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Roses climb to upstairs windows. Purple aubrietia spills over garden walls. Hedges and lawns are immaculate. In every driveway, at least one car and frequently two. This is Woodford Green, Tory territory, where the Conservative Party's credentials are impeccable. Prime Minister Margaret Thatcher herself would feel at home surrounded by property owners who nod in agreement at one of the principal planks in her political platform: ``I want everyone to be a man of property.''

It is difficult to imagine that in this sedate and restful neighborhood, within easy commute of London, housing has become a lively political battlefield in Britain. But it has.

Mrs. Thatcher's bid to turn Britain into ``a home-owning democracy'' is one of the most revolutionary developments in Britain in the last five years.

Britain's housing stock is deteriorating. In large cities like Birmingham, Liverpool, and Manchester, tens of thousands of dwellings are in urgent need of repair.

To meet current demands for accommodation, and replace structures scheduled to be, or which need to be demolished, the housing industry estimates Britain needs 200,000 new houses every year until the end of the century.

According to Lord Scarman, who led the inquiry into the 1982 race riots in Brixton (in which housing was considered a major cause), Britain faces a new era of slums if nothing is done soon about the housing situation.

Housing organizations such as Shelter National Campaign for the Homeless Ltd put the blame at the government's doorstep.

``Lack of natural housing is not a natural disaster,'' says Sheila McKechnie, the organization's new director. ``It didn't come like the floods or the plague. It comes from lack of investment. Public spending cuts have hit housing harder than any other area.''

Comments like that underscore how much housing is a politically charged subject in Britain today.

The Conservatives draw heavily for electoral support from property owners in surburbia and in rural areas. Property and freedom are synonymous.

Ideologically opposed to large public spending outlays, the Government has cut public expenditure for housing and pinned its faith on the private sector.

Yet recession, and already high mortgage rates which have gone up twice in recent months, have cut the number of building starts.

The Labour Party, which finds council housing estates (public housing) fertile recruiting ground, is not opposed to private home ownership. But as the innovators and upholders of the welfare state, it is committed, were it to return to power, to a major rehousing program in which the public sector will lead the way.

The difficulty for the Labour Party is that the public mood is increasingly in favor of private home ownership. That helps explain why the shadow Labour Cabinet put distance between itself and the proposal that tax relief on mortage interest payments should be reduced to help finance an improved system of social security benefits.

The proposal came from prominent left-winger and shadow Social Security Minister Michael Meacher. The embarrassed shadow cabinet, which hopes to bring into the Labour fold skilled and professional workers who hold mortgages, made it clear that a Labour government would not end tax relief on mortages.

Critics say the crisis of confidence in huge public housing projects, intensified by the partial collapse of the Ronan Point Tower block in 1968 (because of construction defects), has allowed the Conservatives to disengage themselves politically from investing in public housing.

The trend toward Thatcher's ideal of a home-owning democracy is unmistakable.

At the turn of the century more than half of American households were living in their own homes (``household'' is defined as a family unit); about 10 percent of British households were in their own homes. By 1932, close to one-third and by 1970, more than one-half.

With the figure now at 63 percent (in the United States about 65 percent) Conservative Party planners anticipate 70 percent, putting Britain among world leaders like New Zealand and Australia and well ahead of France where some 44 percent of its dwellings are privately owned.

Much of that late boost in home-owning in Britain has come from Thatcher's politically shrewd move of enabling public-housing tenants to buy their homes at discounts of as much as 33 to 50 percent.

Between 1979, when the Conservative government came into power, and 1983 more than 500,000 public houses were purchased; this has done more than just change the social landscape in Britain.

It has proved a political windfall for the Conservative government: Many public-housing tenants who used to support the Labour Party now find that -- as owners with a capital asset on their hands -- they are more in tune with the Conservative Party.

The Labour Party has taken note of such political trends and, in an about face, decided to approve the right of tenants to buy their homes.

In the largest single transfer of state assets to the private sector, the sale of public houses has poured 4 billion ($4.8 billion) into local authority coffers. One advantage is that such receipts reduce demand on a cost-conscious government for local authority borrowing.

Spotlighted by the rise in home ownership is the paucity of private rental possibilities.

Whereas US private sector renting still accounts for more than 30 percent of its housing market and more than 60 percent in Switzerland, it's less than 10 percent in Britain.

The main casualties of such a limited market are those who cannot afford mortgage payments or high public-housing rents, and whose option is often squalid institutions.

Lack of private rental units for young couples has fueled the demand for home ownership. Building societies, specialized savings banks which provide the bulk of mortgage money in Britain, have been ready to provide loans with a small down payment.

The result, as Mark Boleat points out in his book ``National Housing Finance Systems, a Comparative Study,'' is that over 50 percent of British households with a head of household between 25 and 29 years of age are owner occupied. That, he says, ``is double the proportion of other countries.''

The British experience of young owner occupiers is in sharp contrast to West Germany.

According to U. Hansen, first secretary of the press section at the West German Embassy in London, ``They start very early here [in Britain] with 100 percent mortgages and then buy their way up. In Germany you live in a flat and save on the side for 10 to 12 years and then you buy your house. It remains with you for the rest of your life.''

One advantage West German home owners have over British counterparts is low, stable mortgage rates.

Asked what German home owners would do if mortgage rates were as mercurial as in Britain, the German diplomat replied, ``They would be frantic.''

Britons, however, are inured to highly volatile rates and take yo-yo British mortgages in stride, even though they play havoc with budgeting. In June 1978 mortgage rates were 8.5 percent; by December 1979 they were as high as 15 percent.

But they can go down just as fast as they went up. Over an eight-month period in 1981-82 borrowers saw mortgage rates drop from 15 to 10 percent.

This year mortgage rates rose from 11.875 to 13 percent on Feb. 1 and to 14 percent on April 1. Each 10,000 borrowed means a monthly payment of 5 more.

Though the international currency market and the strength of the pound have their effects, the explanation lies largely in the way building societies, that peculiarly English institution, also found in other English-speaking countries such as Australia, New Zealand, and South Africa, function.

Because building societies are major holders of short-term savings and the sources for long-term mortgage borrowing, they operate on the principle of borrowing short and lending long. Any sudden drop in deposits curtails the amount of money that can flow out for mortgages.

Thus a shortage of savings deposits necessarily requires an increase in mortgage rates to increase revenue, which may then allow for an increase in interest paid to savers.

According to Peter Norgate, a Woodford shop owner who believes he's seen rates go up more than down, ``It's still the cheapest form of borrowing.''

To Malcolm Gerber, manager of a local estate agency, who has a vested interest in home purchasing, there really is no option even if mortgage rates are currently 14 percent.

``Either you rent a council property or a couple of rooms in a big house and pay exorbitant rents or spend the time with your parents,'' Mr. Gerber says.

Certainly home ownership has proved to be a safe investment. While the consumer index rose by 143 percent between 1970 and 1982, the price of an existing house increased 230 percent.

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