Lettings payment automation provider, PayProp, believes that controversial plans unveiled by Shadow Chancellor, John McDonnell, to give tenants the right to buy their privately rented home, should be debated extensively.
With the party due to discuss the issue at their annual conference, which kicks off this Saturday (September 21), politicians should take the opportunity to consider all pros and cons of the proposals before turning them into party policy.
The Shadow Chancellor (pictured) recently told the Financial Times that tenants would be able to purchase homes below market value at criteria set by the government. McDonnell said the plans would aim to prevent landlords who neglect to maintain their properties from making a 'fast buck'.
The idea has been widely criticised by property industry figures, who suggest that a scheme of this sort could lead to a mass buy-to-let selloff and cause property values to plummet.
Neil Cobbold, Chief Operating Officer of PayProp UK, had this to say: “These proposals are not yet party policy and they need to be considered very carefully before being put forward as the official party line.
The effort to help tenants buy their own homes is understandable, but it shouldn’t be at the expense of landlords. Politicians must also remember that many people now choose to rent due to the flexibility and lifestyle benefits it offers.”
A fair system needed for all parties
The Centre for Policy Studies has suggested that landlords should be given incentives to sell their properties to tenants, including Capital Gains Tax rebates. Meanwhile, the Residential Landlords Association says any ‘Right to Buy’ measure should be voluntary for landlords, or else it would amount to a 'form of compulsory purchase'.
Cobbold says: “There is nothing wrong with giving private tenants the option to purchase properties from landlords, but any such system must provide benefits for both parties. Private landlords have been hit with a range of tax changes in recent years, including additional stamp duty and the removal of buy-to-let mortgage interest tax relief.”
If landlords were offered some sort of exemption from these measures in exchange for selling their properties to tenants, this could create a scenario that is fair for both sides of the transaction and benefits the overall health of the UK property market,”
Party conference season reinforces housing priority
Housing has been a regular topic of discussion during party conference season in recent years – politicians see the issue as key for wooing younger voters, and 2019 will likely be no different.
The Liberal Democrats debated scrapping Section 21 at their conference last week. The Conservatives are also expected to discuss the eviction issue - as well as agents’ referral fees - at their annual gathering in Manchester from September 29.
Cobbold concludes:“This year, with a potential General Election in the offing, the stakes at party conference season are higher than usual. We expect to see lots of talk on housing at the Labour and Conservative conferences as they look to form key policies ahead of a potential campaigning period.
New housing policies - and those covering the private rented sector in particular - could be pivotal in securing key votes in the coming months.”