being welcome, quite rightly don’t want to spend the next decade of their lives subjected to the same rules that governed their home lives when they were just teenagers? With council housing in such short supply there is no option left than to resort to paying rent to a landlord for the right to put a roof over your own head. Once regarded as a waiting room where would-be buyers would stay until they cobbled together the funds for a deposit, increasingly the rental market has become a limbo where many remain financially trapped: locked into paying their landlord’s mortgage rather than one of their own. It is here where the inequalities that lie at the very heart of the housing crisis are rendered in their most punishing detail.
Words by Charlie Forbes
Artwork by Katy Bremner (instagram: @katsbrems)
Sources, Further Reading and Other Resources:
The Economist – ‘Home ownership is in decline’
The Economist – ‘Generation rent grows up’
New Statesman – ‘”Housing as a basic human right”: The Vienna model of social housing’
UK Gov – ‘Home Ownership’
Bloomberg – ‘Helping People Buy Homes Won’t Fix the U.K.’s Housing Crisis’
BBC – ‘Blindboy Undestroys the World: The Broken Housing System’
The Blindboy Podcast – ‘How to Solve the Housing Crisis’
Quartz – ‘Most Germans don’t buy their homes, they rent. Here’s why’
BBC – ‘This Matters: UK housing is broken, can anyone fix it?’
The Economist – ‘Housing is at the root of many of the rich world’s problems’
The Guardian – ‘How to turn the UK’s ‘generation rent’ into ‘generation buy”
The Guardian – ‘To fix Britain’s housing mess, think outside the box’
The Economist – ‘Rent control will make housing shortages worse’
Financial Times – ‘How to turn ‘Generation Rent’ into ‘Generation Buy”
The Guardian – ‘Home ownership unaffordable despite 95% mortgages, analysis shows’
David Mitchell – ‘Why Rishi Sunak should put an end to England’s stamp duty holiday romance’
The Economist – ‘Home ownership is the West’s biggest economic-policy mistake’
The Economist – ‘House prices are going ballistic’
TLDR News – ‘Why Are Houses Unaffordable in Britain? – The Housing Crisis Explained’
The Economist – ‘Housing First-time buyers’ problems won’t be solved by 95% mortgages’