LABOUR’s proposed right-to-buy policy would destroy the housing market as well as increase the number of people without a home, according to a Scottish property management firm.
Apropos by DJ Alexander said it believed that Shadow Chancellor John McDonnell’s idea of allowing tenants to buy their rented homes at a price decided by the government would crash the private rented sector (PRS) and, as the number of available properties decrease, so would the numbers of people with no home rise.
Speaking in an interview with the Financial Times, McDonnell said: “You’d want to establish what is a reasonable price, you can establish that and then that becomes the right to buy. You (the government) set the criteria. I don’t think it’s complicated.”
However, David Alexander, joint managing director of Apropos by DJ Alexander, said the impact of such a move would be “enormously negative”.
He said: “This is effectively a cash grab from the PRS. The state valuing private property and effectively compulsorily purchasing it would cause the PRS market to collapse and have an enormously negative impact on the housing market as a whole as individuals and investors would lose faith in the viability of property.
“Lenders would be unlikely to provide loans to fund the purchase of these properties as values would be in freefall.
“Why would anyone invest in property either as a landlord or as an individual if the value of the sale price could be anything the government wished to pay and, in the case of individual homeowners, if any gains above £125,000 are to be taxed at the highest rate of income tax.”
Alexander said the drop in available PRS homes would have to be addressed by building millions of new houses.
“With the UK population forecast to increase by 360,000 a year for the next decade there is already a shortage of homes and destroying the PRS because of ill considered ideology would only increase the numbers of those without a home,” he said. “The PRS already provides 4.5 million households in the UK accounting for 20% of the total housing market.
“The Labour party would need to commit to building millions of social housing homes in the first couple of years to replace this market and keep up with the increasing demand. Mr McDonnell also said that the PRS has a greater problem with overcrowding when, in fact, the social housing sector recorded its highest ever figure of 7.8% of all stock experienced overcrowding in 2017-18.
“This proposal hits at one of the fundamental tenets of society in the UK that people want to own property and be sure that the value of their investment and hard work is not going to undermine at the whim of government policy.”
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