Graeme Brown, director of Shelter Scotland, writes in the Scotsman today:
RTB [Right to Buy] was introduced in Scotland in 1980 and operated largely unchanged for 20 years. Sitting tenants of public authorities had a right to buy their homes for a discount of up to 70 per cent for flats or 50 per cent for houses. The discount depended on how long you had lived there. While modernisation has slowed its impact, the overall consequences of RTB have been hugely popular.
The numbers are staggering – 490,000 social homes have now been sold in a nation of only 2.4 million households. For some households – not the poorest, but those on modest or below average incomes – it gave access to home ownership and to the accumulation of housing wealth that otherwise may never have happened.
In 2007, This Is Money reported that the cost of an average UK property had gone up by 90% over the previous 5 years: the Council of Mortgage Lenders also reported that the buy-to-let market was rising faster than the rest of the house-buying market. Five years later, the majority of new housing benefits are in work, and housing benefit is a profitable subsidy paid to those wealthy enough to take advantage of buy-to-let.
In 1975, the average house price in the United Kingdom was just over £10,000.
Filed under Housing, Poverty
Bear Stearns was founded in 1923, but although Paula Daly’s Mouse to Minx sells vintage fashion of that era, quite probably when the 85-year-old bank went under on 6th March 2008, Paula Daly didn’t notice – between running her own small business and being a successful self-employed communications and marketing consultant, she says “Life was exhausting, and not without its stresses, but good.”
But in the US the collapse of Bear Stearns is seen as the beginning of the financial crisis of 2008, while in the UK, we date it from the collapse of Northern Rock, three weeks earlier. Both Northern Rock and Bear Stearns had become heavily involved in the sub-prime mortgages: Northern Rock’s business plan was to borrow heavily, extend mortgages based on the loans, and then re-sell these mortgages on international capital markets. This is known as “securitisation”.
Who got the idea for this risky business? In the UK, John Ritblat, former British Land chairman (described as “a charming old rogue, a bit of an old-fashioned spiv” by someone who likes him)
takes much of the credit for the revolution in property financing that has occurred over the past two decades. The industry used to be financed with fixed-rate borrowings secured on the property portfolio, but he pioneered techniques like securitisation of assets which, he believes, has transformed the industry into one financed by long-term, unsecured, borrowings. (The Observer, Sunday 16 July 2006)
Ritblat retired just over a year before August 2007, when Northern Rock first began to feel the chill. A self-confessed workaholic, he evidently knew the right time to retire from the “securitisation” business he pioneered – with an estimated net worth of £100m.
Once the fifth-largest investment bank in the United States, Bear Stearns collapsed in March 2008 under the weight of toxic hedge fund accounts backed heavily by subprime mortgages. The company was quickly sold to J.P. MorganChase (another financial giant and OpenSecrets.org Heavy Hitter) but the bank’s spectacular fall — and the federal government’s failure to stop it — is now seen as the first wave of the epic financial meltdown that created the global recession of 2008 and 2009. (Open Secrets)