THE MIDLANDS PROPERT Y GUIDE MONE YWATCH F INANCE


However, there were a number of complications with these debts. If either the borrower or lender died or the lender passed the debt onto someone else, repossession of the property was highly possible and things were made worse by issues surrounding feudal obligations in the society of the time.


By the 14th century, live pledges had completely disappeared and mortgages didn’t really become popular again until the mid- to late 19th century when the first building societies were created.


PRIVATE RENTING AND UNSCRUPULOUS LANDLORDS Despite the existence of building societies, borrowing money to purchase a house was limited to the more affluent classes in the late 19th century. The Industrial Revolution had encouraged ordinary people to leave the land and flock to the cities for work in the factories but the housing stock was little more than slums in many cases.


By 1900, 90% of British workers rented accommodation but there were always complaints that unscrupulous landlords were pushing up rents, which didn’t keep pace with increases in wages. The 1915 Rent Act made an effort to combat this problem by limiting the amounts by which landlords could raise the rent.


AFTER 1918 – ‘HOMES FOR HEROES’ By 1918, 70% of the British population were renting in the private sector but 1919 saw a massive change. The Housing and Town Planning Act (or Addison Act) was the first large-scale governmental intervention to build houses with the costs shared between local councils, tenants and central government (in the form of subsidies).


The concept behind the ‘Homes for Heroes’ policy was that working-class soldiers who had fought in the 1st World War were entitled to decent housing at an affordable price instead of living in Victorian-era slums. It’s no coincidence that this policy ran in parallel with the establishment of the beginnings of welfare provision for workers too.


Successive legislation helped with the construction of 1 million new homes (half of which were council houses). The Chamberlain Housing Act of 1923 gave subsidies for private builders to construct houses while the Wheatley Housing Act of 1924 made provision for central government to subsidise the building of large council estates.


In the 1930s the middle classes took advantage of the growing availability of mortgages with low interest rates to buy properties.


This housing boom continued into the 1930s with a concentrated effort to demolish slums and move tenants into new housing. This decade also saw the middle classes taking advantage of the growing availability of mortgages with low interest rates to buy properties in the newly-built suburbs on the outskirts of large towns.


Summary: In early times, mortgages were loans which were secured against property, usually land.


The first building societies were created in the 19th century but the vast majority of Britons rented privately, often the victims of unscrupulous landlords. After the 1st World War, there was a Liberal policy to provide decent housing for returning soldiers and council houses were built on a large scale.


The middle classes were able to take advantage of low-interest mortgages to buy newly-built houses in the suburbs.


HOUSING IN THE UK: 1939-1955 By 1939, the number of Britons owning their own home had increased to 27%. However, the outbreak of the 2nd World War put an end to further investment in housing. The availability of housing was also affected by bombing, which depleted an already insufficient amount of liveable accommodation.


In Post-war Britain replacing the damaged or destroyed housing became a priority for the government along with putting the welfare state into place as a result of the 1942 Beveridge Report. There were a number of problems facing the Labour government before they could put this policy into effect. These included material and labour shortages; a massive public debt; rising costs and the economic crisis of 1947. Despite these problems, a million new council houses were built between 1945-55 and there was more slum clearance.


AFFLUENCE IN BRITAIN: THE 1950S AND THE 1960S Throughout the 1950s and the 1960s, Britain went through a period of economic prosperity which was characterised by full employment and the doubling of real incomes: Macmillan’s “You’ve never had it so good”.


Low housing prices and relatively low interest rates encouraged more people to think about taking out a mortgage. The Tory government actively encouraged the creation of a ‘property- owning democracy’ by measures such as reducing Stamp Duty and lending money to building societies so they could provide mortgages. This policy was largely successful with home ownership increasing from 29% (1951) to 45% (1964).


THE 1970S AND 1980S – RENTING OR BUYING? During the 1970s, continued rises in population meant that there was a lack of social housing to meet demand. As a result, the Labour Party put forward the Housing (Homeless Person’s) Act of 1977, which stated that council houses would be allocated according to need. Those who didn’t meet the requirements could rent privately but many thought about buying their own house for the very first time.


Just 3 years later under a Tory government, led by Margaret Thatcher, legislation was passed to allow more people than ever before the right and the ability to buy their own home. This policy was set out in 2 policies: MIRAS and the council Right to Buy Scheme Let’s look at this ground-breaking legislation in more detail.


Questions: Did mortgages in the USA develop in the same way as the UK?


America has never had a sustained policy of building social housing so the mortgage industry in the States developed on a separate path to that of the UK. The Depression (with a resulting half a million repossessions) and Roosevelt’s New Deal saw a radical change in the way the American mortgage industry was regulated and financed.


How many houses are there in the UK?


According to ONS (Office of National Statistics), there are 27.8 million residential properties in the UK (2013 figures). How many people were affected by the slum clearances? It’s estimated that in the Post-war period, 900,000 people Britons were moved out of slum housing.


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