John McDonnell has today confirmed that Labour is considering extending the right to buy to private tenants. I’ve long believed this is a good idea and wholeheartedly support it. The Sun, not unsurprisingly, is all a-flutter and dismissing it as an asset grab, but something needs to be done to address the problems of the housing market and this would be a great start.
Right to buy with public sector housing is something I never understood, as in effect it was subsidised and with no provision for replacement of stock to be able to provide for the needy.
I haven’t read up on this proposal, but if it means that tenants would have the right to buy from private landlords whether or not the landlord wishes to sell, and even more so if that is at anything less than the full market price, then I predict that the effect will be a significant reduction in the rental market with landlords getting out of it. Of course that would lead to a reduction in house prices through the increased supply, and a drop in purchase price as a consequence, which for first time buyers may be a beneficial, if unintended, result.
What would be the case when someone is a reluctant landlord, for example renting out while trying to sell at times when the market is dead? (I was in that position once, having had to move for work, and overall had a lot of hassle and lost out financially as one tenant trashed the house.) Would such landlords have the added risk of losing the equity they had invested in the house through being compelled to sell to a tenant?
It’s obviously not straightforward and would need a lot of thought. Say somebody had been renting a house for ten years, the logical price would be what it would have been worth ten years ago. Their rent would have funded the appreciation so that would be fair. To me, houses are simply somewhere to live and should not be an investment.
I agree that the whole right to buy, which was Thatcher’s way of buying votes by converting council tenants into property owners was a huge mistake. The stock of social housing is now tiny, so people are forced into private rental at exorbitant rates as there is no way to save enough for a deposit.
I was talking to a lady who lives round the corner the other day. She told me that she was married at 21 and moved into her brand new council house a month later, in 1952. What chance of that for a 21 year old these days?
I’m not sure I understand what that would entail. Are you saying the property owner would be legally required to sell the property to a lessee at some point in time?
That would be the point. Under right to buy the private tenant would have a right to buy, just like a council tenant does.
Ok, how is the price set in that particular arrangement? Can the owner decline?
We have purchase option clauses that can be used with rental agreements here in the states but they’re purely voluntary in my experience with non-public properties.
Sorry, I don’t know all the detail; it’s just a proposal. As I understand it there would be a mechanism for setting a fair price. The owner would not be able to decline as it would be a right to buy.
Well in Germany, specifically Berlin, a similar idea has been gaining momentum for several months… effectively nationalising certain housing… there is no right to buy but it is felt rents can be controlled be better controlled by the state. It has been proposed property companies who owned 3000 properties or more would have their assets compulsory purchased by the state… naturally that idea is being challenged by some of the large property companies … interesting one … nationalising property would take us back to a Stalin era concept.
Back to more relevant concepts where I live, it’s holiday and weekend homes that are often the scourge lying idle for much time whilst local people find it harder to rent… I would like to see far greater controls on part dormant properties with compulsory purchase as an option.
I don’t think McDonnell is thinking a nationalising property! That would be a step too far and it’s probably best not to bring Stalin into this. But a levelling of the playing field and help for those struggling to get decent housing has to be a good thing.
Why not… the right to buy discriminates against those who are unable to get a mortgage… state controlled rents with state maintained properties sounds like a valid idea to me,… we have a huge housing stock in our country lying empty.
Right to buy caused chaos in my sector and reduced the amount of social.housing in the system with assets sold off at less than their value meaning they couldn’t be replaced by the provider. Applying this in the private sector will almost certainly result in private landlords leaving the sector. Why would you invest in a property and its maintenance only for the government to force you to sell for less.than market value? Daft idea
Thanks, that’s what I thought but wanted to be sure.
I can see a mechanism like this being useful for breaking up generational wealth accumulation and/or creating new property owners.
But that’s a little scary for someone like me who wasn’t born with a silver spoon and had to work to accumulate the little bit of wealth he has. I wouldn’t like the idea of being forced to sell my properties. I’m a former landlord who got out of it b/c I’m the type of person who takes care of his properties and I could never seem to find the tenants who were like me and paid their rent on time and took good care of the place.
That would be perfect. More housing for people at lower prices.
In some countries renting is the norm, and right to buy simply wouldn’t make sense. But there is something very different about their renting compared to the UK. I thought Germany was one such, though the mention a few posts ago makes me wonder. There was a TV programme a few weeks ago, and somewhere - may have been Austria, they interviewed people wherbit was the norm to rent with complete security of tenure, and people happy with it, some staying for their whole lifetime, or more than one generation, with the property giving all they wanted - and that wasn’t just at subsistence level, but people much better off in society.
In UK of course our culture is for home ownership. And the laws in terms of tenure are clearly not aimed at very long term (indefinite) stable occupancy, and that seems not to be the normal wish of landlords, though I imagine there are exceptions to the norm.
More houses for sale to people who can afford to buy, less properties for people to rent who cannot afford to buy = more people at risk of being homeless. There is a national shortage in housing in general and social housing for rent, the private sector, if it was better regulated, can help but not if it collapses as a result of an I’ll thought out policy
Presumably tenents couldn’t rent a property for 3 weeks and be entitled to buy it, there will have to be a minimum length of time renting.
Let’s say its 24 months, landlords will simply kick the tenants out after 22 months. That’s not going to help anybody.
I would like to see rents controlled and the issue of second homes / holiday homes changed, perhaps by introducing a minimum occupancy period.
I think the right to buy would need careful thought; bricks and mortar in the uk have been assets for a very long time, but the private rental does need control. I would favour regulated rents, with an option to buy after, say, a five year residency in the same property. However, I think landlords would evict before that period was up.
I don’t own any houses but the one I live in my brother has his old flat which is rented out but with a mortgage on it, and helps support him in retirement. He is single on a small pension with little savings.
The idea of his flat could be in effect taken off him at a discount to its value and at the same time reduce his income and leave him with the full mortgage on it is just statist/ marxist theft in the name of “ redistribution” I have no doubt such a ridiculous policy would see many thousands of people badly affected even though they themselves are not wealthy.
The trouble with the now ultra left Labour Party is that they don’t really give a fig for people, only blind dogma. This is just the latest act of theft they propose in the name of so called “redistribution”
Now having got that off my chest I will wait for the usual response…
I was hoping to keep this out of party politics and bland Marxist accusations. It’s an interesting idea and one I’m in favour of in principle. It’s not easy for sure but the issue of affordable and social housing needs to be addressed. Why should right to buy exist in the public and not the private sector? Another way is to end right to buy everywhere.
One interesting development is the community land trust. A CLT develops the housing and its run by a social landlord. No right to buy applies.
I’m interested in the problem this solution is supposed to address. I think that would help with a critique of its merits. It seems history is littered with good intentions that end up getting gamed and creating larger problems.