It’s not uncommon for political parties to outline outrageous proposals in their bids for election. In fact, it’s the norm. Hence, when Jeremy Corbyn spoke of an equivalent Right to Buyscheme for private tenants, it was initially written of as the usual bluster.
Since then, the subject has been mooted several times at a variety of governmental levels. As with affordable bad credit mortgage loans, Right to Buy has successfully helped thousands of tenants step onto the property ladder. Nevertheless, the extent to which privatetenants should qualify for similar discounts remains a subject of heavy debate.
As does allowing private tenants the right to buy after a certain period of occupancy, with or without a discount.
Punishing Problem Landlords
Justification for the scheme centres on the lack of affordable housing inventory in the UK. However, it’s also clear that some government representatives are taking aim at problem landlords. Shadow chancellor John McDonnell recently stated that such a scheme would help more people get onto the property ladder, while quelling the problem of irresponsible landlords who don’t take care of their properties.
Under the new rules, the tenant would receive the right to buy their property after a given period, for a price reached by way of a government-approved valuation. If successful, the scheme could motivate landlords to look after their properties and their tenants more consistently. Or at least, that’s the view of the Shadow Chancellor.
Opponents state that the scheme doesn’t take into account the rest of the UK’s 2.6 million landlords, who could suffer as a result of the new legislation. Critics argue that it is the typical case of punishing all landlords ‘for the sins of the few’. Speaking on behalf of the National Landlords Association, director of policy and practice Chris Norris voiced his concerns over such a scheme being brought into effect:
“To suggest that private landlords should be selling their properties to their tenants at a below market rate arbitrarily set by politicians is ludicrous. Landlords had to pay market rates themselves. It’s only right that, if and when they decide to sell it, they can do so at market rates,”he said.
“If Labour does indeed wish to fix the housing crisis, they should focus on encouraging the government to build more social housing, which is what the housing sector is lacking.”
A Radical and Unlikely Solution
The concerns and criticisms of the National Landlords Association are echoed in economic and financial circles nationwide. For some, it’s simply a case of the Labour party posturing with a promise it cannot and will not deliver. For others, the government is again sidestepping its responsibility to build more social housing.
Accused of taking the easy way out, officials are taking aim at predominantly legitimate and responsible business owners.
In any case, the backlash that would occur if any such scheme was introduced would be huge. In addition, the complexity of the legislation to ensure responsible landlords were not unfairly penalised would be incalculable. This is why most objective industry watchers don’t believe this kind of legislation would work. Some labelling it an unlikely solution to an escalating issue.
If the problem predominantly concerns social housing, opponents argue it would make more sense to focus on how current and former council homes are bought, sold and let out. Additional restrictions on the resale and letting of former council properties could reduce the number of affordable homes making their way onto the lucrative private property market. – UK Property Finance
