Large council estates bring together people who are out of work but enjoy security of tenure at subsidized rents. They not only have every incentive to stay where they are: they mutually reinforce each other’s passivity and undermine each other’s initiative. Thus a culture grows up in which the unemployed are content to remain living mainly on the state with little will to move and find work.

—Margaret Thatcher. The Downing Street Years, 1993.

Nothing will destroy a person’s ambition and self-reliance more thoroughly than living in government housing projects. Vandalism, depression, drugs, crime, gangs and despair are the inevitable result of government-provided housing.

Only the government can create slums

Pride of ownership and the intrinsic value of property will always provide incentives for owners to maintain and improve their properties. Free competition leads to properties being sold to those who can put the land to the best use. Wherever the rights of property owners are undermined, there will arise slums. Rent control, punitive property taxes, uncertain land tenure, and the inability of owners to evict bad tenants are all derogations of the rights of property that bring about slums. In Britain, during the socialist utopia of 1945–1979, property taxes were so high that landlords actually abandoned their properties. Today, vast tracts of greater New York City are cesspools of despair and filth because there is no investment or renewal, thanks to rent control. In Third World countries, the slums are caused by the governments’ failure to provide secure land title.

What about the poor?

If the poor, elderly, and disabled cannot afford the cheapest housing available in a particular area, then they need to move somewhere cheaper or work harder. When left alone, people on low incomes are frugal and hardworking, and take great pride in their modest achievements. So long as they are not poisoned by welfare, they will move to where they can find cheaper rent or cheaper properties to buy. Their modest cottages will be lovingly maintained and eventually, through hard work, they will overcome poverty and begin building and buying larger properties. From their hard work will arise new cities and suburbs—this is the story of the millions of penniless immigrants who arrived at Ellis Island. This is the trend behind ‘white flight’ and ‘black flight’, both more properly called ‘rent control flight’—people fleeing the squalor, misery and decrepitude produced by government infringements of property rights.

Affordable housing

The political priority was clearly lower mortgage rates. The technical problem was how to achieve these without open-ended subsidy. Of course, the purist view would be that artificially controlling the price of borrowing for house purchase was bound to be counterproductive. And in this matter the purist, as so often, was right. If we had pursued a responsible economic policy there would have been no boom and bust of property prices, and rising inflation would not have driven up mortgage rates. Policies providing for sound money and the release of sufficient quantities of development land are the proper way to ensure an orderly housing market.

—Margaret Thatcher. The Path to Power, 1995.

Housing will always be affordable, provided the economy is free and plenty of new development land is regularly opened up. Thus, the government should not tinker with interest rates, offer incentives for home buyers, provide public housing, enter or subsidise the mortgage market, or do anything else to make housing affordable. Instead, it should simply ensure there is always plenty of new land being opened up for development.

This article is an extract from the book ‘Principles of Good Government’ by Matthew Bransgrove