If you look back to the 1980s the UK government of the time, under Margaret Thatcher, instigated the biggest change in the UK property market in living history. The right to buy scheme saw many people take up the offer of acquiring their council properties at a discount to the market value. History now shows us that this left a major gap within the UK social housing sector and while there were significant land assets available for local authorities, many of these were sold off as well.
So, looking back in hindsight did UK local authorities sell off prized land too cheaply?
Raising funds and encouraging homeownership
It is very easy to look back in hindsight and suggest that UK local authorities sold off the “family silver” too quickly and too cheaply. It was obvious that the value of land would increase over the years, as it is a static asset much in demand, but perhaps local authorities could have reduced their land banks over a longer period of time?
The 1980s was an extremely volatile time for the UK economy with the early 80s a boom time and the late 80s hosting one of the most severe stock-market crashes in living history. We will never really know the part that local authorities played in the UK housing revolution by selling off land. The fact is that without the sale of state-owned land banks around the country this would probably have reduced the number of new builds and reduced the momentum in homeownership.
Balancing the books
Looking from a distance it is difficult to really understand how hard it is to balance the books of local authorities across the UK. The cost of public services continues to grow, public sector pension liabilities have increased dramatically and the general public are reluctant to pay more tax. At the time, with homeownership certainly growing and housebuilders desperate for land, perhaps this was the perfect time to sell what in hindsight was the “family silver”.
One side of this particular argument which is never covered in great detail is how the funds raised were used by local authorities. This kind of information is never made public and the true cost of running local and national public services is probably a lot higher than many of us suspect. It is also worth noting that while the sale of school playing fields in the 1980s grabbed the headlines, local authorities still retain a significant land bank today.
Move back towards social housing
There has certainly been a move back towards social housing over the last 10 years or so and with support for left wing thinking political parties growing this trend is likely to continue. In many parts of the UK first-time buyers are struggling to climb onto the property ladder which has increased demand for private rental properties. This has prompted a growing belief that political parties have an obligation to increase the levels of social housing across the UK and assist those who are struggling with accommodation.
It is very easy to throw stones from the sidelines suggesting that local authorities sold off the family silver too cheaply in the 1980s. However, in hindsight perhaps the sale of local authority held land assets greatly assisted the UK property ownership revolution?