It started off as an idea from Jeremy Corbyn’s campaign to become Labour leader but today it’s being backed by a right-wing think tank - giving private sector tenants the right to buy the home they rent.
Over the weekend the Guardian reported that the pro-market organisation Civitas says such a move would help currently-struggling 20- or 30-something tenants to get on the housing ladder.
The Guardian says the report’s author, Peter Saunders, a research fellow at Civitas, claims “generational inequality” has deepened over the last two decades as house prices have raced ahead of earnings. “The result is that the younger generation is now expected to pay a much bigger multiple of its earnings to buy a home than its parents did,” he says.
Saunders writes: “The baby boomers are now making capital gains at the expense of their children. Between 2000 and 2014, average earnings rose by 51%, but average house prices rose by 132%.
“Like council and housing association tenants, private tenants who exercise their right to buy would be entitled to a 35% discount off the market value of the house, up to a maximum currently set at £77,900 outside London and £103,900 in London. The same rules should apply to private-sector tenants who wish to buy their homes, but with two important riders.
“First, the discount should never be so high as to impose losses on the landlord. In the social rented sector, tenants cannot be given discounts which exceed the amount spent on the property by their landlords in the last 10 years, and discounts in the private sector should similarly be reduced to take account of recent improvements costs incurred by landlords.
“But in addition to this, the discount should be capped so the price at which the tenant purchases is never lower than the price originally paid for the property by the landlord (including the original transaction costs). This means landlords would never be forced to incur losses on their investments – an important safeguard for recent buy-to-let investors and for those who have bought in more depressed property markets. Without such a cap, existing landlords could be unfairly penalised.”
He says private sector Right to Buy would be limited to tenants in properties which are at least 25 years old and which they had lived in for several years. This would ensure that investors were not deterred from buying new properties to let.
%20-%20IMAGE%20Client%20Accounting%20%E2%80%93%20what%20are%20your%20options.jpg)
.png)
%20(002).png)
%20(002).jpg)
Join the conversation
Jump to latest comment and add your reply
What an absolute load of cobblers. Yes, the young need higher multiples but we now live ina society entirely structured around debt so the fact this is hiher than it used to be is irrelevant. Whilst London, and a few select prime areas in the UK, are nigh on impossible to buy in for average earners, there are still plenty of affordable choices for those willing to cpmpromise in theor first few years of home ownership. The reality is, millenials are increasinglyh less interested in ownership and would probably be much more excited to hear about rent controls then buying options.
Many Landlords make minimal income from the rental income, once all costs are offset, and therefore long term capital appreciation is their pension nest-egg they rely on. So you want to take this away with a Tenant potentially able to buy a property 'at cost'. Insanity.
Here are a few ideas for the governement:
-Tax breaks and incentives in return for rent controls
-Fixed equity housing (allowing for costs) creating a 'first rung' market where owners dont make money but are able to increase savings through established equity instead of no return on rent.
-Proper house building startegies that align with market demand rather than the developers best interests
It isnt rocket science really and all of these could be implemented with relative ease.
Oh so Soviet Russia. The government is broke so let us rob the richer peasants to bolster up our support with the poorer peasants. After all, any one owning property must be bourgeois and believe in their betterment over others. Because of this they have no right to argue and we could of course put them in a labour (as in work, not theoretical politics) camp and see if they die. If they do then the state can take the rest of their property so job well done.
Please do not think I am joking. I have been there and people have told me that sort of thing was common enough.
Oh my, what a communistic idea. Lovely!
Interesting idea, but one that still does not address the lack of new housing supply! All it will do is shuffle the decks of housing tenure between renting and ownership; not create new housing.
Absolutely agree with above comment that for many smaller landlords, it's the long-term capital appreciation that they're in it for, not revenue profits (certainly up here in the North East!). And we absolutely need a housing strategy, with regional variations, to address housing need first. At the moment, it's still all about London and the SE!
@Kristjan Byfield: "[We need] proper house-building strategies that align with market demand rather than the developer's best interests."
Couldn't agree more. Shuffling around the asset wealth does nothing to address the fact that there isn't enough of it to go round. Meanwhile, private landlords are further discouraged from investing in property, leaving tenants with even fewer housing options. How many can afford to by the properties that landlords are no longer buying?
Build more social housing. Develop more private housing for shared ownership. Free up land for development and renovate brownfield land and disused residential land. Remove planning barriers and punish firms who hoard undeveloped plots to manipulate prices. Invest in more construction jobs.
We are a long way off considering unconventional solutions when there are still so many sensible measures to implement.
Please login to comment