Labour’s plans to offer private rented sector tenants the opportunity to buy their homes off landlords at a discounts have been met with a mixture of amusement and derision from within and outside the industry.
Revealed over the weekend during a newspaper interview with Shadow Chancellor John McDonnell, many quarters of the industry have warned of the consequences of right to buy in the private sector, which under Labour would see the government set a ‘fair price’ for a property.
Mark Homer (left), co-founder of investment firm and developer Progressive Property, says: “It appears that the idea currently lacks detail which makes analysis more difficult.
“However, if the proposal is to pay landlords less than the market value of the property then legal challenges are likely to follow from a significant number of the UK’s 2.5 million Buy To Let landlords.
“Clearly there are also further difficulties. What happens to properties which are mortgaged to a level beyond the right to buy purchase price? “How will tenants be able to purchase a room in a house of multiple occupation and which mortgage lenders are likely to support them in doing this?
“Clearly aimed at garnering favour with a subset of the electorate, proposals like this are much easier mooted than enacted.”
Right to buy
David Smith, Head of Policy at the Residential Landlords Association, says: “Labour’s proposal would effectively kill off a large part of the private rented sector denying a home to many thousands of people.
“If there was to be any chance of this becoming law, there would be a mass sell-off of properties in advance.
“The RLA is all in favour of landlords selling to sitting tenants but it must be entirely voluntary. Anything else amounts to a form of compulsory purchase.”