What Margaret Thatcher Did for UK Property

The controversial impact Margaret Thatcher made on Britain has been seen through 40 privatisation programmes, economic and welfare reform, and the Falklands War.

But nothing defines the concept of Thatcherism more than four laws her government introduced in the 1980s to transform the housing market.

The first was the Housing Act 1980 which incentivised council house tenants to buy their homes at a discount. Within seven years over one million council houses and flats were sold – by 2012 the sales figure reached 2.05m.

As with so many of Baroness Thatcher’s policies, it divided opinion. Advocates say ex-council properties now in the private market (an estimated 415,000 in London alone) have led to an improved quantity and quality of private housing stock. Critics believe the absence of new social homes to replace those sold off contributed to today’s housing shortage and, as supply has not met demand, led to higher rents and sales prices.

For landlords the landmark Thatcher legislation was the Housing Act 1988 which introduced the Assured Shorthold Tenancy.

Was this a mere detail? Not at all. The AST gave landlords the security of regaining possession of a property after six months. In turn this ended much of the uncertainty of being a landlord, encouraged the growth of buy to let and set the foundations for Britain’s Private Rented Sector to rise from 8.9 per cent of housing stock in 1979 to 15 per cent today.

The third piece of legislation came in two parts: in 1980 building societies were permitted to provide non-mortgage products while in 1986 the Building Society Act allowed them to ‘demutualise’ and become banks.

This indirectly stimulated the housing market by producing much fiercer competition amongst mortgage lenders than ever before.

First time buyers and ‘amateur’ landlords found it easier than in the past to obtain affordable mortgages for starter homes and buy to let properties respectively: owner occupation rose to 71 per cent of households before Mrs Thatcher left office and the number of BTL mortgages exceeded one million by the year 2000.

This financial liberalisation – although a big spur to the property industry – was small fry compared to the fourth legislative measure from Thatcher, known as the Big Bang.

This was the reform of London’s capital markets in 1986 which allowed foreign banking firms to operate from London.

Within a few years Docklands, a former industrial wasteland, became one of the world’s great financial centres. With the City Area Guide, it saw the creation of 35,000 financial services jobs in just five years and turned central London into a place for the world’s wealthy to live.

The housing market responded enthusiastically. Greater London’s average house price rose from £23,500 in 1979 to £70,750 when Thatcher left office 12 years later, according to the Nationwide.

Now, in the year Baroness Thatcher has died, that average is £307,000.

In Central London prices have risen far, far more; in the Royal Borough of Kensington & Chelsea the average property in 1979 cost £59,800 whereas now the price is a jaw-dropping £1.43m according to the Land Registry.

Controversial to the end, this legacy will not be respected by everyone. But whatever their view, no one who rents, owns or invests in a property will be untouched by the Thatcher revolution.