How Social Housing Trends Over The Last Century Have Produced The Housing Market of Today

A common view is to see the Social Housing as a distinct and separate entity to the private housing market - there is an “us” and “them” such view often predicated by assertions of the superiority of those owner occupiers in private housing. In truth, the differentiation between the two sectors has not been so clear-cut throughout the last century it can be said that the private housing market owes its success largely to the Social Housing Sector.

The provision of social housing started in the late 19th century when the 1890 and 1900 “Housing of the Working Classes Acts” allowed the first London local councils to build houses as well as clear away slums, and then extended those powers to areas outside of London. These Acts were largely in response to the poor housing conditions, mostly in inner city areas, which arose largely due to the increase of workers and labourers flocking to the city from rural areas seeking work during the years of industrialisation. Prior to 1900 the expansion of housing within the inner cities was largely unplanned and carried out by profit seeking private builders with little emphasis on quality and amenity. Wages were low and borrowing and mortgages were not commonly available, thus most of the population rented privately with only the richest people being able to afford their own homes. The result was that of poor, overcrowded, insanitary housing conditions and an unhealthy workforce causing pressure to be put on the Government to improve matters (especially as there were signs of infectious diseases spreading from the overcrowded and insanitary working class to the literate and influential middle-classes).  By the outbreak of the First World War, around 24,000 housing units had been built, consisting of Common Lodging Houses (which mostly provided accommodation for single men in dormitory style rooms) and  tenement blocks of flats for the inner-city poor built by independent charitable organisations such as the Bristol Industrial Dwellings Company. Most new pre-war housing came from using private funding, following a Government initiative.

It was the aftermath of the First World War that saw the first large scale provision by the Government of social housing in response to David Lloyd George’s promise of “homes fit for heroes” for the returning soldiers. The inter-war years saw a huge expansion in housing provision with an average of 50,000 homes being built each year. The Housing and Town Planning Act of 1919 (often referred to as “The Addison Act”) enabled Local Councils to lead the way as housing providers with the setting up of Housing Committees and the provision of generous Government subsidies and other innovative money raising schemes (such as the London Housing Bonds sold by the then London County Council which raised £4 million during the 1920s). The 1920s saw the emergence of the new suburban “garden” estates built on the outskirts of cities largely consisting of three-bedroom houses for families and aimed at creating self-contained communities. Although there was some clearance in the 1920s, for the first time, we begin to see an emphasis away from the regeneration of the inner city towards a new general needs provision on greenfield sites. A notable example of this being the Beckontree estate built in Dagenham which involved the compulsory purchase of local farms and the building of twenty-seven thousand houses expanding over the Essex parishes of Barking, Dagenham and Ilford. The Beckontree estate was the largest Council estate in the world at the that time.  The Addison Act was introduced as a temporary measure with the assumption that the private sector would “take up the mantle” and take responsibility for housing poor working class, once the economy had fully recovered.

Most of the Council housing built in the 1920s provided good quality housing, however rent was high and subletting prohibited which meant that the housing served the better off working classes and did not address the issues surrounding those at the bottom end of the income scale. These being predominantly those that worked in the factories of the nation’s growing industrial base.

The provision of public sector housing continued to grow in the 1930s with over sixty thousand new homes being built every year; however the high building and amenity standards gradually reduced as the pressure to make social housing more affordable increased.  The emphasis on garden estates was replaced with an emphasis on the building of flats and non-traditional building techniques.

The 1930s also saw an unprecedented growth in the building of private sector housing (exceeding 4% per year between 1933 and 1936), as Britain recovered from a double-dip recession. 290,000 new homes were built in the private sector in 1934 (almost 3 times current levels). Largely due to Neville Chamberlain’s “cheap-money policy” (in which interest rates were reduced close to zero) the 1930s saw the level of private home ownership increasing from around 10% before the First World War to a third by the start of World War Two.

The outbreak of the Second World War saw a huge reduction in the provision of both private and social housing. Thousands of houses across the country were destroyed by heavy bombing leaving Britain facing a severe housing shortage. The initial response was the rapid construction of factory built single story “prefabs” (with a life expectancy of ten years) as a stopgap measure until more permanent housing could be built. In the years between 1945 and 1955, 1.5 million homes were completed by Local Councils with the result that the percentage of people living in council rented accommodation had risen to 25% of the population. The trend towards a house-owning economy had temporarily stalled.

The 1950s, saw mass slum clearance by inner-city councils with an emphasis on the erection of prefabricated blocks of flats funded by the then Government subsidy system. From 1956 the subsidy was confined to new houses built to replace slum clearance and there was more money available for blocks of more than six stories high.

The 1970s and 1980s saw the beginning of the decline of Council housing with councils building increasingly fewer homes with resources being concentrated on the repairs of their now existing ageing council houses. The introduction of the Right to Buy (“RTB”) in 1980 and the deregulation of the private rented sector through the Housing Act of 1988 saw a massive decline in the provision of council housing.

Although Councils had always had the power to sell their housing stock and many did sell houses to tenants on a limited basis whilst the building of new council homes exceeded those that were sold. The RTB gave the tenants the right to force the Councils to sell the property to them even though the number of new council homes being built was on the decline due to budgetary restraints. Nationally, over two million homes were sold to sitting tenants through RTB between the years 1979 and 2003 with many of the better quality council properties being purchased, the majority being houses rather than flats, thus creating a national shortage in council owned family houses.

The RTB saw a rise in private home ownership from 43% in 1961 to 68% in 2008 whilst the size of the socially rented sector had shrunk to 18%.  The RTB introduced hundreds of thousands of properties onto the private housing market and has continued to provide a steady flow since the 1980s.  Without this continuous flow of former Council housing onto the Property Market, the supply of private housing that is available today would be significantly reduced, as the number of houses built in the public sector over the last century significantly outstripped those built in the private sector.

The move away from council owned accommodation towards the private sector picked up significant momentum with the Housing and Planning Act 1986 which facilitated the transfer of council housing stock to Housing Associations.  Housing Associations are defined as “private non-profit making organisations” it would seem therefore that housing in the UK is moving towards a solely private-sector model with an emphasis on home ownership and “affordable homes” for purchase rather than rent. An example being the continuing expansion of Shared Ownership properties  and other Government subsidised schemes such as Help to Buy, both of which should shore up the private housing market by enabling more people to get onto the first steps of the housing ladder.  Indeed the emphasis of the housing policies of recent Governments over the last thirty years has been, and is, a firm leaning towards a private housing market which reflects the housing market that we have today.


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