McDonnell’s distorted and dangerous version of Right to Buy

by Property 118

9:01 AM, 5th September 2019
About 6 months ago

McDonnell’s distorted and dangerous version of Right to Buy

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McDonnell’s distorted and dangerous version of Right to Buy

The think tank Centre for Policy Studies (CPS) has written an article for release describing Labour’s private sector ‘Right to Buy’ policy as dangerous and damaging.

This is superficially similar to a scheme proposed by the Centre for Policy Studies in October 2018, but is a damaging and distorted version of that policy.

‘From Rent to Own’, authored by Alex Morton, Head of Policy at the CPS (and formerly responsible for housing and planning in the No 10 Policy Unit), argued that landlords should be incentivised to sell to tenants, to redress the rise in buy-to-let and fall in owner-occupation in recent decades.

Commenting on the story, Robert Colvile, Director of the Centre for Policy Studies, said:

“It is gratifying that Labour appear to have been reading the Centre for Policy Studies’ recent work setting out a way to help renters buy their home, but they seem to have completely missed the point.

“The big story of the housing market in recent years has been a surge in private rental at expense of owner-occupation. It is vitally important to reverse that – for example by incentivising landlords to sell to tenants through CGT reliefs for both (a policy which our research has shown is practical, affordable and highly popular).

“But it is equally vital that this is done in a way that is fair to tenant and landlord alike. Labour’s proposed ‘right to buy’ for private tenants appears in effect, to be the expropriation of private property, and is likely to have all kinds of unintended consequences.”

“From Rent to Own’ proposed that the Government should turn the Capital Gains Tax payable by a landlord on sale of a rented home into a rebate shared between landlord and tenant creating an incentive for the former to sell, and giving the latter a significant contribution towards a deposit.

“This scheme, entitled Help to Own, would mean that for every £1 a tenant invested to buy the property they rent they would receive a total of £3 for their deposit.”

‘From Rent to Own’ Proposal by the CPS:

A fully costed policy which would actually raise substantial sums of money for the government while increasing the rate of home ownership substantially.

The report proposes that for a single year, the Government should turn the Capital Gains Tax payable by a landlord on sale of a rented home into a rebate shared between landlord and tenant – to the former as an incentive to sell, and the latter to contribute towards a 10% deposit so that they can purchase the home.

  • This rebate would be split 33% to the landlord and 66% to the tenant, capped at 6.66% of the property.
  • The landlord would receive 33% of their capital gains back.
  • All tenants would receive 6.66% of the value of their property toward a deposit.
  • There would be a mechanism to pool capital gains receipts, and further shared ownership schemes to help those whose landlords were reluctant to sell, or who could not afford the entirety of their property.

In order to ensure fairness, the tenant would have to contribute 3.33% of the value of the property to the deposit, although they would be given time to save or find this money. This would be a hand up on to the housing ladder, not a handout for nothing.

This scheme, entitled Help to Own, would mean that for every £1 a tenant invested to buy the property they rent they would receive a total of £3 for their deposit. For an average property worth £228,000, they would be putting in just over £7,000 and getting £22,800 back.

Now it would be interesting to hear what Landlords think of the above policy proposed by the CPS.


Old Mrs Landlord

22:51 PM, 5th September 2019
About 6 months ago

Frivolous I know, but I can't help imagining how this proposal was received in the Blair family.

Larry Sweeney

8:39 AM, 6th September 2019
About 6 months ago

What happens where there are mortgages or other charges on properties. Landlords there is little point crying. Protect your assets. Join us or at least join some rep body if you wont join us. How can we fight our corner when 94%of landlords expect 6% to carry the load. The way to defeat Mcdonnel' theft policies are to tie him in court on a daily basis with legal challenges.
What about the banks. Who would assist in the theft by offering finance. The Alliance would point out to the banks the risks of financing stolen property. Would The government finance the theft and where would the money come from ?
It is sheer madness but not quite as daft as 94% of property owners whose assets are at risk and they time and again refuse to join a landlord organisation. My thanks to all our fantastic members who helped to form the Alliance, but its very unfair that 6% go into battle to save the Prs while 94% cant be bothered. No wonder Mcdonnell thinks stealing from this sector would be a walk in the park.


10:16 AM, 6th September 2019
About 6 months ago

Reply to the comment left by Denise G at 05/09/2019 - 19:24
And that's also why I ended up as a landlord this time around. Last time around I bought a buy-to-let to fund my children's education (clearly an irresponsible thing for me to do in Old Labour eyes). This time around I kept my mother's house to fund her care rather than having her vulnerable to the tender ministrations of the State who weren't doing a good job of caring for people with her condition. And I'm hanging onto it as a long term investment now to fix what that did to my own finances when we were working part time but also having to work as carers, doing 7 day weeks. Again, it's a long term investment it involves risk, it's hard work, and it's no free ride.

But of course under McDonnell's plans I'm doing something irresponsible here by trying to provide for my family. I should look to the State for all that and the State should decide everything. "For the many, not the few".

Of course in our country it's the "many" who have a stake in society and have a lot to lose from a Corbyn-style government. I can't remember which particular commentator I saw on TV recently who said something really true: Socialism always start out with declarations of universal brotherhood and ends up with people eating their pets.

Simon Williams

10:35 AM, 6th September 2019
About 6 months ago

The post by Binks about buying up a dilapidated town house and creating 5 high end flats is interesting for at least 2 reasons. First, a reminder that landlords often play a vital role ADDING to supply by bringing back existing property into productive use. Second, that a McDonnell style policy would set up hugely damaging distortions in the PRS as landlords inevitably change their renting model to reduce the risk of RTB. If you have a 3 bedroom house which you could either rent out to a family or let out on a room-by-room basis to 3 students or overseas nationals, which would you choose if the first option risked a massive expropriation of the asset? No brainer really.

michael fickling

19:41 PM, 6th September 2019
About 6 months ago

It is fundamentally wrong for any government to effectively grab anyones property against their wishes and pass it on to someone else.. Thats the basic point here. There are of course many other problems with this proposal.. like the fact that the government allowed/encouraged us to put domestic property into pension plans and indeed many of us actually invested in property effectively as our pension/income provision for later life. Effectively forcing such landlords to sell to tenants is to seize these peoples pension and prevent any further growth in same through either capital gain or rental profit. Also what about the many of us who have built up tax losses whilst doing so. The only way to benefit from such a loss was to eventually get into profit and have the profit of later years untaxed or at reduced tax due to carried forward losses .If such a landlord is forced to sell they take a further loss because they lose the benefit of being able to effectively use any accrued losses to offset taxation on later profits achieved on rents. There will be many other double loss scenarios too such as mortgage redemption penalties on what may be long term fixed rate mortgages etc etc. Whilst we raise all these things and no doubt more.. the central plank of our argument to oppose forced sales to tenants must be that it is just plain wrong to force anyone to part with their possessions to a third party at the whim of that third party. The continuing attacks and vilification of private landlords is really the big issue...from which this forced sale scenario is just one more crazy offshoot. Where does it all stem from ??............well..
.....Much of all this silly stuff comes from two or three incorrect perceptions and mydia promoted follows..
Myth A..... Property prices have dramatically increased in some exponential and strange way in the U>K as a whole.....they havent. National figures even with the big distortions of the south east show a long term average of about 2.5%.....thats fact not opinion..see the big building society figs and the gov. s own O.N.S..figs and charts..all three show very very similar figures about 2.5% average.per annum for the whole of U.K average since the so called GFC up to the present time.
MYTH ..B>> First time buyers cant afford to numbers massively greater than any long term pattern. Again complete nonsense as mortgages have never ever been cheaper..and first time buyers buy with a mortgage! might add to this that there are dozens of 95% mortgages available including for first time buyers. That hasnt always been the case in the past...
One might also add a point C..MYTH too..because the overall rental situation here with domestic property is NOT markedly different to other similar/comparable countries. Its is also perfectly normal for house prices to rise in such countries.. and indeed in most westernised countries this is accepted as normal and indeed helpful to the respective economy as the real estate with all ts connected finance ,trades,professions ,builders,solicitor,insurers..tradies etc etc is... taken a whole effect to be just about the biggest employer in any democratic westernised type society. Kill or suppress house prices and investment therein by gov. interference and you are very likely going to have a negative effect on the whole economy and also on employment levels as a whole.
Its all quite crazy that after the GOVERNMENT sold off billions of severely discounted council home years ago...and did nothing effective to prepare for the NEXT generation of inevitable renters.....corbyns team now propose to effectively repeat and greatly compound the same mistake firstly at our expense..and later again at our expense as taxpayers when the next generation of renters have no where to rent. All taxpayers will end up paying for that one way or another to solve it. HIstory repeats because people dont bother to consider it !...and also because they act upon myths and misunderstandings rather than reality.
Whatever our personal circumstances as both landlords and decent people we should resist any such draconian government interference in our investments such as forced sale arrangements to tenants and fight for our liberty to control our assets as the rightful owners. To condone it or be seen to condone any part of it would be a big mistake .Its plain wrong in every respect.

Karen Holtge

22:30 PM, 6th September 2019
About 6 months ago

I don’t think they could allow compulsory acquisition due to the cost to the financial system. This would cause instability in the financial system. If a landlord was in negative equity, as many in London may be, then the bank would be left with the shortfall.

Michael Barnes

23:29 PM, 6th September 2019
About 6 months ago

Reply to the comment left by Karen Holtge at 06/09/2019 - 22:30
If a landlord was in negative equity, as many in London may be, then the bank would be left with the shortfall.

Probably not: the debt would go with the LL and be recoverable against his other assets.

Michael Barnes

23:31 PM, 6th September 2019
About 6 months ago

This proposal assumes that there IS a capital gain.

So would my properties that are still around 2004 prices be safe from either scheme?


10:30 AM, 7th September 2019
About 6 months ago

Reply to the comment left by Michael Barnes at 06/09/2019 - 23:29
Perhaps: Unless the landlord was running his business as a limited liability company in which case the proposal would penalise only the large number of small, unincorporated landlords who bought properties perhaps to top up their pensions, pay for their children's education, or for their care in retirement maybe.

So in this scenario it would penalise the 'Many' and not penalise the 'Few'.

Typical Old Labour woolly thinking. "'Hang the rich'....oh...we didn't manage to do that. We just nailed middle-income earners again."

Dylan Morris

10:22 AM, 14th September 2019
About 5 months ago

Lenders have always granted 100% mortgages for RTB purchases due to the excellent loan to value. Factor in that your tenant does not need to have saved up a deposit to buy the landlord’s property and the number of tenants wanting to buy at a knock down price will be immense.

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