Shadow chancellor John McDonnell floated a policy that would effectively force landlords to sell property to tenants at a government-set “reasonable price”.
Buy to let mortgage brokers were less than impressed.
“This ‘right to buy’ idea is nothing short of ludicrous. It would overturn our capitalist system and send us into the dark ages. It would create a shortage of rental properties further compounding the problem they are trying to fix,” said Ying Tan, founder and chief executive of Dynamo.
Matt Hardman, director of The Buy To Let Broker agreed that the policy would invert the UK’s existing economic model.
“For the shadow chancellor to make a soundbite like that, which is bordering on communist, is farcical. You can’t suggest legislation to give away landlord’s equity. People have worked hard and are providing homes,” he said.
“We need to do more to get first-time buyers onto the ladder, but this is not the answer. We should focus on building a strong economy so that people can afford to buy homes.
“One in five properties is in the private rental sector because there is no council housing. Councils rely on private landlords. But the property is not owned by the state and the state has no right to dictate a transaction,” Hardman added.
The proposal did not set out what would be considered a “reasonable price”, or how this might be calculated.
Hardman said: “A lot of it is very ill-thought-out. It’s totally impractical, on many, many levels.”
A house is a home
Andrew Montlake, managing director of Coreco, was sympathetic to the view that “a house is a home” and not just an asset.
But he said: “It’s one thing to bash landlords — and heavens knows they’ve been bashed a lot over the past few years — but it’s another to force people to sell, potentially, for under value.
“It could cause a massive flood of sales that could destabilise the whole housing market.
“A house is a home, yes, but you need a private rental sector within any healthy market, because not everyone wants to buy. Some people want to rent, some need to rent, whether long- or short-term. You need a good mix of property types in the market for it to be healthy and successful.
“The majority of landlords act in good faith and to force them to sell is wrong,” said Montlake.
It’s fair to pay more
However, Montlake was moderately more open to a call by Labour Party leader Jeremy Corbyn (pictured) last week to target so-called “buy to leave” investors, in the Hackney Gazette.
“There is a slight problem with ‘buy to leave’ in certain areas, some developments in London. I don’t like to see overseas buyers purchase properties and then leave them empty, I don’t think that’s right. There is enough of a housing crisis in this country that all property can be utilised properly,” Montlake said.
“If properties are left vacant then, whatever the mandated time-period may be, there could be additional charges imposed.
The Labour Party clamp down on “buy to leave” outlined a potential levy on second homes and greater powers given to councils over empty properties.
“There’s already an additional three per cent stamp duty charge on second homes, which is fair. If you want to buy a second property you should be charged more,” Montlake said.
“I don’t have a problem in principle with people being charged more for multiple homes, but it has to be within reason,” he added.
‘Landlords want to let’
Other brokers saw “buy to leave” as a niche issue.
“The problem with ‘buy to leave’ is generally only at the very high end of the market, where properties are bought outright with cash,” said Tan.
“I understand that One Hyde Park, one of the most desirable addresses in London, has only 30 per cent occupancy at any one time. Often it’s wealthy overseas investors buying property in the hope it will increase in value and better than leaving the money in a bank.
“The majority of properties suitable for first-time buyers have financing on them and landlords want to let,” Tan said.
