Shadow Chancellor, John McDonnell has announced a radical new scheme that targets property owned by buy to let landlords. If Labour gets into power, it will give tenants the right to buy their rental property at a discounted price. John McDonnell says this will tackle the problem of rogue landlords, as well as making it easier for private tenants to gain a foothold on the property ladder.
The Right to Buy
Speaking to the Financial Times, John McDonnell says: “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.”
McDonnell believes his plan is the best way to influence landlords who invest in property and fail to maintain their houses at the expense of tenants.
“We’ve got a large number of landlords who are not maintaining these properties and are causing overcrowding and these problems,” he said.
McDonnell’s policy has been described as an echo of Margaret Thatcher’s Right to Buy scheme, which was launched in the 1980s and saw thousands of council house tenants given the right to buy their home for a heavily discounted price.
Critics of the scheme say such a move would decimate the private rental sector and landlords would depart in their droves rather than face having their assets “seized” by Labour. Some even say Labour’s policies could send the country into a dramatic recession, prompting a rise in homelessness and a property market crash.
Additional Taxes for Buy to Let Landlords
John McDonnell is also planning to raise additional taxes from buy to let landlords, which some say would further erode the private rental sector.
The former vice-chair of the Conservative Party, Michael Fabricant MP, is reported in the Daily Mail as saying:
“McDonnell has promised he would overturn the mixed-economy capitalist system if he came to power. This manoeuvre is just the start. It would decimate the rental market in the UK, creating a shortage of properties available to rent.”
Labour’s policies are the result of a commissioned white paper called Land for the Many. The paper’s authors believe the buy to let market needs far greater controls to protect tenants, and the abolition of tax breaks to prevent landlords from making excessive profits.
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