Labour’s amended right to buy policy and proposed interference in the UK housing market will not help those most in need and will potentially harm the housing sector. Apropos by D.J. Alexander believes that, with two weeks to go before the publication of the Labour parties’ manifesto, some policy directions affecting the housing market are cause for concern.
David Alexander, joint managing director of apropos, explained: “The Labour Party appears to have shifted its original idea to allow all tenants the right to buy from their landlords to apply only to those with more than two properties. The shift appears to be aimed at placating individuals and families with smaller property investments and focusing on large scale investors.”
“However, the policy of buying anyone’s property at a price decided by government rather than market value would instantly destabilise the whole housing market. Equally, it is unclear how the government could guarantee that any tenant would be able to gain a mortgage on a property in which the value has been decided arbitrarily. What would the real value of any property be if the government can intervene and price it on a whim?”
David continued: “The target now is institutional and large-scale investors who will undoubtedly leave the marketplace if their investments can be undermined so easily. The property market requires long term confidence and certainty and these policies would immediately challenge this.”
“At the same time, the policy of offering discounted homes for first-time buyers with mortgage payments is also difficult to apply. How much discount would be required in London or Edinburgh compared to Burnley or Middlesbrough? The variations would potentially create a two-tier housing market with enormous discounts (and consequent long-term gains) for those in the most expensive areas. Every time government tries to intervene in markets there are unintended consequences. The use of discounts for first time buyers would also potentially unfairly skew the market.”
David concluded: “Clearly more social housing needs to be built. The PRS needs proper regulation to create greater fairness and security for tenants. Investors and landlords need to be assured that they will not be punished for investing in property. These ideologically based proposals would do more harm than good by destroying landlords’ assets, which would remove thousands of properties from the private rental sector and result in tenants being unable to find suitable accommodation. We need to develop a more cooperative, sustainable approach to deliver homes for people in need of rented accommodation, regardless of their situation.”