Communist Corbyn housing policy branded disastrous
In a policy statement Corbyn, the left-wing Labour backbench MP for Islington North, said were he to come to power he would scrap the right to buy scheme for local authority housing and stop it from being introduced for housing association tenants.
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”.
Experts said while the idea was just that, an idea, it could potentially damage the housing market catastrophically.
Alan Ward, chairman of the Residential Landlords Association, said: “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.
“It could also lead to extreme price changes in the market which harm a generation of home owners and further deplete stock if not carefully introduced.
“It is too easy to tar all landlords with the same brush and not fair on many who provide an excellent service and accommodation. Much more sensible would be some serious, fresh new thinking over how to build more affordable housing to meet demand, protecting tenants with longer tenancies and getting rid of slum landlords once and for all.”
Dominik Lipnicki, co-owner of Your Mortgage Decisions, said: “Luckily there is very little chance that with Corbyn in charge, Labour would get anywhere near forming the next government.
“Policies such as these are near communist in their ideals, what next – collective farms from wealthy estates? Too much government interference in housing usually has disastrous side effects, such as market collapse or serious lending restrictions.
“Surely the simpler idea would be to build more homes, relax planning laws and force local government to have house building targets. We do not need extreme measures, just common sense.”
Corbyn’s housing policy statement also suggested that instead of extending the right to buy Britain should be “reducing the harm it causes to our affordable housing stock”.
Corbyn said: “Local authorities in areas of high housing stress should be given the power to suspend right to buy in order protect depleting social housing assets.
“There are many other steps we could take as well. It is essential we make sure receipts from right to buy remain in a local area and that genuine replacements are built – an aim the government has sorely missed.
“We could also reduce the discount. We should also look at how to help private renters, since they are often paying much higher rents with less security and a less responsive landlord than housing association tenants.
“We could re-direct some of the £14bn of tax reliefs received by private landlords to help struggling private tenants; this would of course include building new council homes and helping private tenants to overcome the deposit problem.”