Is the UK paying the price for selling off council properties in the 1980s?
Those who remember the 1980s and Margaret Thatcher will be well aware that the trend towards selling off council properties to their tenants took off. We saw thousands upon thousands of properties acquired by their tenants at below market prices as a means of introducing en masse property ownership to the UK. At the time this seemed to be a relatively sensible decision going forward, putting homes in the hands of tenants and raising significant funds for councils in the process.
However, as the UK property market continues to move ahead, the rental market comes under yet more focus and those looking to jump onto the housing ladder are struggling, can the seeds of the current frustrations be traced back to the 1980s?
Buy to let properties
As more and more council houses were sold to their tenants, at extremely attractive rates, this created a very liquid housing market in the UK. Indeed many tenants chose to sell their properties in the short to medium term, banking significant profits, allowing them to look elsewhere and move up the property ladder. This created a significant boost for the mortgage industry, resulting in fewer houses available for those on low incomes and pushed the UK private rental market to a whole new level.
Investors filled the gap
While the Labour Party has been very critical of UK buy to let landlords, promising various restrictions on rental increases, the fact is that investors moved in to fill a gap left by governments and councils of years gone by. At the time very few councils complained about the right to buy option given to tenants as they counted a massive increase in their income. However, when the roundabout stopped spinning it became apparent that council properties were diminishing in number at a time when more and more people were looking to rent properties.
If it had not been for private investor stepping into the breach we can only guess what kind of situation we would be in today. Councils have no interest in investing in new properties, instead looking to go down the PFI route, and successive governments have pandered to the home ownership community. In many ways politicians have benefited from rising house prices which create a very strong feelgood factor and support for the sitting government.
Is it too late for politicians to complain?
Over the last 10 years or so we have seen a significant number of new regulations and laws brought in with regards to private landlords and private rental. While the Labour Party has promised to bring in yet more restrictions, which will reduce private investment in the long-term, politicians have as normal left it too late to react. The damage has been done, council property portfolios have been decimated and the funds raised when the “right to buy” was given to tenants are long gone.
In what seems to be a growing trend in the political arena, those who have taken chances, invested significant amounts of money and in some cases made significant returns, seem to be easy folly. The ever-growing number of regulations, taxes and restrictions make investment in the UK private rental market less and less attractive. If investors were to retreat from the UK private rental market where would this leave those looking for rental properties?
Article courtesy of Property Forum