Housing: The Essential Foundations

Dr Paul Balchin, Paul Balchin, Maureen Rhoden

• Publisher: Routledge
• Year: 2002
• Topic: Physical Sciences
• eBook ISBN:
  9781134721382
• Subtopic: Geography
• Index: Geography

Housing: The Essential Foundations provides a comprehensive introduction to housing studies. This topical text is essential reading for students embarking on degree and diploma courses in housing, surveying, town planning and other related subjects. Professionals within these fields will also find the book valuable as a source of up-to-date information and data. Uniquely multi-disciplinary and including a wealth of illustrations and examples, this book focuses on key topics which include: * equal opportunities and housing organisations * town planning and housing development * housing management, design and development * economics of housing * management and organisation * environmental health and housing * property, housing law, policy-making and politics * housing policy and finance prior to and post Thatcherism * future policy issues under the Labour government post 1997 Throughout the authors stress the importance of housing market activity that accords with good planning practice, legislation, democratic decision-making, economy and efficiency. In introducing the many diverse aspects of housing within a single volume, this book provides the essential foundations for the study of this multi-disciplinary subject. Paul Balchin, Gregory Bull, Pauline Forrester, David Isaac, R.Shean McConnell John O'Leary, Maureen Rhoden, Jane Weldon all at Univeristy of Greenwich, UK and Mark Pawlowski, University

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AN OVERVIEW OF PRE-THATCHERITE HOUSING POLICY

Paul Balchin

The purpose of this introductory chapter is to provide a review of the evolution of housing policy from the nineteenth century to 1979. It was during this period that present-day housing markets evolved and present-day causes for concern emerged. During the latter years of this period, owner-occupation succeeded private renting as the dominant form of housing tenure, and the number and proportion of local authority dwellings reached its peak, but housing needs were far from satisfied in each of the housing sectors. This chapter specifically examines:

• The Victorian origins of housing policy.
• The development of housing policy, 1914–39, emphasising rent control and decontrol in the private rented sector, the introduction of housing subsidies in the local authority sector, and the gradual expansion of owner-occupation.
• Post-war housing policy, 1945–51, focusing on the extension of rent control and the increase in subsidies to local authority housing.
• The ‘consensus years’, 1952–79, reviewing rent decontrol and the introduction of rent regulation, house-building in the local authority sector, private sector rehabilitation, housing associations, and the substantial growth of owner-occupation.
• Housing finance reform.
• The changing pattern of tenure, 1913–79, and its regional distribution.

INTRODUCTION

Housing issues are frequently examined within the context of recent economic, social and technological change, and housing problems are often attributed to the policies of the current or previous government. But in any of the older industrial countries, the present state of housing is in large part a legacy of policies reaching back to the period of rapid industrialisation and urbanisation in the nineteenth and early twentieth centuries.

Since its inception, housing policy in the United Kingdom has been conditioned by the dominant political philosophy of the time. The virtual absence of housing legislation in the first half of the nineteenth century was a reflection of a liberal or laissezfaire approach to most matters—economic and social— and of an adherence to the free market. By the late nineteenth century, however, it was increasingly recognised that legislation was necessary to enhance environmental health in our towns and cities and that intervention into housing markets was essential if living conditions were to be improved and the productivity of urban workforces raised.

After the First World War, but more particularly after the Second, a mixed economy developed whereby state intervention and the market coexisted. For a few years in the inter-war period, and for much longer interludes after 1945, corporatism replaced a laissez-faire adherence to the free market. The Beveridge Report (1942), heralding the expansion of the welfare state, highlighted the need to protect ‘from the cradle to the grave’ all individuals and the family from, among other inflictions, the squalor of poor housing. There was also a broad consensus that policies, fairly even-handedly, should further the interests of all households, whether they were private or social sector tenants or owner-occupiers. Although, of course, there were periods in the decades following the Second World War when Conservative governments, to a limited extent, reverted to market criteria in formulating policy, it was not until after 1979 that Conservative administrations adopted a vigorous neo-liberal approach to housing—characterised most notably by reduced public investment in house-building, the marketisation of rents in both the private and social sectors, and the privatisation of social housing (see Chapter 3).

THE VICTORIAN ORIGINS OF HOUSING POLICY

The introduction of housing policy in the nineteenth century was a direct response to the economic and social legacy of the industrial revolution. The population of Great Britain increased from 11.9 million in 1811 to 40.8 million in 1911 and it had become largely urban. Poverty and squalor were manifested in the condition of housing in our towns and cities. The increase in the supply of labour enabled employers to keep wages to the minimum—often to subsistence level—but urban landlords, in their desire to maximise profit on their property, developed housing at a very high density and of appalling quality. Overcrowding and disease were the inevitable results throughout the industrial areas of Britain.

During the first half of the nineteenth century, laissez-faire attitudes in government largely prevailed. Within a free market, almost all working class housing was privately rented. Landlords needed to raise about two-thirds of the value of their property on mortgage, and if interest rates increased, landlords passed on the cost as much as possible in higher rents in order to maintain profitability. Gauldie (1974) has shown that rents rose steadily in the period 1780–1918 (even when the general price trend was downwards), and that in the nineteenth century the average working class family paid 16 per cent of their income in rents in contrast to 8–9 per cent paid by middle class families. The majority of private landlords were relatively small capitalists content with a secure return on their capital—housing comparing very favourably with other forms of investment. Until the extension of limited liability in the late nineteenth century, investment in joint stock companies was unattractive to those with modest means. But with the development of the stock exchange and building societies, the expansion of government and municipal stock, and increased investment opportunities overseas, private rented property became much less attractive as an investment.

On a very limited scale there was, however, an improvement in the condition of working class housing. ‘Not-for-profit’ housing associations originate from 1830 when the Labourer’s Friendly Society was formed. The society built very few houses but these were of a higher standard than most low-income dwellings at the time. However, throughout the rest of the century, poor households failed to attract financial backing. Charitable trusts therefore attempted to show that private enterprise could provide decent housing for the working classes. Bodies such as the Guinness Trust, the Peabody Donation Fund, the Joseph Rowntree Trust and the Sutton Dwellings Trust, formed in the nineteenth century, are still active today in supplying general family housing. Higher-paid workers, however, often showed an interest in owner-occupation and set up building societies—‘self-help’ organisations established initially to divert the savings of members into house-building.

In the second half of the nineteenth century, a laissez-faire approach to environmental and social problems gradually became discredited. Not only was an improvement in housing deemed necessary for health reasons, but it was thought that it would indirectly raise productivity at work and alleviate political agitation at a time when the majority of the population was disenfranchised. Trailing the introduction of public health legislation (the Public Health Act of 1848), housing legislation was added step by step to the statute book.

The Labouring Classes Lodging Houses Act and the Common Lodging Houses Act (both of 1851) were targeted at mobile labour, and in turn permitted local authorities to provide temporary housing and controlled and monitored private common lodging houses. The success of these Acts was, however, thwarted by the unwillingness of ratepayers to provide the necessary revenue. Subsequently, the Artizans and Labourers Dwellings Act of 1868 (the Torrens Act) and the Artizans and Labourers Dwellings Improvement Act of 1875 (the Cross Act) were intended to promote slum clearance, but because ratepayers were reluctant to finance clearance, and as most slum housing was sited on high-value land in the inner urban areas, the Acts were ineffectual. Authorities also had the problem of having little or no accommodation to offer displaced households.

The Public Health Acts of 1875 and 1890 were nevertheless having a favourable effect on the quality of new private and later public sector housing and on residential environments in the emerging inner suburbs. It was unfortunate, however, that increased public intervention from the 1848 Act onwards further reduced the attraction of housing investment. Controls often resulted in either higher rents (to compensate landlords for improvement costs incurred) or a decrease in the supply of accommodation if investment became less profitable. Public sector house-building thus became essential if affordable housing for lower-income households was to be provided. In 1869, a local authority in Liverpool was the first to build municipal housing for rent and, following the Housing of the Working Classes Acts of 1885 and 1900, local authorities and particularly the newly constituted London County Council and London’s boroughs developed a number of large housing estates often with their own work-forces—the direct labour organisations. Under these Acts, local authorities (without any financial assistance from central government) thus became the suppliers of housing for general needs and partly usurped the role of self-help organisations and charities.

Plate 1.1 By-law housing developed under the Public Health Acts of 1875 and 1890

Two-storey terraced housing developed at the end of the nineteenth century, London Borough of Merton

THE DEVELOPMENT OF HOUSING POLICY, 1914–39

Rent control and decontrol

Despite the introduction of local authority housing at the end of the nineteenth century, private rented accommodation still constituted 90 per cent of the nation’s housing stock at the outbreak of the First World War (with owner-occupation accounting for most of the rest). There was, moreover, still a tendency for private landlords to raise rents to their highest possible level—a practice particularly prevalent during the first year of the war, when housing shortages were exacerbated by a dramatic reduction in the rate of house-building. Following rent strikes across the country (but most notably in Glasgow), the government introduced rent control in 1915 by the Increase in Rent and Mortgage Interest (War Restrictions) Act. Rents were controlled at 1914 levels on property where rateable values were less than £35 in London, £30 in Scotland and £26 elsewhere in the United Kingdom (Table 1.1). In the years that followed, the Act inevitably discouraged investment in rented property. The Increase in Rent and Mortgage Interest (Restrictions) Act of 1920 substantiated these fears. Rent control was continued into peacetime and applied to properties with rateable values of less than £105 in London, £90 in Scotland and £78 elsewhere, but the increase was more a reflection of increased property values and re-rating than any significant extension of control. The Onslow Report (1923) confirmed that rent control deterred investment in new housing. It stated that the 1915 and 1920 Acts had made private enterprise reluctant to perform its traditional function of supplying working class housing, but warned that instant decontrol would cause hardship.

Table 1.1 Rent control and decontrol, 1915–38

The Rent and Mortgage Interest (Restrictions) Act of 1923 generally continued the policy of rent control, but there was immediate decontrol if the landlord gained possession, or if sitting tenants accepted a lease of two years or more, or if a lease was granted fulfilling certain conditions. The Act remained in force for ten years. The Marley Report (1931) investigated the working of the Act, and showed that of the 1.5 million houses built from 1918 to 1931, 600,000 local authority dwellings constituted virtually all the new accommodation for the working classes. Rent control was clearly deterring investment in low-income housing, although the 1923 Act had worked well for middleincome housing where a large measure of decontrol had not caused hardship to tenants, while it encouraged private developers/landlords to increase supply. The Report proposed that rents should be immediately decontrolled where supply exceeded demand (usually in the case of large houses); rents should be decontrolled when landlords obtained vacant possession (in the case of medium-size houses where supply equalled demand); and rents should continue to be controlled where demand exceeded supply (usually in the case of small houses). Following these proposals, the Rent and Mortgage Restrictions (Amendments) Act of 1933 divided houses into three classes. Class A houses (the most expensive properties) were decontrolled immediately; Class B houses (those intermediate in price) were decontrolled on vacant possession; and Class C houses (those with rateable values less than £20 in London and £13 elsewhere) remained controlled, regardless of whether there was a change of tenant. The Act was to remain in force until 24 June 1938 and no longer.

The Ridley Report (1938) examined the working of the 1933 Act and was critical of the effects of the control of Class B houses. The Increase of Rent and Mortgagee Interest (Restrictions) Act of 1938 consequently decontrolled the higher-rent houses in Class B (those with rateable values above £35 in London and £20 elsewhere), but abolished decontrol by vacant possession of the lower-rent self-contained dwellings in that class.

In the period 1923–38, approximately 4.5 million dwellings had been decontrolled, and investment in the development of medium- and high-rent housing had become attractive. There were still, however, 4 million controlled dwellings, and at the lower end of the market properties were mainly pre-1914 in origin, usually terraced, in poor condition and lacking basic amenities.

The introduction of housing subsidies

It was not until after the First World War that local authority housing really ‘took off’. In 1919, 610,000 new houses were needed in Britain as house-building had virtually ceased throughout the duration of the war, and at the 1919 general election, Lloyd George promised to supply homes ‘fit for heroes’ to attract the ex-serviceman’s vote (Swenarton, 1981). After his election win, his coalition government introduced a housing programme in which local authorities and public utility societies (akin to housing associations) were to build 500,000 houses within three years. This was incorporated in the Housing and Town Planning Act of 1919 (the Addison Act), a watershed in British social history. Under the Act, local authorities initially had the duty of surveying housing needs in their area (an innovation) and then, having quantified the shortage, generous ‘bricks and mortar’ subsidies were introduced to help meet the needs of working class families. Local authority losses in housebuilding were limited to the product of a penny rate with the Exchequer automatically meeting all additional losses—losses which inevitably would be high as rents were to be pegged to the level of prevailing ‘working class’ rents in the area, adjusted to the means of the tenant. Many rents were therefore equal to controlled rents. The Act also fixed standards for new housing well above the normal conditions of working class houses. Addison ‘more than any other man thereby established the principle that housing was a social service, and later governments had to take up his task’ (Taylor, 1965:148).

But the 1919 Act gave little incentive for local authorities to economise, and the capacity of the construction industry was strained, pushing up costs and exacerbating post-war inflation. Subsidies simultaneously increased as houses costing, for example, £400 to build in 1918 were costing over £900 by 1920. Exchequer grants were therefore sharply restricted in 1921 and stopped in 1922. The Addison Act nevertheless resulted in 213,000 houses being built.

A new subsidy system was devised and included in the Conservatives’ Housing Act of 1923 (the Chamberlain Act). Chamberlain believed that the rising cost of housing was the result of Addison’s open-ended subsidies rather than a cause, and introduced a subsidy which in form was to continue through to the Housing Finance Act of 1972. It consisted of a fixed annual Exchequer payment of £6 per dwelling for twenty years—available to both the public and the private sectors. The government showed a preference for the latter sector as it built houses for sale, and local authorities would only qualify for the subsidy if they built small and substandard houses in areas where private enterprise could not meet demand.

Soon after the first Labour government took office, insisting that more and better houses be built, it repealed the Chamberlain Act and replaced it with the Housing Act of 1924 (the Wheatley Act). The subsidy was raised to £9 for forty years, and the Act transferred the main responsibility for housing back to local authorities, which did not now have to demonstrate that private enterprise could not meet local needs before they could proceed with building. Rents were to be equal to ‘appropriate normal rents’, interpreted as being equal to controlled rents in the private sector. The difference between this rent level and market rents was to be offset by a minimum rate fund contribution of at least half of the Exchequer subsidy.

Plate 1.2 Local authority housing developed under the Housing Act of 1924

Two-storey terraced housing developed on the St Helier Estate, London Borough of Merton, by the London County Council in the early 1930s

Although 503,000 dwellings were built under the 1923 and 1924 Acts, it was doubtful whether the needs of the poorest working class families had been met. Council housing was regarded by many as prestigious and it was going mainly to the lower middle classes, such as clerks, teachers and shop-workers. The main working class areas—the inner cities—had a...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• PLATES
• FIGURES
• TABLES
• NOTES ON CONTRIBUTORS
• INTRODUCTION
• 1: AN OVERVIEW OF PRE-THATCHERITE HOUSING POLICY
• 2: THE ECONOMICS OF HOUSING
• 3: HOUSING POLICY AND FINANCE
• 4: EQUAL OPPORTUNITIES AND HOUSING
• 5: TOWN PLANNING AND HOUSING DEVELOPMENT
• 6: HOUSING DESIGN AND DEVELOPMENT
• 7: ENVIRONMENTAL HEALTH AND HOUSING
• 8: LEGAL STUDIES, PROPERTY AND HOUSING LAW
• 9: MANAGEMENT AND ORGANISATION
• 10: POLICY-MAKING AND POLITICS
• 11: CONCLUSION