Did the ‘Right to Buy’ council houses really help tenants in the way Margaret Thatcher had hoped?
Was it really a property owning democracy?
You may remember that Margaret Thatchers' policy to allow council tenants to buy their council houses was hailed as a breakthrough in producing a "property owning democracy". It arrived, supported by claims that everyone was also now a shareholder, buying shares in the newly privatised utilities such as British Gas and British Telecom.
Was that really true?
The council tenants, targeted to buy their properties, are now beginning to die. As a result, the arrangements (or lack of them) that they made when they bought their properties are becoming all too apparent. Far from there being an increase in property ownership, it would appear that for the most part these council tenants could not afford to buy the properties on their own, even with the significant discounts that were available to them. In many occasions, it now appears that an enterprising son or daughter, who was working, obtained the mortgage monies that were necessary in their own name. This arrangement enabled their parents to buy the property, with the benefit of the discount. However, at the time of the property purchase scheme, there were stringent claw back provisions if the property was transferred out of the ownership of the council tenant within a specified period of time - first 5 years and then 3 years.
This caused difficulties for the son or daughter putting up the mortgage monies, unless they went to a specialist lawyer. As the vast majority did not, in many cases the exact ownership of the property was not specified. Twenty-five years on, when the original council tenants are beginning to die, this is now causing problems.
What is clear is that, in these circumstances, the parents will have had the benefit of the discount. Often this was significant - typically a much as 40% of the value of the property. If a son or daughter provided the remaining balance, using a mortgage, the question must now be asked as to what agreement was reached with the parent in relation to this? Was the agreement that the property would be transferred to that child outright on the death of the parent? Or was it that the child should only recover the benefit of the percentage value of the property which represented the mortgage taken out when the property was initially purchased? Why should other members of the family not benefit from the property on the death of their parent? Or if one child has shouldered the burden of that mortgage why shouldn't they recover the whole of the property outright on the death of that parent?
Far from a Right to Buy Scheme benefiting those council tenants themselves, the scheme appears only to have benefitted the next generation, who for the most part had already been able to buy their own property and saw this as a property investment over and above their own main homes.
The fact that proper agreements were not specifically set out at the time of purchase, is now causing disagreements between families, in the event of a council tenant parent's death, as to who should inherit the property if a child put up the mortgage monies initially.
We are seeing quite a considerable number of these claims going through the Courts at the moment, where we are acting for different sides. In some cases this is for the child, who put up the mortgage monies and in other cases for the other children who are not happy with their parents' property being passed to one child alone and not to all the family.
Each case depends on its own facts, but it is interesting to note, that Margaret Thatchers' "property owning democracy" did not benefit council tenants in the way that she thought was going to be possible.
Now that our new Coalition Government is reducing Housing Benefits, which Boris Johnson has referred to as "ethic cleansing" in some London boroughs, the fact that there are no council houses readily available, to house all the tenants needing properties, is an indication that the original Right to Buy policy might have been short sighted.
If you have had any experience of Right to Buy council tenants dying, and there being difficulties in relation to the ownership of their properties, then we would be interested to hear from you.