What has happened to the “nation of inheritors”?Home ownership in Britain has expanded dramatically in the last 60 years. On the eve of the Second World War in 1938 there were about 4 million owner-occupied dwellings in Britain – about a quarter of all households. Twenty years later, in 1960, largely as a result of the sale of privately rented houses to sitting tenants, home ownership reached just over 40 per cent. Today it stands at more than 16 million dwellings, and 70 per cent of households, aided in part by the sale of more than 2 million council houses under the Right to Buy.Widening home ownership has also had profound implications for wealth distribution in Britain.

When private renting was the norm most households had very limited personal assets apart from savings and household goods and wealth was concentrated in very few hands. In 1923 the top 1 per cent of households owned 61 per cent of personal wealth, the top 10 per cent owned nearly 90 per cent and the top 20 per cent owned almost 95 per cent This concentration has since fallen dramatically. By 1970 the top 1 per cent of households saw their share of total personal wealth reduced to 30 per cent, and the top 10 per cent share fell to 70 per cent.By 1985 the share of the top 1 per cent had fallen further to less than 20 per cent and the top 10 per cent to 54 per cent Interestingly, there has been little further reduction. In fact, the concentration of wealth among the top 1 per cent and 10 per cent has risen slightly since the early 1990s, possibly as a result of the house price slump in the early 1990s and the rise in share prices in the late 1990s.The rich still own a large proportion of land and shares, but home ownership has evened out wealth distribution very significantly. It has given a large proportion of the population “a stake in the system”, although for the half million housebuyers who were repossessed in the housing market slump in first half of the 1990s this must seem very dubious. Inland Revenue statistics on “identified personal wealth” showed that residential property accounted for 38 per cent of total wealth in 1999, followed by insurance policies at 16 per cent and securities and cash at 15 per cent each.

For most homeowners, their home is by far their biggest single asset.The annual Inland Revenue figures on “estates passing at death’ show the value of house property in estates has risen from £465m in 1968-69 (just before the first house-price boom) to £13.4bn in 1999-2000. More importantly, the share of housing in the total value of estates has risen from about 25 per cent in the late 1960s to a peak of almost 50 per cent in 1988-89 when the 1980’s house-price boom reached its peak. It has subsequently fallen back to about 37 per cent but it still exceeds the value of cash and securities, at about 23 per cent each (chart 1). UK residential property has been the largest component of estates for the last 30 years.These are aggregate figures, however. What we find when the composition of assets is broken down by size of estate is, first, for small estates, cash is the most important asset, second, that for big estates (more than £1m) securities and other property are very important, and, third, residential property is most important in the medium-range estates.So far, so predictable. But there is something of an enigma regarding housing inheritance.