The capital market favours housing investment, because they are so durable. They increase in value with time. But a loan to buy is fixed on the day of purchase so repayment costs decrease with inflation.
Equity is the current market value of a house less outstanding loans and it begins to grow from the start of an investment transaction. Complementary Housing uses equity to provide affordable homes for tenants and homeowners alike.
Macmillan Heath & Thatcher dismantled Bevan's low-cost rented sector. With three times longer in government than Labour, it took them forty years to do it. His National Health Service is also under attack, but more easily understood, it has been protected by the electorate for seventy years.
The Right-to-buy law is the enforcer of a HIGH RENT POLICY. It has abolished the low-cost rent option by giving away the equity of the stock. It has driven both private and public rents high and it has used high rent subsidies to enforce a high priced housing market. The RTB law has taken us back to the 1930s.
Our present problems are the logical result of a return to pre-war housing policies.
Have the freedom to use the growth of equity in any way they choose.
Privately Rented Houses are high cost consumer services (PRCS). By far the most expensive way of providing houses. They are six times the cost-balanced rents of a mature stock that needs no subsidies. But without subsidies, a PRCS becomes slum housing for the poor.
By far the most efficient and cheapest means of providing decent houses is to use the equity of the rented stock entirely to reduce rents. Equity grows from the moment the first house is built. It accumulates and grows to provide an an income that can be used to reduce the rents of every house in the stock.
In the second half of the last century, the central objective of Conservative Housing Policy was to restore the dominance of the private rented sector, as it was before WWII. Repeated failures followed ill-considered policies that distorted the market and the private rented sector diminished from 60% to 9%, until the most extreme distortion of the housing market was introduced by Thatcher in 1980 under the guise of a Right-to-buy law.
The Right-to-buy law gave away, as much as 70% of a house value, to sitting tenants. With discounts of this order, she completed 2 million sales over the next two decades and boasted under the privilege of parliament about votes that they would bring her. But her real objective was to extract the equity from the rented stock, which for forty years had frustrated their attempts to restore the private rented sector. The discounts paid, were extracted from the equity of the rented stock, which had previously been used to keep rents low. She drove all rents high. At last, she halted the decline of the private rented sector and she was prepared to pay higher rent-subsidies that escalated under the High Rent Policy designed to restore the private rented sector. But later, they knew, they could blame it on the poor.