David Alexander: Labour needs to re-work rented sector proposals

A compulsory 'right to buy' in the private rented sector is just plain loopy, says Alexander. Picture: Contributed
A compulsory 'right to buy' in the private rented sector is just plain loopy, says Alexander. Picture: Contributed
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I suppose some will argue that “what’s good for the goose is good for the gander”. By that I mean that if Mrs Thatcher required local authorities to sell council houses to sitting tenants at below-market values what would be so wrong about a future Jeremy Corbyn government forcing private sector landlords to sell to tenants on a similar basis?

Descend from planet Zog to planet earth and it becomes clear the consequences would not only destroy confidence in the housing market as a whole but create havoc in the national economy by trip-starting a massive flight of capital from the UK.

Incredibly, this proposal has actually been reiterated (following a wider report into housing for the Labour Party) by shadow Chancellor of the Exchequer John McDonnell speaking in an interview last weekend. Make no mistake, if implemented, this would be catastrophic for the country as it would seriously diminish the principle of “property rights”, which is one of the foundations of liberal-democratic societies and successful capitalist economies. Look around the globe: countries where the law respects property rights have free and fair elections, freedom of speech and consumer choice; those who do not tend to be authoritarian and struggle economically.

But let’s look specifically at the probable effects of McDonnell’s proposal for residential property. First of all, any analogy with council house sales is misleading. Council homes are public property and the massive building programme which began after the Second World War and continued up until the 1970s was an initiative of national government rather than local authorities, so Westminster-imposed sales were perfectly logical.

Requiring landlords to offload their own private assets (especially at below-market rates) is totally different. It also seems ironic given that most private landlords have managed to buy into the market through taxed income amassed by their own efforts rather than inherited wealth; indeed it is probably fair to say that many of them were brought up in Labour-voting households.

So while a compulsory “right to buy” in the private rented sector is wrong in principle, in practical terms it is just plain loopy. According to the shadow chancellor, the outcome would be improved quality as too many landlords spend too little money on their properties to make a “fast buck”. “In my street now… a third of the houses are right-to-buy, badly maintained, overcrowded; it’s horrendous,” he said.

I am sorry this has happened in Mr McDonnell’s back yard (Hayes in west London, I believe) but in the conventional buy to let streets of Edinburgh and Glasgow this is certainly not the case. Here a landlord would be mad not to properly maintain property for the simple reason that neglect would make it less attractive to tenants and diminish the capital value. If there is concern about safety and overcrowding in privately-rented homes then affected tenants would be better served by a future home secretary making sure the full force of the law is brought down on “rogue” landlords rather than penalising responsible owners.

But if a law giving tenants the right to buy is ever foisted on the private sector there will be few responsible landlords left because most will have sold up before a compulsory sales regime further diminishes their properties’ value. Where will that leave Labour voters for whom renting privately is essential because they can’t raise the deposit on a mortgage?

Housing is, of course, an issue devolved to Holyrood where Labour is the third party and unlikely – at least at present – to do much harm. Despite a raft of “populist” policies which seem aimed, especially, at winning the West-Central vote, I can only hope the SNP administration shares my view that the McDonnell proposal is unworkable, unfair and completely contrary to the needs of both private landlords and tenants in Scotland – and throughout the UK.

- David Alexander is MD of DJ Alexander