There’s been a fierce outcry from Conservative MPs and the lettings industry in response to Labour’s threat to give private rental tenants the right to buy their properties - even if the landlords did not want to sell.
The proposal, put forward yesterday by Chancellor John McDonnell, would mean that discounts could be made available to tenants - just like the old Thatcher Right To Buy policy for council house renters. That would allow purchases by private tenants to be made at below market value.
Conservative MPs have led the political attack on the proposals.
Michael Fabricant MP says: “McDonnell has promised he would overturn the mixed-economy capitalist system if he came to power. This manoeuvre is just the start. It would decimate the rental market in the UK, creating a shortage of properties available to rent.”
Fellow Tory MP Andrew Bridgen adds: “This is a frightening insight into what it would be like if this man ever became Chancellor of the Exchequer. These policies would destroy the private rental market as well as crash the entire housing market. It would also lead to a rise in homelessness, which Labour claims to be against.”
Meanwhile from the industry, David Smith - policy director at the Residential Landlords Association - says: “Labour’s proposal would effectively kill off a large part of the private rented sector denying a home to many thousands of people. If there was to be any chance of this becoming law, there would be a mass sell-off of properties in advance. The RLA is all in favour of landlords selling to sitting tenants but it must be entirely voluntary. Anything else amounts to a form of compulsory purchase.”
And David Alexander, joint managing director of property management firm Apropos, refers to this as a “cash grab” which would prompt a rental market collapse.
“Lenders would be unlikely to provide loans to fund the purchase of these properties as values would be in freefall. Why would anyone invest in property either as a landlord or as an individual if the value of the sale price could be anything the government wished to pay and, in the case of individual homeowners, if any gains above £125,000 are to be taxed at the highest rate of income tax.”
He continues: “This proposal hits at one of the fundamental tenets of society in the UK that people want to own property and be sure that the value of their investment and hard work is not going to undermine at the whim of government policy. This right to buy scheme would permanently undermine the confidence of individuals and investors in property and cause serious and substantial financial losses for millions of homeowners across the UK.”
The row has blown up following an interview with yesterday’s Financial Times in which John McDonnell says: “You’d want to establish what is a reasonable price, you can establish that and then that becomes the right to buy ... You (the government) set the criteria. I don’t think it’s complicated.”
He continues: “We've got a large number of landlords who are not maintaining these properties and are causing overcrowding and these problems.”
McDonnell says the plan would deter landlords refusing to invest in their properties while making what he calls a “fast buck” at the cost of their tenants and the community.