To wonder how Labour’s Right to Buy on privately rented houses would work?

[Bearbehind]

Just read something this morning about Labour proposing Right to Buy on privately rented properties - how would that actually work?

How can they force a private landlord to sell at a discounted rate?

Also, if one of the requirements is you have to have been renting the property for several years, that’s just going to lead to less secure tenancies because landlords will make sure tenants cannot qualify for this.

It seems like a bonkers idea to me

What is the actual issue then if the hypothetical landlord still gets their hypothetical 100 k ?

The issue is the taxpayer has to fund that so it takes money away from other things so will never work.

Still no suggestions for where my tenants will live? Anyone want to have a whip round for a few tents?

And if a landlord had wanted to keep his £100k he’d have put it in a bank not a rental property

Oh right well you better tell the lenders regularly offering these mortgages then OP, they don’t seem to agree with you

I didn’t say no such mortgages exist - only that lenders do care about this kind of structure.

It’s higher risk and results in higher interest rates and lower lending limits.

How is it going to work though?

Even if they go ahead with it and even if it's just for the slum landlords. Most of these houses are shared between dozens of people, which of them exactly will be entitled to buy it?

“bearbehind

They’ve given cash to a private company who use it to invest in new property for them to rent. How do the government get payback for that?

Because you said yourself you’re talking about entities who reinvest in new builds etc or it buys housing stock for associations.

You’re clearly one of Corbyn disciples who doesn’t understand that this stuff actually has to be paid for though so it’s probably best we agree to disagree.”

You don’t understand.

The government give a housing association cash for their RTb discount on a property they’ve sold.

The housing association use that cash to build a new house

They either sell it and keep the profit

Or they rent to another of their tenants and keep the rental money.

None of this is payback for the government EXCEPT that there is an extra house built in an economy that desperately needs houses. Just like Barrett homes build much needed houses

Obviously it’s more complex than that as you can apply a number of complex accounting treatments and we’re talking a large number of sales, but in essence that’s what they’re doing.

The government are just giving them cash.

I’ve already made a suggestion costa, so has Astra.

The reason why landlords will object even if they get market value is because we've had to pay stamp duty (now a lot more than private purchases) and because we've worked to find properties that are a good rental Investment and often done work to them to make them into better investment.

We've bought furniture for them, bought licences, and many more things. None of that will be reimbursed.

Trust me, the government already gets their pound of flesh from landlords, I have paid huge sums in income tax, stamp duty and capital gains tax as well as local govt taxes like hmo licences.

None of this is payback for the government EXCEPT that there is an extra house built in an economy that desperately needs houses. Just like Barrett homes build much needed houses

And that EXCEPT is so big even you had to put it in capitals.

There’s nothing in the private landlord scenario except cost.

Of course there are good and bad landlords. The big problem I have seen in London, having helped a lot of vulnerable people gain accommodation, are the ruthless "sharks" that take advantage.

They buy a bog standard house and divide it into so called "studios" (as they attract a higher rate of housing benefit). These studio's are barely more than a single room with a crap partition with a tiny shower and toilet. Fridge with a little plug in hob thing. It really should be a bedsit not a studio. They deliberately take the benefit tenants that no one else wants. Then charge £1000 a month as they know the tenants can claim that. Standard 3 bed terrace gets turned into 6 studios. £6000 a month multiplied by however many houses they own. All being paid for with our taxes! None of us should want that.

I actually used to hate that part of my job. It was sad to see people who wanted to be grateful they had a roof over their heads, but the place was just so damn depressing. I also hated that I was having to work with these "landlords".

@Passthecherrycoke

Oooh that is lovely. All that remains is for the tenant to rent it back to Mr Jones, and for Mr Jones to buy it back again in a couple of years. A win-win for sure.
Even without that, surely you can see that in this scenario the "discount" is entering the economy twice (once as a deposit, once as cash payment to the ex-landlord)?

Trust me, the government already gets their pound of flesh from landlords, I have paid huge sums in income tax, stamp duty and capital gains tax as well as local govt taxes like hmo licences.

Exactly, the government is raking it in with increased stamp duty on 2nd properties, tax on rental income etc.

Yet cherry thinks they’ll give all that up plus subsidise the landlords discount just so some people can buy instead of rent.

And that’s ignoring where those people get the stamp duty costs (on the full value of the purchase) plus legal fees etc from

Also ignoring the fact the chances of landlords who want to sell having the tenants who want to and are able to buy is neglible anyway.

I’ve already made a suggestion costa, so has Astra.

Remind me

In and believe rbis is raging on. It's all irrelevant.

If there is any hint this is coming Into legislation, which let's face it is t going to happen as Corbyn isn't getting in and even if he did he'd never get it through Parliament any landlord would simply give notice to any long standing tenants before it became law. Thus removing their rent to buy,

It's moot, no one will have rhe right to buy. Because landlords would know rhe legislation is possible and give notice in line with the contract. 🤷‍♀️

I’m another stupid landlord I think as i’m also unclear how this would work. I’ve seen nothing suggesting that the landlord would get the cash value of the discount from central government - the article linked earlier implied the opposite - that they were effectively being required to share the market uplift with the tenant. This works if there has been market uplift - but a lot of landlords are only doing it because of negative equity so the discount must be straight out of their pockets in that situation.

What is the actual issue then if the hypothetical landlord still gets their hypothetical 100 k ?

I guess because it could still be a loss of money.

For example, they buy a house for £90,000 but have had to put a new roof on it, and get a new boiler as well as other cosmetic upgrades. When we sold our house these kinds of things were not included in the mortgage valuation. Also, they had to pay solicitor's fees and stamp duty for the property. So, we could say (for example) this house has actually cost them £120,000 but the mortgageable market rate of the property might still be £100,000. The other £20,000 could be a loss of capital.

I’ve seen nothing suggesting that the landlord would get the cash value of the discount from central government

That bit appears to have been for cherry’s eyes only 😂

Waiting to see answers for Costa as also wondering where all my tenants are supposed to go!

A lot of them rent for flexibility reasons - first time living with a partner, job can require them to move frequently, want to temporarily be near a specific school. Some of them have been renting for up to 12 years and are very happy

Not too worried about this though as don't think Labour will get in, this law would never get past House of Lords and I think a lot of landlords would simply sell the house before the number of eligible years were reached

I am also ordinary and a landlord - just used DH's redundancy money to fund BTL being as his pension went down the toilet...

Oh ok. Quite an important detail to be clear on I would have thought.

PassTheCherryCoke and other Momentum supporters. Can any of you explain to me how to get round the fact that this policy will contravene the First Protocol of the ECHR, the right to protection of property? Its also in contravention of the stronger rights to property in the EU Fundamental Charter. Will Labour be rewriting the rules of the ECHR as well as the British economy?

MoonageDaydreamzn I can think of several ways round this. The simplest is to rent your property by the room on individual contracts so no one person is the tenant overall. Presumably no one person can then buy the property without making the others homeless.

A lot of Labour councils have already taxed this, by insisting on punitive licensing on HMOs. Perhaps they will introduce some kind of community tenant buyout for HMOs? Who knows. Perhaps HMOs will be made illegal, since the ultimate aim of "rewriting the rules on the economy" seems to be to prevent people moving from their place of birth and going out into the world of work on a national scale so as to further their ambitions by earning more.

An obvious way to circumvent it would be to set up a not for profit charity which rented the properties to the tenants instead and which reimbursed the landlord by salaries commensurate with those received by Labour luvvies currently working in the charities sector. Because charities will almost certainly be exempt from this rule on landlords. So too might companies, so transferring the property holdings to a company might work as well, although it would be expensive. Landlords might have to put rents up to enable it.

Labour also propose, amongst other things, to force companies to sell 10% of their shares to workers. So expect investors to drop out of the British economy, as it will be too high risk.

Quoting from the Labour article posted by bearbehind: "The discounts they would have to offer to their tenants would merely share out some of the windfall gains they have been making over the last decade or two"

And yet, with such an attitude, folk still believe a Labour government would continue to reimburse LLs for the discount - I mean really?

It's always a bit ironic to hear suggestions that LLs should be treated as businesses from those who also insist they should be more socially inclined towards tenants. FWIW I'm very much in favour of sensible LL control - even rent caps where the market's becoming overheated - but it seems some need to make their minds up and think about the whole issue, rather than just "Ooooo great - they can take this off Mr Rich Bas*d and give it to me!!"

“Oooh that is lovely. All that remains is for the tenant to rent it back to Mr Jones, and for Mr Jones to buy it back again in a couple of years. A win-win for sure.”

This makes no sense. Why would mrJones want to rent it back? Why wouldnt the new homeowners want to live in it?

There is already legislation in place preventing RTB’ers renting out their properties btw. But there is no gain for mr Jones or the new owners in your idea above.

“Even without that, surely you can see that in this scenario the "discount" is entering the economy twice (once as a deposit, once as cash payment to the ex-landlord)?”

No. It’s not in the economy twice at all, even if it was who cares? It’s a tiny amount of money in the economy and would have no impact.

“ I’ve seen nothing suggesting that the landlord would get the cash value of the discount from central government”

That is what right to buys are. If they don’t intend to do it this way this would need to rename it as a different product.

As they did with right to acquire.

The article linked by the OP is nonsense btw- you only have to read it to see OP is completely misapplying it to today’s suggestion

@Costacoffeeplease just re read