Besides being the American dream, homeownership has long been held as a measure of the U.S. economy, and a given right in our democracy. Yet a strange thing happened over the past 10 years, the British passed us by in per capita ownership.
Since 1980, homeownership in Great Britain has taken a giant 25 percent leap. During the same period, American ownership slipped by approximately 5 percent. In the past, the United Kingdom lagged considerably behind the United States, but now their homeownership is 68 percent against our figure of 64 percent.Can we do it here? Who could do the job?
Housing here needs similar help. And, to further government plans through the Federal Housing Administration, The Meyer's Report knows of an eminently qualified candidate for the job, Margaret Thatcher - former prime minister of Great Britain.
The part of her resume that would stand out if she were applying for the job would be " . . . over a period of 10 years raised homeownership by 25 percent." The figure is astounding, considering this is in a country where socialism still stands strong and until recently almost every utility company was government owned.
Comparable to HUD houses, a large part of the United Kingdom's housing for lower income families has been traditionally supplied and supplemented by the British government. Controlled by local councils (city government) and called "council houses" these units typically were row houses, seen in many movies depicting London. "Generation after generation of families would live in a council house and pay subsidized rent to the local government each month," commented Jim Pearson of the Urban Housing Corporation in England, "the children basically never thought of applying for a mortgage once they became adults as their parents and grandparents before them never did."Thatcher started to change this policy by allowing, for the first time in history, people to buy their council homes from the local councils at reduced mortgage rates and even reduced valuations compared to an equivalent home built by a private developer.
Private housing developers such as Barret's Housing Ltd. objected to this, but rather than discontinue the offer to council-house dwellers, the government allowed developers to offer mortgages and incentives of their own to people who qualified.
"Our incentive to offer reduced rates and lower deposits is that once a young couple have purchased their first home with us they will move up to better and larger homes still built by our company," said Moira Drake, mortgage executive with Hewitt Home Builders in the United Kingdom.
To further enhance the growth of homeownership, Building Societies, the equivalent of our savings and loans, were deregulated. This released more money into the home mortgage market and lowered interest rates along with the size of deposit required.
Too late for us now, but perhaps a lesson for the future, is how their "S&Ls" were deregulated but still restricted in where they could invest the shareholders' money. They could not, for instance, take as collateral an eagles nest or a 30 horse carousel as two S&Ls did here.
One major factor in the successful conversion from government to private homeownership is that the policy wasn't tried with apartment blocks. Only developments that were in the style of town houses were included. Very few apartment blocks are being built in Britain today, and none by the government.
Various incentives are given by local councils to encourage people to purchase their own home. These have ranged from subsidized interest rates to throwing huge street parties once a development was 90 percent privately owned.
To justify the nationwide expense of this policy, a government white paper was issued saying that homeownership gives people independence and a sense of greater personal responsibility, while helping to spread the nation's wealth more widely. Thatcher has stated, "These are important factors in the creation of a more stable and prosperous society, and they justify the favorable tax treatment accorded to borrowing for house purchase by owner-occupiers."
Although the HUD housing projects are in better shape under Secretary Jack Kemp's administration, less government rules on paper and more government ruling by action is required if America is to keep pace with England.