It is fair to say there has been a significant boost in home ownership across the UK since the 1980s. This was the time that the Tory government introduced the right to buy scheme which allowed council tenants to purchase their property at below market price. Many believe this is what prompted the UK property boom, giving first-time buyers a taste for their own home and offering a stepping stone to more expensive properties.
Climbing onto the ladder
The most difficult part of the homeownership journey is making that first step from rented property to homeownership. It can be daunting, it can be expensive and in some cases it can be impossible. So, the introduction of a relatively low level entry point (in the shape of right to buy properties) had a significant impact upon homeownership in the UK. The truth is that politicians use homeownership as a lever by which to curry favour with voters. After all, if the value of your property keeps going up and up under for example a Conservative government, would you then consider switching to labour and socialist policies?
Much needed stock
It is also worth considering the fact that for many years there has been a significant shortage of affordable property in the UK. Indeed today experts suggest that annual new-build shortages are in the region of 100,000 units plus. When you bear in mind that right to buy properties have had a significant impact on supply, how worse would the situation be today if this had not happened?
The right to buy scheme only recently finished in many areas of the UK with politicians now more aware of a lack of social housing. In what became something of self-fulfilling prophecy, a lack of social housing pushed many towards rental properties, encouraging buy to let investment which pushed prices higher, out of the reach of many first-time buyers.
Replenishing social housing stock
While there have been many positives with regards to the right to buy scheme there is also a downside which we touched on above. A lack of social housing, and bear in mind that right to buy properties were sold below the market price, is pushing many people towards private rental properties. This in turn creates more demand from buy to let investors thereby pushing prices higher and higher out of the reach of individuals looking towards homeownership.
At some point the government and local authorities will need to bite the bullet and invest a significant amount of money into new social housing stock. There must also be a promise not to starve the supply of social housing in order to revitalise the first time buyer market in the future. We have housing associations and other charitable organisations but perhaps local authorities need to take control again?
It is safe to say that the right to buy scheme which was introduced back in the 1980s has had a major impact upon first-time buyers in the UK and general homeownership. The downside is that social housing has struggled, pushing many towards private rental which create a self-fulfilling prophecy. While local authorities continue to announce third partly deals to increase social housing numbers, much of this is too little too late.