A recent suggestion by the Joseph Rowntree Foundation charity, for government help to allow private tenant right to buy their landlords’ homes, has been slammed as pie in the sky economics. 

Last week the charity said successive governments had promised to solve the housing crisis by building more houses, while effectively ignoring the ownership pattern for the existing 25m homes across the UK. So with landlords reassessing the profitability of private renting in the light of upcoming reforms, the foundation claims it is time to “see this as an opportunity to implement policies which see homes change hands from landlords to tenants.

So the charity proposes that government sets a strategy for reducing the size of the private rental sector “by rebalancing the position of first-time buyers and landlords in the mortgage market and discouraging property speculation.”

But David Alexander of DJ Alexander Ltd – part of the fast-growing Lomond Group – says the idea will do nothing to help people get on the property ladder and is more likely to exacerbate housing shortages rather than relieve them.

He says: “This makes no sense at all. Why would government subsidise private tenant right to buy the property they live in? If you did this, then everyone who wasn’t a renter should also be supported to buy their home. You can’t subsidise one part of the market and not the rest.”

He continues: “Aside from being hugely inflationary it also fails to understand that a lot of people are happy to be in the private rented sector. The private rented sector is an essential element of the housing market and any proposals to reduce its scale should be looked at with caution. 

“It is estimated that around 40 per cent of private sector tenants are from outside the UK. They are here to work for a few years and then return to their home countries and the private rented sector provides suitable homes for them to live in while they are here. These people cannot access social housing and they have no desire to buy a property so removing the option of private renting from this group makes no sense if we are to create an expanding, thriving economy.”

Alexander says the foundation’s proposals shows a misunderstanding of the role of landlords. 

“These are people who own properties which they rent to tenants. They are not obliged to provide this service but do so as an investment. They can just as easily withdraw from the market and invest their money elsewhere.

“A tenant buying a property from a landlord doesn’t need government intervention as it can already happen, it just requires a willing landlord and for the tenant to pay the market value. The JRF seem to be assuming that market conditions don’t exist in property but exist in all other aspects of life. 

“The solution is relatively simple. If more social and private housing is built and supply exceeds demand, then prices will fall, and property will become more affordable. If this doesn’t happen, then we will continue to experience rising prices and housing shortages. Artificial interventions such as the one suggested in this report will do nothing to alleviate current housing difficulties.”

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