Alarm over homes plan
Labour’s right to buy policy ‘a threat to private rented sector’
4.5 million households live in the rental sector (pic: Terry Murden)
The Labour Party’s proposed right to buy policy would undermine the private rented sector (PRS) and increase the number of people without a home according to a property management firm.
David Alexander, managing director of Apropos by DJ Alexander, believes that Shadow Chancellor John McDonnell’s idea to allow tenants to buy their rented homes under a price decided by the government would crash the PRS and increase the number of people without a home as the number of properties available would rapidly reduce.
In an interview with the Financial Times Mr McDonnell stated that “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.”
Mr Alexander, commented: “This is effectively a cash grab from the PRS. The state valuing private property and effectively compulsorily purchasing it would cause the PRS market to collapse and have an enormously negative impact on the housing market as a whole as individuals and investors would lose faith in the viability of property.
“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?
“With the UK population forecast to increase by 360,000 a year for the next decade there is already a shortage of homes and destroying the PRS because of ill considered ideology would only increase the numbers of those without a home.”
The PRS already provides 4.5 million households in the UK accounting for 20% of the total housing market and and Mr Alexander said Labour would need to build millions of social housing homes in the first couple of years to replace this market and keep up with the increasing demand.
David Alexander: already a housing shortage
“Mr McDonnell also said that the PRS has a greater problem with overcrowding when, in fact, the social housing sector recorded its highest ever figure of 7.8% of all stock experienced overcrowding in 2017-18.”
Mr Alexander concluded: “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.”