The History of British Housing; The Path to Generation Rent

Since 2001, the number of people renting in the UK has doubled. New figures, published by PwC project that by 2025 over 50 per cent of people under 40 will be renting privately. A report commissioned by ARLA and undertaken  by the Centre for Economics and Business discovered that first-time buyers in 2016 will have spent an average of £53,000 on rent in their lifetimes compared to the £9,000 (in today’s money) spent on rent by the baby boomer generation.

In fact, for millennials, homeownership may be out of reach entirely, lending them the name Generation Rent. Today’s housing crisis hasn’t appeared from nowhere. Below, we look at the journey British housing has taken over the years. How did we get from “Homes Fit For Heroes” to ‘Generation Rent’.


At the end of the First World War, the majority of the UK rented, and did so predominantly through private landlords. Substandard living conditions became a concern for the government after the poor health of World War One recruits shocked army officials. The Prime Minister, David Lloyd George, led a popular campaign named “Homes Fit for Heroes” that promised good quality social housing for all returning soldiers. The Housing and Town Planning Act 1919 provided Local Authorities with subsidies for council housing.


An abundance of labour, land and an interest rate cut led to a construction surge which peaked at 350,000 houses being built per year. The housing boom of the 1930s saw the cities expand to the suburbs and gave rise to the quintessentially British 1930s semi.


By the end of the Second World War, Britain’s housing stock was greatly depleted. German bombs had devastated urban housing and construction of new housing had ground to a halt in favour of a focus on the war effort. The 1942 Beveridge Report named “squalor” as one of ‘five giants’ hindering social progression, however, with materials in short supply and debt at -200% of GDP after 6 years of war, resurrecting the construction industry was a slow process. Nevertheless, a high standard of council housing was made a priority by Housing and Health Minister Aneurin Bevan. Under Clement Attlee’s Labour government, a million houses were built to replace those destroyed during the war; 80 per cent of which were council houses.


The fifties saw the long awaited end of rationing. Britain’s economy was once again on the up and construction of local authority housing boomed with 250,000 units constructed each year. With developments in  planning legislation and new architectural technologies, slums were cleared as the age of the high-rise was ushered in and new towns were purpose built to house those resettled from the slums.


The post-war building boom continued with council and private housing reaching a height of 400,000 per year. This was the age of the tower block; a ‘high rise utopia’ was heralded as the solution to rehousing those suffering in substandard accommodation. However, quantity came at the cost of quality, quashing this utopian dream. Despite this, by the end of the 1960s, Britain’s home ownership had significantly increased to equal the number of renters.


By the 1970s, public dissatisfaction with the austere, unsafe and technically-defective high rises was bluntly apparent. The strength of opposition to high-rise living, alongside its correlation with crime and social depression, shifted public policy away from high rise building. Government policy combined with an easing of credit conditions ensured Britain’s first housing bubble ensued; prices were up by 36 per cent and the average property doubling in price over a three year period.  


Thatcher’s government radically altered the face of British housing policy. Construction of council houses dramatically reduced in this period. The Right to Buy policy saw Britain’s social housing stock sold off at huge discounts and never replaced. House prices rose 16% in 1987 and by another 25% in 1988 as Britain experienced the next big housing bubble- the Lawson boom.


Recovery from the Lawson boom was a slow process. Unemployment levels reached 3 million for the second time in a decade. Those that had taken advantage of the easing on credit controls now found they couldn’t keep up with the large mortgages they’d taken out. House prices fell for four years consecutively, as record levels of homes were repossessed. Progress was painfully slow but by the end of the 1990s, the market was recovering.


Between 2000 and 2007, the average house price rose from £100,000 to nearly £225,000. The population rose, cheap credit was readily available and house building was at its lowest since the 1930s. These factors coexisted in creating Britain’s third big housing bubble, which burst with the financial crash of 2008.

So where are we now?

British housing stock has been depleted to devastatingly low levels; insufficient social housing has created the homelessness crisis we have today. The dramatic discounts afforded by Right to Buy sold off council housing stock but yielded little revenue to build new houses.

Britain’s three housing booms have pushed house prices way above inflation and the general cost of living – dramatically outstripping pay increases. Alongside this, in the wake of the credit crunch, lenders are asking first-time buyers for a typical deposit of £33,960 compared with £16,400 in 2007.

The recent Redfern Review made the argument that the government’s austerity measures after the 2008 crash have kept incomes low for the 25-40 age group, limiting their sway in a housing market dominated by the over 40s. This imbalance of power favours investors over first time buyers, bolstering the ranks of renters at the expense of owner occupiers.

To recap; Generation Rent is not only earning less but paying out a higher proportion of what they earn in rent. House prices are astronomical and the deposit required for a mortgage is at an all time high. There’s a huge shortage in affordable housing leaving first-time buyers to compete with landlords for what is available.

With all these factors at play, it’s no wonder millennials are giving up on the dream of owning their own home. With home ownership out of reach, attention is turning to what Generation Rent need; affordable rent, reliable maintenance, protected deposits, fair contracts and an end to staggering fees.

This article was provided by LPC Living.