OpenRent Community

Would Labour Make Landlords Sell to Their Tenants?

This month, Shadow Chancellor John McDonnell said that a Labour government would give private tenants the right to buy the homes they rent. Landlords who have buy-to-let properties could be compelled to sell their properties to their tenants at a ‘reasonable’ price.

This has drawn much attention from landlords, as the country seems only months away from a general election. But what did McDonnell actually say and will it actually happen?

What has been promised so far?

The policy idea was first brought up by Labour leader Jeremy Corbyn in 2015. It was brought back to the fore this month when McDonnell discussed it; first with the Financial Times and then again on the Andrew Marr show.

“We’re exploring the idea of a Right to Buy for private tenants which is there available to council tenants and others,” McDonnell said. “The discussion would be about what would be a fair price.

“If you remember in the past, there have been fair rent assessments in this country, so some people have put forward the idea that you could have a fair price assessment, but that’s part of the consultation that we’ll be having.”

Would landlords be forced to sell at a discount?

This is the thing landlords want to know most of all. At first, in the FT interview, McDonnnell implied that a Labour government would set the rules of the sale.

“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 that complicated.”

But then on Andrew Marr, the Shadow Chancellor appeared to row back, saying:

“I wouldn’t expect anyone to lose out, of course not. People would be protected. If people have invested in that way, you’d want them protected. But this is giving people who have rented over a period of years the opportunity to purchase if they could, because it gives their families stability.”

What now?

It’s impossible to predict politics and policy. But the Labour Party do seem to have been moving away from McDonnell’s first outline of the policy, which left readers to make up their own minds of what a ‘reasonable’ price is and what a ‘fair prices assessment’ would involve.

OpenRent understands from conversations with Labour policymakers that there is some discussion within the party on whether a strong right to buy for tenants is the right policy at all.

In any case, the idea of expanding the right to buy into the private sector has been around for a while, but has never been formally adopted as Labour policy. We think landlords should pay more attention to this if it ends up in the Labour manifesto and not worry too much until then.

The Labour Party would need to win a large majority at the next election in order to pass these kind of powers to tenants. Giving compulsory purchase-style powers to tenants to buy their landlord’s property would be a dramatic change in how the UK conceives of property rights.

Conclusion

Giving tenants the power to expropriate landlords’ property would be controversial if actually attempted. Housing is the UK’s biggest use of land measured in terms of total value. A huge amount of bank lending relies on housing as collateral. Changing the rules on property rights really would change the background assumptions that have underpinned the private rented sector for decades.

But given the obstacles we mention above, and the fact that it would probably take years to finalise and implement a policy in practice, we think there’s no need for landlords to be concerned just yet.

If nothing else, this month is evidence that the private rented sector remains in the spotlight. It feels like big changes are on the horizon. As always, OpenRent will keep all our services and guidance up to date, making it easy to stay compliant and be a great landlord.

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The reason most people are in rented accomodation is because they cannot either raise the deposit for a mortgage or do not have sufficient income to qualify and fund repayments required for one.
So, how do the government expect these people to suddenly be able to get a mortgage to buy from the landlord.
This is just labours usual financial fuckwittery and will come to nothing.

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fuckwittery :joy: that tickled me.

I make you right - Labour would say anything for some brownie points

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I think that an attempt to force an individual to sell anything that is a personally owned possession is questionable through the court of human rights. And with regard to the sale price, surely the only person who can agree to a discount or no discount is the owner assuming of course he wants to sell HIS property in the first place.
I think Labour are digging a great hole over silly proposals like this. It’s like another Labour idea when they suggested that Tenants could have pets in a rented house if they wished regardless of the Landlords ruling on the subject. This idea appeared to go quietly away. Another daft idea was that the Landlord should be made to pay the Council tax on any rented property he offered for rent.
Now we are hearing whispers about “garden tax”
It looks as though the nutty Labour brigade are out to shut the private rental sector down yet they have no housing stock to offer the tenants they are going to make homeless!!

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Save your breath guys. It cannot ever work and will not ever happen.

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State controlled seizure of assets, that’s what it really is, and 100% McDonnell is serious about that.

He plans on doing the same in ‘re-nationalising’ energy firms and railways.

I think it also pretty obvious that the staff writer of this piece doesn’t own any Buy To Let properties… hence the generally ‘welcoming’ tone of this Stalinist policy.

State controlled seizure. In this instance it may benefit one type of person, but where does it stop? What are the repercussions of that? Who decides who ‘has too much’?

It’s a very dark and deeply immoral path which has no end.

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Would this apply to council and housing association properties too?

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Everyone should remember what politics is all about - getting votes. Labour appeal to the poor. Every year there are more and more of those in the UK, so it’s purely through politics that appealing to this particular group means that they are appealing to an ever expanding mass of people for votes. Labour themselves (along with everyone else) will know that the very idea/suggestion of spelling out the end of private rented accommodation will create the worst housing catastrophe in history. This is just politics, and is obviously not common economic sense. What it will do is create votes - hopefully nowhere near enough to put them in power. What it won’t do is actually happen.

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It’s another typical daft Labour policy just to get people to vote for them based on the politics of envy (let’s shaft landlords as they are all evil type of thinking). If implemented, the first thing many landlords will be doing I suspect is immediately selling up, especially once you add on the idea of paying your tenant’s Council Tax as well. Who in their right mind would put all that effort in and take risks for a loss? You’d have to be nuts. A lot of people will find themselves homeless if this is implemented. The Labour conference also threw up a load of other outlandish policies designed to pull votes in like a 4 day week (at no cost). The other crazy one yesterday was giving housing, NHS treatment, benefits, and even the right to vote in the U.K. for migrants from anywhere in the world. It will turn the UK into a wasteland. The thinking behind it is to effectively import a new electorate who would always vote Labour. The whole thing is a cracked socialist utopia peddled by nutters who have little understanding of the real world. The sad thing is, if they actually implemented these policies and decimated the country, then were kicked out in 5 years, they’d repaint the ‘Tory Cuts’ and ‘Austerity’ placards and start shouting again. How anyone could vote for them is beyond me. The sad thing is, they have lots of really good policies as well - they are just overshadowed by the extreme ones. Any landlords who vote for them need their head testing! P.S. - I live in one of the safest Labour seats in the country and my family are born and bred Labour voters - it comes to something when my own family don’t want them in power - they have changed the Labour Party beyond recognition.

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Of course this is unworkable because a large number of landlords have fixed term mortgages, many with 5 year terms. Is the government really going to force landlords to break the terms of their contact and pay the hefty penalty charges - often as much as 6% - for exiting the mortgage early?

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Totally insane idea. Older landlords who have rented their family homes for an income to cover the lack of good pension in their old age, could end up on benefits themselves or worse, homeless.
This right to buy would see a mass exodus of available private houses to rent.

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In London this policy will have the effect of shrinking the private rented sector making it even more difficult for young renters.

Labour policy is not thought through which suggests that they are more interested in mobilising voters than providing decent housing to young people.

I have already pointed out to councillors that this will force more landlords to sell, handing the property over to the better off home owners that will probably not vote Labour.

They will simply further reduce the number of rented properties making things worse. Those young renters will have to move further out and inner city high streets will further decline.

A proper housing policy would produce more affordable rented properties whilst improving the existing rented sector.

Lots of new flats have been built in london and sold off at prices young renters can’t afford. But once they are sold they are no longer available to renters. Stagetic purchase of these new tower blocks of flats that could be rented out should be the most obvious way to go.

The existing private rented sector offers more variety to renters. Without them there will be no chance of living in terraced houses or streets or living in certain areas.

Labour hasn’t considered the consequences of their policy prefering to demonise landlords which leaves the field open to the Greens or the LibDems to safeguard the interests of young voters.

This highlights a vulnerability for Labour and an opportunity for the Greens, Libdems and even the Tories.

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Rise like lions after slumber, in unvanquishable number! Shake your chains to earth like dew, which in sleep had fallen on you: ye are many – they are few!

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Did you see your darling Johnson yesterday. He certainly was trying to earn brownie points and failing. Even a hard Brexit MP distanced himself from Johnson.
Careful what you wish for, tabloids have a agenda; that agenda is not to help Landlords, only themselves.

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On current record the only political party that has and has enforce ‘nutty ideas’ are the Tories.
How do you like being thier Customs Guards stooges, without pay or favours?
Remember they also abolished tax relief earned by their rich banker friends?
Careful what you wish for, tabloids have a agenda; that agenda is not to help Landlords, only themselves.

You are right, this is the usual Right Wing press ‘Corbyn promises to eat your babies’ hysteria.
If anything when Labour raises the income of poorer in our society, Landlords will be able to charge higher rents!

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At what point would they get the right to buy, after three years, five, etc? Landlords that were concerned would just get tennants to leave before they became entitled to buy.

Then again providing it was at fair market value, all sales costs were paid and the money was exempt from capital gains it could be a reasonable deal. I don’t see that happening though.

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Surely such a policy would give landlords an incentive to keep rotating tenants so they wouldn’t accrue the years to make the compulsory purchase?
So it would hurt those most that it was intended to help?

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I don’t think Labour care about the landlord

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Labour are un-electable - the root issue is not landlords, its the under-investment in council housing.

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