McDonnell’s distorted and dangerous version of Right to Buy

by Property 118

9:01 AM, 5th September 2019
About 7 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.



Comments

Whiteskifreak Surrey

10:04 AM, 24th September 2019
About 6 months ago

In today's City am - worth reading. Frankly speaking I think it sounds like a communist propaganda in the 19-seventies. Horrible prospects: https://www.cityam.com/mcdonnell-sets-out-his-plans-for-a-superstate/

JJ

10:13 AM, 24th September 2019
About 6 months ago

Reply to the comment left by Whiteskifreak Surrey at 24/09/2019 - 10:04
I know. It's exactly what we thought last night.

This kind of thing does not matter on planet 1970's because after the glorious revolution, once you've scared off investment and destroyed the service economy in favour of a thriving black market, if you are the top of the communist party food chain you are still entitled to your main home and your Dacha in Norfolk. And you are a long way from the starving masses at the bottom of the food chain whose plight is all the fault of the rich people who took their investment elsewhere; so you are not to blame for the collapse of the economy. On planet 1970's it's somebody else's fault.

Tenants also have to put up with the kind of rental properties that I saw when I visited Poland in the early 1980s, and what some of my Russian friends tell me their families' accommodation in Moscow is like now. The majority of people equally poor and hungry.

Whiteskifreak Surrey

10:17 AM, 24th September 2019
About 6 months ago

Reply to the comment left by JJ at 24/09/2019 - 10:13
I experienced that in 1970's and 80's when living in Poland. Those commies are going even further than what we had.
But the folk who votes for them think there will be a Scandinavian-style heaven here... This is really dangerous.

JJ

11:54 AM, 24th September 2019
About 6 months ago

Reply to the comment left by Whiteskifreak Surrey at 24/09/2019 - 10:17
Yes I know: I remember towards the end of Gordon Brown's premiership there was a lot of PR being splashed about about 'scandinavian style public services'. That was just an excuse to raise more taxes. The problem with labour governments is that they spend a lot, don't generate more tax except in the short term, but don't spend the taxes wisely; they invest in areas of the economy that are unlikely to generate a return whilst ramping up debt. In the end the communists don't care because they think the State should own everything anyway. The high levels of debt mean that in the end you lose control of your own destiny. The UK had to have a bail-out from the IMF. There are lots of countries today who are effectively in hock to China.

Those 1970s-style policies destroy service economies like ours. It almost bankrupted us in the 1970s, it's always a disaster. And when it goes wrong tenants always suffer. Being in Poland in the early 1980s and actually sleeping in some of the accommodation they had to live in made me feel very lucky to be living in the UK.

Michael Barnes

15:58 PM, 24th September 2019
About 6 months ago

Reply to the comment left by Appalled Landlord at 24/09/2019 - 01:28
"The text from the Labour MP is a cracker. They should set it to music and sing it at the end of conference"

I tried, and I think it could be set to the red flag.

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