Thread by @beth_stratford

A thread on "Right To Buy for private tenants" that @johnmcdonnellMP and @UKLabour are considering and which was discussed briefly by @michaeljswalker & @AaronBastani on a recent @novaramedia podcast - some concerns and an alternative suggestion for achieving same goal 1/n

@johnmcdonnellMP @UKLabour @michaeljswalker @AaronBastani @novaramedia I endorse the principle that we should help tenants who want to escape the private rented sector to do so, and that we should find ways of sharing out some of the eye-watering windfall gains and rent extraction that landlords have enjoyed throughout housing boom/crisis.
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But there are several problems with the Right To Buy for Private Tenants proposal:

1. Tenants would only be eligible for the discount if they have been renting in the same property for 3+ years (and presumably had been on an official tenancy agreement for this whole time).
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This obviously excludes renters who have had to move through no fault of their own, or who have been renting on a more informal basis. And it creates a HUGE incentive for landlords to get rid of their tenants before 3 years are up. What lengths might they go to to do this?

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2. In order to benefit from the the Right To Buy discount, renters would need to form a cohesive group and negotiate a joint mortgage. What difficulties, conflicts and resentments could this introduce?

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3. Since the discount is funded out of the landlord’s capital gains, in practice tenants would not be able to benefit from this policy unless their landlord had owned for a long period of time in an area of house price inflation.

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4. The flip side of benefitting a relatively arbitrary subsection of renters, is that this policy would mean an arbitrary subsection of landlords having their capital gains entirely taxed away, while others would get away without sharing any of their unearned windfall.



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3. Since the discount is funded out of the landlord’s capital gains, in practice tenants would not be able to benefit from this policy unless their landlord had owned for a long period of time in an area of house price inflation.

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4. The flip side of benefitting a relatively arbitrary subsection of renters, is that this policy would mean an arbitrary subsection of landlords having their capital gains entirely taxed away, while others would get away without sharing any of their unearned windfall.



7/n

If we want to support people out of the private rented sector and into some form of homeownership, it would be better to tax capital gains for *all* second homes uniformly and use this revenue for a scheme which is accessible to a more comprehensive group of renters.
8/n

In our #LandForTheMany report for the Labour Party we outline one possible such scheme - The Common Ground Trust (which is explicitly designed to complement a range of policies to strengthen tenants rights and improve the taxation of land and housing): landforthemany.uk/4-stabilising-…

In brief, the proposal is that people (including housing co-ops) could approach the Trust when they had found a house they wanted to buy and ask the Trust to purchase the land. They would then purchase only the bricks and mortar.
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Since bricks and mortar account for 30% of the price of a property on average, this would allow people to put down much lower deposits and take on much lower mortgage debt than is currently the case, particularly in high land value areas.
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In return for this help, the new buyers would sign a lease that would entitle them to exclusive use of the land in return for paying a land rent.
When moving house, members would sell their bricks and mortar, while the Common Ground Trust would retain the title to the land.
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There are several reasons why we believe the Common Ground Trust is a more workable and transformatory policy when compared with a Private Sector Right To Buy.

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1. The Common Ground Trust creates a mechanism for the gradual, voluntary, but potentially large scale, transfer of land – our single most valuable asset – into a form of shared ownership, so that the associated land rents can be pooled and distributed according to need ...
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...rather than captured by private landowners and banks at society’s expense. (Although the Trust would be non-profit, it would aim to accrue a surplus which would be pooled and used to fund a Rainy Days and Retirement Discount for members...
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This would help to improve the attractiveness of the scheme, compared to both renting and the mainstream model of mortgaged home ownership, as it would improve security of tenure for members who had fallen on hard times, or were unable to work any longer.)
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2. The Trust would help to ensure house price stability by giving the government a lever for supporting demand in the housing market. This is important because falling house prices carry risks, among which are households stuck in negative equity and economic contraction.
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Fear of such outcomes is currently a major barrier to meaningful housing market reform - including rent caps/controls, improvements to security of tenure in the PRS, and measures to clamp down on the speculative behaviour that can lead to rapid and ruthless gentrification.
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Through the Common Ground Trust the govt has a way to support demand in the housing market - to expand the number of people ready & able to buy a house and offset the reduced demand from landlords and speculators. This makes meaningful housing market reforms more feasible.
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3. It helps to establish in the popular imagination the idea that unearned rents arising from the control of a scarce natural resource should be socialised. As the Trust expanded its membership, so the proportion of land remaining in private ownership would shrink.
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Thus it would gradually become more feasible to raise land taxes and advance the broader land reform agenda.
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I'll be discussing this proposal (alongside other policies from our #LandForTheMany report) at #TWT19 alongside co-authors @GeorgeMonbiot & @Laurie, report commissioner @jon_trickett and chair @kwalkeronline. 1pm, Tues 24th at Komedia Studios - come join! theworldtransformed.org/festival/2019/…

2. The Trust would help to ensure house price stability by giving the government a lever for supporting demand in the housing market. This is important because falling house prices carry risks, among which are households stuck in negative equity and economic contraction.

17/n

Fear of triggering a house price crash is a major barrier to rent caps, property tax changes & other meaningful housing market reforms. The Common Ground Trust helps overcome this barrier because it supports ordinary ppl to buy the houses being sold by landlords&speculators.18/n

3. It helps to establish in the popular imagination the idea that unearned rents arising from the control of a scarce natural resource should be socialised. And, if the scheme proved popular, the proportion of land remaining in private ownership would shrink. 19/n

Thus it would gradually become more feasible to raise land taxes and advance the broader land reform agenda. 20/n

I'll be discussing this proposal (alongside other policies from #LandForTheMany report) at #TWT19 with co-authors @GeorgeMonbiot & @L__Macfarlane, report commissioner @jon_trickett and chair @kwalkeronline
1pm, Tues 24th at Komedia Studios - please join! theworldtransformed.org/festival/2019/…