1880 may be quite a good watershed for other reasons . the public health act of 1875 had enabled local authorities to pass bye-laws regulating the structure of walls and foundations of new buildings on health grounds and not merely on grounds of stability and fire prevention . in the late 1870s the local government board published a series of model bye-laws for the guidance of local authorities in these matters . a recent estimate suggests that almost a quarter of the dwellings occupied today , some 3 2/3 million , were built before 1880 . to demolish them by 1980 would require a rate of demolition of nearly 200 thousand a year . thereafter , assuming no shortening in the average life , the need for demolition would fall to about 100 thousand a year , since houses were being built at roughly this rate in the twenty-five years before the first world war . there is , admittedly , no overriding reason for picking 100 years as the natural term of life for a house , rather than , say , eighty years ; nor is there any special reason why the backlog should be cleared in twenty years , rather than in ten or thirty . but , given the likely increase in stock required in this period , it should be well within the capacity of the house building industry to deal with a replacement programme of this kind by 1980 . this aim is not , perhaps , an ambitious one ; even if it were achieved , the housing stock in England and Wales might still be one of the oldest in western countries , apart from France . to carry out the programme in , say , ten years would mean forcing up the annual rate of house building to something near 500 thousand a year , with a subsequent severe drop . 3 . policy . the main housing need , therefore , between now and 1980 is likely to be for the replacement of old houses , not for additions to stock . at the moment , the pattern of house building is the reverse . only about 60-70 thousand houses are being demolished each year ; so , of the 260-270 thousand houses being built in England and Wales , just on 200 thousand are adding to the stock . this pattern can hardly continue for long ; it certainly can not go on up to 1980 . the stock of houses is rising by some 200 thousand a year ; the number of households needing separate dwellings over the next twenty years is likely to increase by an average of around 100 thousand a year . vacancies are therefore likely to increase by some 100 thousand a year - this is only a little less than the total number of unfurnished vacancies in 1951 ( 140 thousand ) . clearly there is a limit to the proportion of houses which will be allowed to remain vacant . owners of vacant houses will reduce prices or rents in order to sell or get tenants , and the falling price of older houses must eventually depress the prices that are offered for new houses . this will cut into building profits , and so slow down new house building by private developers . how big the vacancy proportion has to be before this begins to happen is difficult to say : American experience suggests that the critical vacancy level might be about 5 per cent or a little more . with the present pattern of house building this vacancy level could be reached in about five years &apos; time . imperfections in the housing market - the fact that the proportions of old houses and vacancies may be high in the north while demand for additional new houses is heavier in the south - might insulate new buildings for a while from the depressing effects of high vacancies . but if the present pattern of building continues , some time between now and 1970 the critical level of vacancies will certainly be reached . taking the maximum estimate of household formation instead of the medium one ( page 22 ) and consequently assuming an increase of 125 thousand households a year instead of 100 thousand , the present rate of additions to stock would still bring about a 5 per cent vacancy rate within less than a decade . the question therefore is whether resources will be channelled from additions to replacement . but it is not easy for the private developer to undertake the demolition and replacement of old houses . he has to acquire groups of old dwellings , because of the high cost of individual demolition and because old houses are often so densely packed that perhaps three or four have to be demolished for every new one built . the developer may therefore have to negotiate with a large number of owners : ownership of old property is becoming even more fragmented as landlords sell houses on which rent control has been lifted . there is also the problem of rehousing the old tenants . finally , when the developer does build , the houses will be much more expensive than houses built on virgin land because of the cost of demolition . he may doubt whether clients wealthy enough to buy relatively expensive houses will in fact be tempted back from the suburbs to predominantly working class neighbourhoods . if , notwithstanding these difficulties , when old houses are demolished , the new houses ( whether built on the same site or elsewhere ) are built for those who can afford to buy them , the housing subsidy bill would certainly be kept down . this policy would imply that the blocks of old houses in the inner rings of cities , now occupied by the relatively poor , should be rebuilt with houses for the relatively wealthy . for it is at most the top third of households in the income scale who are likely to be able to afford to buy a new house out of income in the next twenty years - though rather more than this would be able to pay the economic rent , if the cost of building was amortised over 60 years ( page 27 and table 4 ) . those who previously lived in the centre would move to better but still old houses in outer districts . there would be an ordered improvement in standards for households in all income groups , each household moving to a house a little better than the one it previously lived in . housing standards in general would be improved by a process of percolation . but this policy would require a great deal of mobility , and this is a further difficulty . obstacles to mobility . mobility is high when the household is growing but this rapidly tails off as the parents reach middle age . by the time the children are leaving home , the parents are attached to the district by jobs and friends and often by the improvements made to the house and garden . when - as usually happens - the husband dies first , the widow often stays on her own . this is why a four-roomed dwelling - was , in 1951 , the most common size of dwelling for a one-person household . there are other obstacles to mobility . for the owner-occupier , the fees for selling a &amp;pound;3,000 house and buying and surveying another at the same price can easily amount to &amp;pound;160 , excluding removal expenses . even on a &amp;pound;1,000 house fees may well come to &amp;pound;80 or so . it is cheaper for those renting houses to move : here the main obstacle in the next few years will be that tenants of rent-controlled dwellings will be reluctant to leave them . finally , the number of people who can become owner-occupiers is limited : it is difficult to get a mortgage on an old house , and only a small proportion of the population can afford , out of income , to repay the mortgage on a new one ( page 27 ) . the problem will grow as the supply of privately-rented houses dwindles . old houses are lived in mainly by people who can not afford to buy and who need to be able to rent ; unless , therefore , the replacements of the old houses are also built to let , there is likely to be a serious shortage of rented accommodation which will further hinder mobility . economic rent and home ownership . on the other hand , if it is the tenants of the pre-1880 houses who are to be rehoused in the new houses , it is only the local authorities who can undertake this operation ; for this housing would have to be subsidised substantially . the people who live in these old houses can not - either now or in 1980 - afford the economic rent of a new house , particularly since the cost of demolition will make the new houses more expensive than most . new houses are expensive to buy out of income , partly because , although the life of a house is at least sixty years , the cost usually has to be repaid to a building society over about twenty years . for a &amp;pound;2,500 three-bedroomed house , this makes the total annual cost ( at an interest rate of 6 per cent ) &amp;pound;284 ( table 4 ) . spreading the cost over sixty years brings down the annual sum required to &amp;pound;214 ; this figure can be considered as the economic rent ( including rates and maintenance ) of a typical local authority new house , since most local authorities assume a sixty-year life . virtually no private developers are building ordinary houses for renting . any who did , after forty years of rent control , would probably wish to get their capital back in , say , ten to twenty years ; and the economic rent on this basis would be higher than the local authority figures and indeed than the cost of buying . the most that a household can normally be expected to pay for housing is probably about a quarter of its income , and most people pay far less . the building societies seem to take 25 per cent as the maximum . a very common rule is that all regular outgoings on account of house ownership shall not exceed 25 per cent of an applicant &apos;s basic income ( excluding overtime , bonuses and spare-time earnings ) . both sums are normally considered without taking account of tax . even taking this maximum figure of 25 per cent , two-thirds of households still can not afford to pay the economic rent of a new house , and something like 90 per cent can not afford to buy one out of income ( table 4 and chart 2 ) . this is purchase out of income only : rather more than 10 per cent of households have a significant amount of capital - for instance , over a third of households now own , or are in the process of paying for , a house of some kind . consequently rather more than 10 per cent can afford to buy a new house if they use part of their capital . it would , of course , help to extend the range of possible owner-occupation if mortgages could be given for a period nearer to that of the life of a house . this would bring the proportion of households who could buy nearer to the proportion who can afford to rent . but , even so , it is clear that most of the people who are now living in pre-1880 houses would be unable to buy or pay the economic rent for a new house ; for they are , by and large , in the bottom half of income-receivers and are unlikely to have any substantial assets . how is the position likely to change within the next twenty years ? real incomes might nearly double in that time . but new house prices are likely to continue to rise faster than other prices , since productivity in house building increases more slowly than in most other industries . for instance , comparing 1960 with 1938 , the cost of a local authority house ( excluding land ) rose appreciably faster than the average household income . longer term comparisons are possible for some other European countries : in those for which information is available - the Netherlands , France and Ireland - house building costs rose faster than wages from 1914 to 1956 . on the other hand , there is considerable scope for productivity rises . in a study of traditional houses completed in 1949-1951 the labour costs of the least efficient firms were almost three times as great as those of the most efficient ones . some improvement may come from the better-managed firms ousting some of the less efficient but the fact that so old an industry is still composed of so many small firms , varying so widely in efficiency , argues that the forces of competition are not strong . 