Housing Act 1980
Encyclopedia
The Housing Act 1980 was an Act of Parliament
passed by the Parliament of the United Kingdom
that gave five million council house
tenants in England
and Wales
the Right to Buy
their house from their local authority. The Act came into force on the 3 October 1980 and is seen as a defining policy of Thatcherism
. In Scotland
the Right to Buy was provided by the Tenants' Rights, Etc. (Scotland) Act 1980 and for Northern Ireland
it was left to the Housing Executive
.
party under Margaret Thatcher
had promised in their manifesto for the general election of 1979 to give council house tenants the 'legal right to buy their homes'.
's remit as he was Environment Secretary
at the time. On proposing the Bill to Parliament in 1979 Heseltine said it "lays the foundations for one of the most important social revolutions of this century". Gerald Kaufman
, then in the Labour Party
Shadow Cabinet
and a former Environment Minister himself, said the Act would "not provide a single new home and [would] deprive many homeless people or families living in tower blocks from getting suitable accommodation". The Labour Party was vehemently opposed to the Act but by the general election of 1987
had dropped its opposition to the Right to Buy.
The Act allowed tenants who had lived in their homes for at least three years to buy at 33% discount of the market price and 44% for a flat. If one was a tenant for over 20 years they got a 50% discount. Those not allowed to buy were tenants of charitable housing associations.
However many of the houses sold were built in the 1950s and 1960s, they were of poor quality and are today referred to as Non Traditional Housing, many had serious structural defects and were designated defective, the passing of the Housing Defects Act 1984 was required to allow for grants to be given to unsuspecting buyers, and to implement a cut off date for the issue of such grants.
As a result of increased building costs a further act was passed Housing defects Act 1988 to limit the amount of money payable, and move some types of Non Traditional Housing into different categories, for different levels of grant.
Mortgage-interest tax relief was also in operation and the Act provided the right to a mortgage from the local authority. The Act introduced the concept known as a 'secure tenancy' which restricted local authorities power to recover possession from their tenants. The Secretary of State had reserve powers to intervene with local authorities if they did not comply with the Act.
The Act also gave those who paid a £100 deposit the right to buy their home at a fixed price in a period of two years after paying the deposit. If the tenant was to sell the home they bought under the Act within five years of purchasing it they would have to share the capital gain between themselves and the local authority.
s rather than councils. 1.5 million council houses were sold by 1990, by 1995 it was 2.1 million and as a result of the Right to Buy the Treasury
received £28 billion. Proponents of the Right to Buy argue that it gave working-class council tenants opportunities to get on the property ladder which they would not otherwise had had without the Act.
Critics of the Act argue that it was designed to pass the responsibility of old defective housing from the government to the new homeowner, the act also added to the current shortage of council housing and the rise in homelessness
and claim that this is a result of the Act. Others claim that when inflation
rose towards the end of the 1980s and the recession
of the early 1990s came, many people could not afford their payments on their mortgage and therefore had their houses repossessed. Also, when prices came down after they had first purchased their home, some found that their houses were worth less than their mortgages, which came to be known as 'negative equity
'.
Act of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
passed by the Parliament of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
that gave five million council house
Council house
A council house, otherwise known as a local authority house, is a form of public or social housing. The term is used primarily in the United Kingdom and the Republic of Ireland. Council houses were built and operated by local councils to supply uncrowded, well-built homes on secure tenancies at...
tenants in England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
and Wales
Wales
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...
the Right to Buy
Right to buy scheme
The Right to buy scheme is a policy in the United Kingdom which gives tenants of council housing the right to buy the home they are living in. Currently, there is also a right to acquire for the tenants of housing associations...
their house from their local authority. The Act came into force on the 3 October 1980 and is seen as a defining policy of Thatcherism
Thatcherism
Thatcherism describes the conviction politics, economic and social policy, and political style of the British Conservative politician Margaret Thatcher, who was leader of her party from 1975 to 1990...
. In Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
the Right to Buy was provided by the Tenants' Rights, Etc. (Scotland) Act 1980 and for Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
it was left to the Housing Executive
Northern Ireland Housing Executive
The Northern Ireland Housing Executive is the public housing authority for Northern Ireland. It is the enforcing authority for those parts of housing orders that involve houses with multiple occupants, houses that are unfit, and housing conditions.- Origins :...
.
Background
Since the Housing and Town Planning Act 1919 the number of council houses had steadily risen for over fifty years and council tenants could only buy their home with the permission of their local authority. The ConservativeConservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...
party under Margaret Thatcher
Margaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...
had promised in their manifesto for the general election of 1979 to give council house tenants the 'legal right to buy their homes'.
The Act
The Act came under Michael HeseltineMichael Heseltine
Michael Ray Dibdin Heseltine, Baron Heseltine, CH, PC is a British businessman, Conservative politician and patron of the Tory Reform Group. He was a Member of Parliament from 1966 to 2001 and was a prominent figure in the governments of Margaret Thatcher and John Major...
's remit as he was Environment Secretary
Secretary of State for the Environment
The Secretary of State for the Environment was a UK cabinet position, responsible for the Department of the Environment . This was created by Edward Heath as a combination of the Ministry of Housing and Local Government, the Ministry of Transport and the Ministry of Public Building and Works on 15...
at the time. On proposing the Bill to Parliament in 1979 Heseltine said it "lays the foundations for one of the most important social revolutions of this century". Gerald Kaufman
Gerald Kaufman
Sir Gerald Bernard Kaufman is a British Labour Party politician, who has been a Member of Parliament since 1970, first for Manchester Ardwick, and then subsequently for Manchester Gorton...
, then in the Labour Party
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...
Shadow Cabinet
Shadow Cabinet
The Shadow Cabinet is a senior group of opposition spokespeople in the Westminster system of government who together under the leadership of the Leader of the Opposition form an alternative cabinet to the government's, whose members shadow or mark each individual member of the government...
and a former Environment Minister himself, said the Act would "not provide a single new home and [would] deprive many homeless people or families living in tower blocks from getting suitable accommodation". The Labour Party was vehemently opposed to the Act but by the general election of 1987
United Kingdom general election, 1987
The United Kingdom general election of 1987 was held on 11 June 1987, to elect 650 members to the British House of Commons. The election was the third consecutive election victory for the Conservative Party under the leadership of Margaret Thatcher, who became the first Prime Minister since the 2nd...
had dropped its opposition to the Right to Buy.
The Act allowed tenants who had lived in their homes for at least three years to buy at 33% discount of the market price and 44% for a flat. If one was a tenant for over 20 years they got a 50% discount. Those not allowed to buy were tenants of charitable housing associations.
However many of the houses sold were built in the 1950s and 1960s, they were of poor quality and are today referred to as Non Traditional Housing, many had serious structural defects and were designated defective, the passing of the Housing Defects Act 1984 was required to allow for grants to be given to unsuspecting buyers, and to implement a cut off date for the issue of such grants.
As a result of increased building costs a further act was passed Housing defects Act 1988 to limit the amount of money payable, and move some types of Non Traditional Housing into different categories, for different levels of grant.
Mortgage-interest tax relief was also in operation and the Act provided the right to a mortgage from the local authority. The Act introduced the concept known as a 'secure tenancy' which restricted local authorities power to recover possession from their tenants. The Secretary of State had reserve powers to intervene with local authorities if they did not comply with the Act.
The Act also gave those who paid a £100 deposit the right to buy their home at a fixed price in a period of two years after paying the deposit. If the tenant was to sell the home they bought under the Act within five years of purchasing it they would have to share the capital gain between themselves and the local authority.
Results
Home ownership grew from 55 % of the population in 1980 to 64 % in 1987. By the time Margaret Thatcher left office in 1990 it was 67 %. However, the number of public houses built went down to 35,000 in 1990 from 170,000 in the mid-1970s, with most of these built by housing associationHousing association
Housing associations in the United Kingdom are independent not-for-profit bodies that provide low-cost "social housing" for people in housing need. Any trading surplus is used to maintain existing homes and to help finance new ones...
s rather than councils. 1.5 million council houses were sold by 1990, by 1995 it was 2.1 million and as a result of the Right to Buy the Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...
received £28 billion. Proponents of the Right to Buy argue that it gave working-class council tenants opportunities to get on the property ladder which they would not otherwise had had without the Act.
Critics of the Act argue that it was designed to pass the responsibility of old defective housing from the government to the new homeowner, the act also added to the current shortage of council housing and the rise in homelessness
Homelessness
Homelessness describes the condition of people without a regular dwelling. People who are homeless are unable or unwilling to acquire and maintain regular, safe, and adequate housing, or lack "fixed, regular, and adequate night-time residence." The legal definition of "homeless" varies from country...
and claim that this is a result of the Act. Others claim that when inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
rose towards the end of the 1980s and the recession
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
of the early 1990s came, many people could not afford their payments on their mortgage and therefore had their houses repossessed. Also, when prices came down after they had first purchased their home, some found that their houses were worth less than their mortgages, which came to be known as 'negative equity
Negative equity
Negative equity occurs when the value of an asset used to secure a loan is less than the outstanding balance on the loan. In the United States, assets with negative equity are often referred to as being "underwater", and loans and borrowers with negative equity are said to be "upside down".People...
'.