Labour could give tenants who rent private homes the right to buy them at a cut-price rate, the Shadow Chancellor has revealed.
John McDonnell outlined the party’s incendiary plans to ‘tackle the burgeoning buy-to-let market’ in a bombshell interview last night.
The dramatic policy is designed to clamp down on middle-class families who buy a second property as a nest egg for their retirement.
The suggestion from the Shadow Chancellor – applying Margaret Thatcher’s iconic right for council tenants to buy their homes to those who rent properties from millions of private landlords – offers a chilling insight into the consequences of a Labour victory in any snap election.
And in a separate development, a report found Mr McDonnell is planning to confiscate around £300billion of companies’ shares and hand them to workers in one of the biggest state raids on the private sector to take place in a Western democracy. Last night critics said the ‘frightening’ measures could lead to a crash in property prices, a new mortgage crisis, a rise in homelessness and even a recession.
Britain’s opposition Labour party’s shadow Chancellor John McDonnell speaks during an event to set out his party’s approach to the Government’s Spending Review, in central London on August 29, 2019
The new ‘right to buy’ scheme would see private tenants given the right to forcibly buy the home they live in at a discounted price set by the Government. The UK’s 2.6million landlords would also face higher taxes, Mr McDonnell said.
In an interview with the Financial Times, the Shadow Chancellor called the idea ‘great and radical’ as he laid out his wish to ‘tackle the burgeoning buy-to-let market’. He said: ‘You’d want to establish what is a reasonable price, you can establish that, and then that becomes the right to buy. [The Government] set[s] the criteria. I don’t think it’s complicated.’
Mr McDonnell said he believed the idea would reverse problems caused by Mrs Thatcher’s policy, whereby council tenants were able to buy their home from the state. He said: ‘We’ve got a large number of landlords who are not maintaining these properties and are causing overcrowding and problems. In my street now… a third of the houses are right-to-buy, badly maintained, overcrowded. It’s horrendous.’
Jeremy Corbyn hunts for the right combination for his bike lock in London today
Critics say the move could cause chaos in the private rental market, leading to a collapse in housebuilding and a worsening of the housing crisis.
And it could lead to a house price crash that could see hundreds of thousands of homeowners fall into negative equity – when their mortgage debt is higher than the value of their home.
Scrutiny of Jeremy Corbyn’s policies is ramping up amid fears Brexit turmoil could spark a snap general election. The policies were met with incredulity by MPs last night.
Michael Fabricant MP, former vice-chairman of the Conservative Party, said: ‘McDonnell has promised he would overturn the mixed-economy capitalist system if he came to power. This manoeuvre is just the start. It would decimate the rental market in the UK, creating a shortage of properties available to rent.’
Fellow backbencher Andrew Bridgen, MP for North West Leicestershire, said: ‘This is a frightening insight into what it would be like if this man ever became Chancellor of the Exchequer.
British Prime Minister Margaret Thatcher hands over the deeds to the council house belonging to the King family of Milton Keynes, Buckinghamshire, 25th September 1979. One of the first families to buy their house from the local authority
‘These policies would destroy the private rental market as well as crash the entire housing market. It would also lead to a rise in homelessness, which Labour claims to be against.
‘It’s true to his declared ambition to destroy capitalism.’
The tenants’ right to buy policy was first mooted in 2015 as part of Mr Corbyn’s leadership bid, but did not immediately become Labour Party policy. It emerged earlier this year that the party is also considering a radical report which suggested stringent rules on the owners of buy-to-let policies, including capping rent rises at inflation.
The paper, Land For The Many, which was commissioned by the party, called for tighter controls on the ability of landlords to evict renters on ‘spurious grounds’ – such as ending a property owner’s automatic right to sell. There would also be the abolition of tax breaks for those charging ‘excessively’ in a bid to end the ‘buy-to-let frenzy’.
The report also called for inheritance tax to be scrapped and replaced with a lifetime gifts levy on cash or homes given to children. Labour says the document is being considered but is not official party policy.
Yesterday new analysis also emerged about the scale of the Labour land grab on Britain’s biggest companies.
Labour – which has already said it plans to renationalise utility companies such as National Grid – would confiscate about £300billion of shares in 7,000 large companies and hand them to workers, it said. Under the ‘inclusive ownership funds’, companies with more than 250 employees would have to transfer 10 per cent of their shares to workers over ten years.
The value of large private sector companies is around £3trillion, meaning Labour could make a grab for £300billion. It would be one of the biggest state raids on the private sector to take place in a Western democracy, according to analysis by City law firm Clifford Chance.
Dan Neidle, a partner at the firm, said last night: ‘There is no historic precedent for this. We are in completely uncharted territory.’
A raid of this scale could lead to the collapse of the stock market and cause immense damage to pension funds, which are heavily invested in the UK’s largest companies. Investors could also move their money out of the UK, fearing another grab on their money.
Matt Kilcoyne, from the Adam Smith Institute think-tank, said: ‘This is robbing your pension and hobbling your children’s future, all to try to steal votes at the next election. This would be one of the largest expropriations in British history.’ Mr McDonnell said that it was ‘right’ that ‘all share in the benefits that investment produces’.
Last night a spokesman for Mr McDonnell said: ‘Ahead of the next election we will lay out our programme to really end austerity, eliminate in-work poverty and drive up living standards across the UK economy.’