The impact of the central hallmark of the 1980 Housing Act.
Working at the National Library of Library towards the end of 2013, I noticed a rise in the number of electoral roll requests in connection with 'Right to Buy' (RTB) applications.
I later learned that this was near the end of RTB's life in Scotland. The Scottish Government had announced that the policy, which gave public sector tenants the right to purchase the home they lived in, was to be scrapped. Those who still qualified for RTB had until 31 July 2016 to exercise it and buy their homes.
RTB was one of the main policies of the Housing Act 1980. Like many housing and governmental policies, RTB divided opinions. But unlike other housing policies, RTB had the staying power to last through eight general elections, and the appeal to remain an attractive proposition for Scottish tenants after more than three decades, as they hurried to apply before the deadline.
So why did RTB last so long? Who were the winners and the losers? And why did it come to an end in Scotland? The Library's collections were a good place to try to find out, with material dating back to the 'birth' of RTB in 1980, through the many stages of its life to its ultimate 'death' in Scotland in 2016.
'Right to Buy' was initially described in the Conservatives' manifesto dated 11 April 1979. Boldly aligning themselves with the electorate, the Conservatives stated what they believed was a key aspiration of the UK public: 'To most people, ownership means first and foremost a home of their own'. They promised to deliver this aspiration, and 'help people to become home owners', through various measures like tax cuts, grant schemes and the sale of council houses. In a nod of recognition of the need for short-terms lets as well as longer-term homeownership, they made a secondary pledge to 'revive the private rented sector'.
Their promises won over the electorate, and Margaret Thatcher became Prime Minister on 3 May 1979. With the Conservatives in power, 'Right to Buy' became a statutory right. Presenting the new Housing Bill to the UK Parliament, the then Secretary of State for the Environment, Michael Heseltine, claimed RTB was the Government's response to fostering a 'deeply ingrained desire' for home ownership in the UK and said, of the new statute:
'It reflects the wishes of the people, ensures the wide spread of wealth through society, encourages a personal desire to improve and modernise one's own home, enables parents to accrue wealth for their children and stimulates the attitudes of independence and self-reliance that are the bedrock of a free society.'
Heseltine's statement summed up three key features of RTB, to be discussed and analysed in the decades to come. First, it was a policy rooted in market-oriented ideology, viewing housing as a capital asset, owned by individuals and subject to market mechanisms. Second, RTB embodied liberalism — as a privatisation mechanism, it opposed the intervention of the government and encouraged independence and responsibility at the level of the individual, placing them in a position of power and control. Third, it positioned homeownership as a more desirable and 'natural' tenure than renting or tenancy.
RTB became ensconced in law, as the Tenants' Rights, Etc. (Scotland) Act 1980 (or the Housing Act 1980 in the UK), affirming the 'rights of public sector tenants to purchase the dwelling-houses which they occupy'. This entitlement was available to most tenants, on the proviso that they had lived in the property for a 'qualifying period' of three years' continuous occupation. But not only did the Act provide the entitlement, it also set out attractive incentives to convince tenants to exercise their right to buy.
A 'starting' discount of 33 per cent of the property's market value was offered, and the longer tenants had lived in the property, the greater the discount (an extra one per cent discount for every additional year over the qualifying period to a maximum of 50 per cent discount after 20 years' tenancy). To help them raise the necessary funds, tenants were also entitled to apply to their landlord for a loan of 100 per cent of the purchase price of the property, and they had the option to pay £100 to fix the property price for two years.
sales peaked in Scotland in 1989 when nearly 40,000 public sector dwellings were sold
As the 1980s progressed, the RTB policy evolved to become even more enticing to tenants. The Tenants' Rights, Etc. (Scotland) Amendment Act 1984 reduced the qualifying period from three years to two years, and increased the discount allowance (32 per cent for a two-year tenancy, increasing to a maximum of 60 per cent for a 30-year tenancy). Two years later, the Housing (Scotland) Act 1986 extended RTB to more tenants, and offered even greater discounts on the purchase of flats (tenants buying a flat after two years' tenancy could do so at a discount of 44 per cent instead of 32 per cent, and those who had 15 years' tenancy in a flat were entitled to buy it at a maximum discount of 70 per cent of the sale price). By now, RTB was very hard to resist for any tenant in Scotland, whether they had considered homeownership or not.
Before RTB, it was still possible for tenants to buy public sector homes in Scotland, but the discounts were less defined, and the Secretary of State for Scotland approved or rejected individual applications. Between 1974 and 1978, several hundred council houses were sold by this process, which crept up to 1,619 in 1979 (presumably following the growing trend for homeownership).
When RTB began, however, the instant impact was clear in Scotland, with the number of council house sales increasing to 5,099 in 1980 and reaching 14,000 in 1982. It didn't end there. RTB sales peaked in Scotland in 1989 when nearly 40,000 public sector dwellings were sold that year. 26,000 of these dwellings were flats — highlighting one of the biggest categories of 'winners' of RTB in Scotland: tenants purchasing their council flats, benefitting from the massive discounts included in the Housing (Scotland) Act 1986.
Surveys of Scottish tenants who bought their flats and houses through RTB reveal what it was like to be one of the RTB 'winners'. Through their accounts, the key features of RTB (as laid out in Heseltine's speech) emerge. Many Scottish RTB purchasers said they were satisfied with RTB because it allowed them to gain an asset. For the older RTB purchasers, the value of this asset manifested as a sense of security for the present, and something to leave their family in the future. Younger buyers liked getting their first step on the housing ladder, by gaining a property with which to trade on the housing market. As Heseltine predicted when RTB became law, independence or freedom from the state was another positive aspect of the policy to many Scottish tenants. Tired of waiting for the council to maintain their homes, for some, buying their properties meant freedom to take responsibility for their own repairs, and the chance to 'do what they liked' to their property, to 'make it their own' with improvements as they saw fit. When questioned about renting vs owning, the majority expressed support for buying — in a survey of RTB purchasers carried out in 1990 by the Scottish Consumer Council, two thirds said buying 'made more sense' than renting.
Many Scottish tenants-turned-owners considered themselves 'winners' of RTB purely on a financial basis, particularly if they had lived in their homes for many years and bought at sizeable discounts. In a study of council house sales in Scotland published in 1985, one respondent described RTB as 'the sale of the century'. In the same study, a RTB purchaser from north east Fife said: 'You can't lose out. For all we paid you [could have had] a new car'. Discounted property prices meant smaller mortgages, and in many cases, mortgage payments were less than rents. Many Scottish council tenants had experienced their rents rising in real terms at around 20 per cent per year, so for them, the prospect of paying a mortgage where the payments might reduce over time as the size of loan decreased meant a clear win. An added bonus was that buying the property would result in 'something at the end', as opposed to years of paying rent which many considered 'dead money'.
This steady flow of capital receipts bolstered the Government's finances
Those who bought their homes under RTB inspired and empowered others to do the same, helping the rise of RTB in Scotland. Through word of mouth, tenants who came from a family of renters 'broke the mould' and became a new generation of homeowners. Entire neighbourhoods which had traditionally been 'public sector rented' tenure shifted to 'owner-occupier', which many RTB purchasers noted had the effect of making their estate 'upmarket' and a 'desirable' area to live in.
As well as the thousands of individuals who successfully and satisfactorily exercised their RTB, the other big winner was the UK Conservative Government. On a financial level, the revenue generated from RTB properties was significant (for the UK as a whole, over £1 billion a year during 1980-81, nearly £4 billion during 1989-90, with a total of over £15 billion between 1980 and 1990). This steady flow of capital receipts bolstered the Government's finances as they were making expenditure cuts in many other areas of public spending.
Finances aside, the popularity of RTB worked wonders for the status of the Conservative Party at the time. The Party could bask in the knowledge that they had accurately predicted the appetite for homeownership, and through their scheme were giving thousands of people what they wanted, whilst succeeding in their objective to privatise council housing and lessen the influence of the state in housing provision. They reaped the rewards as their vision of a 'nation of homeowners' became a reality, with around 50 per cent of all dwellings in Scotland (over one million homes) owner occupied in Scotland in 1990 (compared to 35 per cent of dwellings in 1979). The Conservatives had created a policy so powerful that it challenged traditional social democratic views of housing, bringing into question whether homeownership was a right of citizenship, and influencing other parties' policies on public sector tenures (when Labour came to power in 1997, despite originally pledging to abolish RTB, they continued with the Conservatives' RTB policy).
Thousands of tenants exercised their RTB and fulfilled their dreams of homeownership. But this was not the case for all. Buying a home was not well-suited to everyone — renting was preferable for some people as it offered flexibility and freedom from responsibility at a time when they were not ready or able to 'settle down'. Despite this, in the wave of positive rhetoric with which RTB first arrived in Scotland, thousands of tenants applied to use their RTB (possibly coerced because of the large discounts offered). Many of these, however, later withdrew as they learned more about what was involved. Between October 1982 and September 1983 more than 5,000 tenants withdrew from the RTB purchasing process in Scotland, and between 1981 and 1991 the number of RTB applications in Scotland outweighed the number of RTB sales almost every year (in 1988, only half of those who applied for RTB actually completed the purchase).
Interviews with those who withdrew from the process offer an insight into the 'losing side' of RTB, as they highlight some of the potential drawbacks involved with making the transition from tenant to RTB homeowner.
The financial commitment to buy a property was a factor which caused many tenants to withdraw. A male buyer from Strathkelvin, consulted in a study of council house sales in Scotland published in 1985, observed: 'If you can't afford to pay the rent the local authority will help you. But if you buy the damn thing … and you come up against a hard time, you are on your own pal. Nobody is going to want to know you'.
Some tenants who had rented from the council for years had little knowledge of home maintenance
Tenants with worries over job security or the frequency of their income could have struggled to keep up loan or mortgage payments if they went through with RTB, depending on the type of loan they had. Endowment mortgages were the fashionable loan of the 1980s, where the borrower would make monthly 'investment' payments into shares or property designed to mature for the term of the mortgage, to ultimately pay off the amount borrowed by the end. Door-to-door salesmen and brokers often peddled these mortgages as package deals, bundling in home improvements, insurance and other add-ons and encouraging tenants to maximise the amount borrowed with the promise of sizeable 'lump sums' in return for their investments. Unfortunately (as cautioned by Citizens Advice Scotland in an advisory guide from 1991), these mortgages were inflexible and likely to become expensive with surging interest rates. Furthermore, as realised later in the 1990s, many of the predictions made for endowments were over-exaggerated, meaning that in some cases, savings plans fell short of the required funds at the end of the mortgage term. For tenants in this sort of situation, the dream of homeownership was closer to a nightmare.
It wasn't only mortgage or loan commitments which marred some tenants' experiences of RTB. Other homeownership costs like building insurance, maintenance costs, repairs, service and factoring charges were also tough to manage according to interviews with RTB applicants. Some tenants who had rented from the council for years had little knowledge of home maintenance or the need to keep a property in a state of good repair. As more and more of Scotland's flats were purchased under RTB, whole blocks and tenements became multi-occupancy, with many new homeowners ill-equipped to deal with maintenance of common areas within these properties, having previously left this in the care of their landlords as tenants. Disputes about shared responsibility for maintaining roofs, walls and staircases in these (often ageing) properties left some new homeowners wishing they had remained tenants.
Scottish local authorities were put under pressure to keep up with a flood of RTB applications, and some struggled to cope, evidenced by complaints over administrative errors. One couple from Dundee complained that because of the delay in processing their RTB application in 1988 (it took 16 months instead of the estimated three months) their house had increased in value, and as a result they were having to pay £2,000 more than their neighbours to buy their home.
These complaints were the thin end of the wedge in terms of RTB-related problems for Scottish local authorities. Although they obtained a proportion of the revenue from council property sales, Scottish councils were restricted as to how much of this they could use to build new homes. Most of the 'best' housing stock — like semi-detached houses and larger family homes and homes in 'sought after' areas — was snapped up at the start of RTB, and to compound the issue, privatisation of council housing was ongoing, with continued stock transfers to housing associations. RTB presented a challenge for Scottish local authorities: to provide public housing for tenants with fewer properties available.
This dilemma faced by local authorities pinpoints one of the major categories of losers of RTB — those tenants who remained tenants, i.e. those who didn't or couldn't become RTB purchasers. These people, at the expense of RTB, had less choice of where they could live, and experienced the antithesis of the freedom reported by many RTB purchasers. Since there was greater uptake of RTB in some areas versus others, there was a loss of tenure-mix in many of Scotland's residential areas, and a resulting polarisation of 'desirable' vs 'undesirable' localities. With 'desirable' areas characterised by affluent RTB purchasers, 'undesirable' areas remained associated with social housing which began to gain a reputation as a 'safety net' form of housing or the tenure of 'last resort'. This 'residualisation', (whereby lower income households became concentrated in social housing), was accelerated by RTB, and it caused many tenants who continued to rent public sector housing to experience stigmatisation and alienation.
'Right to Buy' rattled on through the 1980s and 1990s in Scotland leaving winners and losers in its wake, but it was in 1999, when Scotland received devolved power of responsibility over housing, that RTB came under increased scrutiny. By 1999, more than 300,000 properties had been sold through RTB, and the Scottish Executive estimated that by 2010 there would be an increased need for housing in Scotland — partly due to an increase in homelessness (the number of households that applied to their local authorities as homeless in 1986/7 was 25,200 — by 1996/7 this had risen to 41,000), and partly due to demographic changes causing an increased number of smaller households (e.g. single-person households and households with two adults and no children).
While recognising that RTB had created 'unparalleled opportunities for many households to achieve their aspirations and own their own homes' the Executive called for the need to balance these aspirations with the 'need to obtain value for money and protect the interests of the community as a whole' (quoted from page 46 of 'Investing in Modernisation: An agenda for Scotland's housing, a Green Paper', published by the Scottish Office).
The Housing Act (Scotland) 2001 set out a 'modernised' RTB applicable to all new tenancies from 30 September 2002 (existing tenancies retained the 'preserved' RTB on the old terms). In contrast to earlier revisions of RTB which encouraged greater uptake of the entitlement, the 'modernised' RTB attempted to slow down the spread of RTB by offering less attractive terms: a longer qualifying period (five years instead of two), reduced discounts (the maximum discount was set at 35 per cent of the market value of the property, for both flats and houses, or £15,000 — whichever was the lowest). The 2001 Act also contained measures granting power to landlords and local authorities to restrict or temporarily suspend RTB at a local level, to help protect housing in the longer term.
The impact of these changes initially caused an increase in RTB sales in Scotland (sales went from 14,095 in 2001 to 17,343 in 2002 and 20,698 in 2003), as tenants — still keen on RTB — feared this would be their 'last chance' to exercise it. In 2006, a report for the Scottish Parliament took an objective look at RTB in Scotland. It estimated there were approximately 558,500 social rented tenancies in Scotland, and of these, it was estimated that 72 per cent (some 400,000 households) had the RTB in some form, either 'preserved' or 'modernised'. Even with the Scottish Executive pledging to invest £1.2 billion to deliver affordable housing and support the future of the social rented sector, this was a worrying statistic given the projected increased needs for housing in Scotland over the coming decade. The Scottish Federation of Housing Associations also began to express concern at an impending housing shortage, because of homes built by their member associations being continually transferred into private ownership under RTB. They made the case for excluding new tenancies from RTB, stating that 'for every new rented house built we are losing almost four'.
The Housing (Scotland) Act 2010 reined RTB in further, removing the right to buy from first-time social housing tenants (whose tenancies began on or after 2 March 2011), and removing it from those living in newer social housing (i.e. houses built after 15 June 2008). This was the beginning of the end for RTB. In 2012 a consultation process on the future of RTB in Scotland began. On 3 July 2013, during a visit to a housing association in Glasgow, (then) Deputy First Minister Nicola Sturgeon confirmed that RTB in Scotland was to end.
Although RTB has now ended in Scotland, it has not been forgotten. It was a policy which captured the imagination of both the public and politicians and challenged traditional housing conventions and models. It was a policy which needed no additional resources to effect, yet it transferred public wealth into the hands of individuals on a massive scale. It was a policy that allowed tenants to become homeowners without moving from their homes. It was a policy that empowered people to take ownership of their homes, and in the process gain control of a personal space where they could fulfil a basic human predisposition to keep people and objects of value close and safe. No wonder it was so popular with so many and lasted for so long.
In the course of its near 40-year existence, RTB allowed nearly half a million people to become homeowners in Scotland who might otherwise have remained social housing tenants. In doing so, it catalysed a change in the dominant housing tenure in Scotland from public sector tenancy (as was the norm in the 1970s) to owner-occupier, which, at its peak in 2002, saw 63 per cent of the dwelling stock in Scotland occupied by owners — equating to 1.47 million homes.
For those who aspired to be homeowners and whose circumstances suited homeownership, RTB was a success. But one of the failings of RTB in Scotland was that it sold homeownership to the masses and homeownership did not always suit the masses. Tenants who had the right to buy but were unsuited to owing a home were faced with a choice to buy one and try to cope with the associated financial burdens and responsibility, or to go 'against the grain' and not buy, and remain in social housing — a sector at risk of decline and stigmatisation. A minority of tenants who were not granted the right to buy had no such choice.
Figures suggest that only a small percentage of homes sold through RTB in Scotland later became repossessed (in 1999 for example, seven per cent of all repossessions in Scotland were of RTB properties). However, this is difficult to accurately track, given the long-time scales involved. Sound advice would have helped RTB purchasers make informed choices. If it had been mandatory for prospective RTB purchasers to receive written advice about home purchase and ownership (as recommended in a Scottish Consumer Council report from 1990), more tenants could have made choices informed by their individual circumstances instead of being led by the temptation of discounted property prices.
As a policy, RTB did what it set out to achieve, but growing RTB at the expense of all other housing tenures was unmanageable in Scotland. RTB stimulated an overwhelming appetite for homeownership as the 'natural' or dominant tenure, but this could not be sustained in the longer-term (evidenced by the fall in the proportion of owner-occupied homes in Scotland since its peak in 2002).
Studies showed that by 2002, an estimated 37 per cent of RTB properties in Scotland had been re-sold, and of these, six per cent were in the Private Rental Sector (PRS). Local authorities have increasingly had to turn to the PRS to house tenants due to housing shortages, in some cases paying Housing Benefit to tenants to subsidise private rental of former RTB properties. A 2012 study of housing in an area of Renfrewshire estimated that 43 per cent of the Local Housing Allowance claims in the locality were to subsidise rent on former RTB properties. This shows that, in an unexpected consequence, decades after its beginning, RTB was propping up the PRS.
The Scottish Government stopped RTB when it recognised the need to halt the decline of social housing, and keep this sector alive, but killing off RTB was only part of the process. Changing attitudes to reject the 'desire to own', and to make renting, rather than owning, an attractive prospect once again is a much bigger task, involving the reversal of decades of 1980s-inspired empowerment and aspiration. A 'nation of home renters' doesn't have the same ring to it … yet.
