HOUSING IN BRITAIN · COUNCIL OF MORTGAGE LENDERS HOUSING IN BRITAIN MARKBOLEAT and BEV TAYLOR . AI THE BUILDING SOCIETIES ASSOCIATION 3 SA VILE ROW LONDON WlX lAF Third Edition May 1993 CONTENTS page INTRODUCTION V 1. HISTORICAL PERSPECTIVE 1 Pre-1960 1960-79 Post-1979 Present policy 2. HOUSING TENURE 7 Types of tenure The housing stock Households 3. HOUSING CONDITIONS 11 State of the housing stock Policy towards improvement 4. HOUSING POLICY AND THE INSTITUTIONAL FRAMEWORK 14 Owner-occupation Social housing Housing associations Private renting Leasehold reform Scotland, Wales and Northern Ireland Public expenditure on housing 5. ATTITUDES TO HOUSING 19 The 1993 BMRB survey Attitudes to tenure Housing satisfaction Attitudes to council house purchase and alternative landlords Attractiveness of Home Ownership Negative equity 6 TRENDS IN ATTITUDES TO HOUSING 25 Tenure preference Council tenants and tenure preference Age and tenure preference Region and tenure preference Housing satisfaction 7. HOUSING FINANCE 28 The mortgage market Financing local authority housing Housing subsidies Housing costs ii page 8. HOUSING SERVICES AND HOUSE MOVES 32 Source of mortgage Type of mortgage loan House moves Length of time respondents have lived in their present home Home improvements Housing services Satisfaction with lender 9. THE FUTURE 35 Demographic influences Recent trends in population and household formation Regional household formation County household formation Conclusion 10. INTERNATIONAL COMPARISONS 39 Overview USA Australia Canada New Zealand Japan Europe Comparative figures on owner-occupation by age 11. SUMMARY 49 Historical perspective Housing tenure Housing conditions Housing policy Attitudes to housing Trends in attitude to housing Housing finance Housing services and house moves The future The international context BIBLIOGRAPHY 51 Appendix 1 52 BMRB Housing Consumer Survey 1993 Appendix 2 56 Scotland, Wales and Northern Ireland iii INTRODUCTION The first edition of this book was published in May 1986. The introduction to the first edition said that the book was being published to bring together available information on the housing stock and housing finance in Britain, and also to publish for the first time the results of a major market research survey conducted by The Building Societies Association. A second edition, drawing on a new market research survey, was published in May 1989. This third edition is being published for the same reasons. The book is not largely original research, but rather brings together information which is not easily accessible on various aspects of the housing stock and housing policy in Britain. The CML has also commissioned from the British Market Research Bureau a new market research survey, many of the questions in which repeat those asked in 1986 and 1989, and also earlier surveys conducted in 1983 and 1975. The results of the survey are fully reported, and the five surveys together are analysed to show changing attitudes over time. The authors gratefully acknowledge the assistance of Adrian Coles for preparing Chapter 9 and commenting on an earlier draft of the report, and Fiona Hoyle and Ron Armstrong for assisting with Chapters 3 and 4. Mark Boleat Director-General, Council of Mortgage Lenders May 1993 V CJMPTER 1 HISTORICAL PERSPECTIVE In order to put present housing policy and The Housing and Town Planning Act 1919 (the conditions into perspective, a brief historical Addison Act) required local authorities to adopt a overview is necessary. This chapter briefl y surveys strategic view of housing in their areas. An overall trends in housing to provide the historical objective was set of building 500,000 houses a year background for the rest of the book over three years, and, for the first time, the Exchequer became prepared to meet any deficit caused by a difference between the level of rents and the cost of new dwellings. The Housing PRE-1960 (Additional Powers) Act 191 9 introduced subsidies It is generally accepted that in cities in particular, for private building. The Housing Act of 1923 housing standards in Britain in the 19th century extended subsidies to private builders; 43% of were often appalling. In 1885, the report of the houses built for private owners between 1919 and Royal Commission on Housing for the Working 1930 were built with subsidy. Classes described overcrowding, inadequate lt is estimated that in 1938 th ere were 11.4 million sanitary arrangements and extremes of disrepair dwellings in England and Wales, of which 32% were and the effects these had on the population. There owner-occupied, 10% were rented from the public has, naturally, been an improvement in housing sector and 58% were rented from the private sector. conditions in line with the increase in living standards generally. In Britain, a major feature of Shortly before the end of the Second World War, the evolving housing market has been the steady the Government published a white paper Housing rise in owner-occupation and, until 1979, the (Cmnd 6609) which set out three objectives of equally marked increase in the proportion of housing policy- housing provided by local authorities. (a) A separate dwelling for each fam ily which It is generally stated that shortly before the First wanted to have one. World War, about 90% of all homes were privately (b) A rapid completion of post-war slum clearance rented, the remaining 10% being owner-occupied. and overcrowding programmes. However, there seems no firm basis of fact for this (c) The progressive improvement in the conditions particular calculation, although pre-1914 of housing. information for a few areas is consistent with it, as are the national 1938 data about the tenure of the Housing was physically rationed in the immediate pre-191 4 stock. post-war period, and new building was almost entirely by local authorities for rent. Public sector The First World War saw legislation which was, in completions (in England and Wales) rose from the long term, to have a major effect on the nature virtually nil to 195,000 by 1948, during which year of the British housing market. The Rent and only 33,000 private houses were completed. In Mortgage Interest Restriction Act of 1915 fixed 1951 , it is estimated that the housing stock in rents, gave tenants security against evicti on, and England and Wales had increased to 12.5 million, prevented increases in interest rates on mortgages. owner-occupation accounting for 31% and the It was intended to be a temporary meas ure, but, in rapidly growing public rented sector for 18%. fact, rent restrictions have remained in force in varying forms ever sin ce. The Housing Act 1949 removed from local authorities the requirement to provide houses only The Tudor Waiters Co mmittee examined house for the "working classes", marking a fairly design and recommended (in 1918) that the design significant departure from previous policy. This Act of housing should allow for improvements in living also introduced improvement grants payable at the standards sufficient for 50 years. The Committee discreti on of local authorities to owner-occupiers. said that families would require more space, more privacy and the provision of individual rooms for Between 1952 and 1954, building controls were separate activities. A minimum area of 900-950 eased, and private housebuilding expanded rapidly. square feet was proposed, and it was also The number of completions in Great Britain rose recommended that dwellings should have three from a low point of 23,000 in 1951 to 91,000 in bedrooms and a bathroom. The Committee's report 1954. However, public sector housebuilding had a major influence on housing design in the continued to rise and a record 257,000 dwellings post-war period. were completed in 1954, a year which also saw 1 348,000 dwellings in total completed, by far th e housing. This was fo llowed by the Housing Act highest figure in the post-war period, until the 1964, which established the Housing Corporation boom of the mid-1960s. with funds to loan to housing associations for cost rent and eo-ownership schemes. The Housing The Housing (Repairs and Rents) Act 1954 aimed to Subsidies Act 1967 reformed the subsidy system for deal with obsolete and obsolescent houses through local authority housing and provided for the option slum clearance, an increase in improvements and mortgage scheme which came into effect in 1968. encouragement of repairs and maintenance. The Housing Subsidies Act 1956 marked tl1 e first post­ Both owner-occupation and council housing war attempt to reduce local authori ty involvement continued to grow during the 1960s, at the expense in housing. The subsidy for housing to meet normal of the private rented sector. From 1961 figures are needs was first reduced substantially, and it was available for Great Britain rather than for England eventually abolished. and Wales only. It is estimated that between the In 1957 there was a major Rent Act which aimed to April 1961 Census and the end of 1971 the reverse the effects of rent regulation in Britain. The proportion of owner-occupied dwellings increased Act freed from rent control tl1e better privately from 42.3% to 50.6%, the proportion of public owned houses and permitted rents to rise on other sector rented dwellings increased from 25 .8% to dwellings subject to a ceiling. All new tenancies 30. 6%, while the proportion of dwellings in the were released from rent control. The effect was not private rented and other sector fell from 31.9% to to increase the quality and quantity of rented 18.9%. Housebuilding reached record levels during housing, but rather to lead to the sale of previously the 1960s. Completions averaged 314,000 a year rented properties, perhaps as landlords feared the between 1960 and 1964, and 390,000 a year in the reimposition of controls.