Jeremy Corbyn, the left-wing Labour backbench MP for Islington North, and contender for the Labour party leadership, has said in a policy statement that were he to become prime minister he would introduce drastic changes to the private rented sector: one to introduce some form of right-to-buy scheme for private tenants, and two to scrap the right-to-buy scheme for local authority housing and prevent its introduction for housing association tenants.
As reported by Mortgage Introducer, mortgage market experts have “decried an idea floated by Labour leader hopeful Jeremy Corbyn to extend some form of right-to-buy to private tenants as verging on “communist”.
But he also said he would “investigate” whether money raised by scrapping tax relief for private landlords could be used “to fund a form of right-to-buy shared equity scheme to private tenants in cases when they are renting from large-scale landlords”.
Whilst mortgage experts said that while the idea was just that, an idea, it could potentially “damage the housing market catastrophically”.
Alan Ward, chairman of the Residential Landlords Association, told Mortgage Introducer:
“Exit of private investment would require at least 30% sale before collapse of the market according to a stress test I recall reading in the depth of the last recession.
“Corbyn’s plan could be the trigger point for the end of civilisation as we know it.”
Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, said:
“A policy of this type, should Labour ever get close to being elected to power, could damage the property market in a way that the Financial Policy Committee is currently very keen to avoid.
“Sudden shocks and precipice events are outside the current economic policy framework.”
Brokers said the idea, if introduced, would cause extreme price changes in the housing market and called it potentially “disastrous”.
Andrew Montlake, director of Coreco, said:
“If serious, then it is an extraordinary idea that at face value could do a lot of damage to the private rental sector, which is a sector that is much needed, but could lead to more people taking on debts that cause issues in the future encouraged purely by discounts on value.”
Writing for The Guardian newspaper Thursday, Brian Eno, in an article entitled “Jeremy Corbyn for prime minister? Why not?” he says, “Corbyn has a story that people want to hear. It’s positive – idealistic even – but it isn’t outlandish.”
Jeremey Corbyn was an outsider at the start of the Labour leadership campaign, only just scraping onto the ballot, but the level of interest shown already in terms of nominations puts him at the forefront and a serious contender for leadership. Whether this leadership will eventually lead to power as prime minister is another matter.
— LandlordZONE® (@LandlordZONE) August 7, 2015