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Labour’s right to buy policy a land grab with many unintended consequences – Bamford

by: Patrick Bamford, business development director at AmTrust Mortgage & Credit
  • 04/10/2019
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Labour’s right to buy policy a land grab with many unintended consequences – Bamford
I am acutely aware of the importance of ensuring individuals have every opportunity to get onto the property ladder.

 

But I also understand just how important the private rental sector (PRS) is to UK plc, our economy, and of course in helping close the housing gap.

It has never truly been the case that every single individual in the entire country wants to purchase their own home.

Indeed in terms of social mobility and allowing people to live in all areas of the country, the private rental sector is absolutely crucial.

 

Not a simple trade-off

Now some might like to present the whole housing argument as landlords versus first-time buyers but that’s far too simplistic.

Indeed, you might have hoped that recent governments of the day would not take such an approach but that seems as unlikely as it has ever done.

When George Osborne was chancellor, he couched the issue in these terms, and it resulted in a series of measures which have effectively spelt the end of the amateur landlord.

Now, it would appear the Labour Party is considering policies which would decimate further the number of private landlords and, ergo, the number of homes available within the private rental sector with a policy which can be best described as ‘Right to Buy for private sector tenants’.

How this might work in practice remains to be seen but Labour seems keen on enacting a policy which would mean a landlord would have to sell their property to an existing tenant, with discounts on the market value available based perhaps on the amount of time the tenant has lived at the property.

 

Land grab

To me this is something akin to a land grab.

It appears to take no account of whether the landlord wants to sell, that they would have bought at a market value, potentially including three per cent more stamp duty, or that these properties may be being held for retirement or inheritance or, quite frankly, whatever the hell the landlord wants to do with it.

Would we really see a policy introduced which is likely to make purchasing property to let out a thing of the past?

After all, if you have no control over when you can sell an asset or the price you can get for it – this policy infers that the government would set the price that the tenant would pay – why would you ever buy it in the first place?

There are also so many unintended consequences here.

If a tenant has no right to buy for say the first few years of their tenancy, then it’s likely landlords would simply try to remove tenants before the end of that period.

Perhaps this is why the removal of Section 21 is so high up on the agenda?

 

Make homeownership more difficult

And of course, you would not only see great swathes of property supply removed from the PRS, but you would also see rental rises for existing tenants because of this.

And there’s the rub – while some people feel forced to rent because they have no option to buy, others want to rent with no plans to buy and certainly with no inclination to buy a property they rent.

Such a policy would have serious implications and, you might think, would make the journey towards homeownership for the younger generation even more difficult because of the lack of housing options available to them.

We might all hope that this is one policy idea that never reaches the Statute Book.

 

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