Private landlords should sell their properties to tenants at a discount paid for by the taxpayer, an influential charity has claimed.
Under Baroness Thatcher’s new “right to buy” idea, tenants could buy their own home from their landlord, according to a proposal from the Joseph Rowntree Foundation.
Trade body the National Association of Residential Landlords has warned that any move to reduce the size of the rental sector will result in higher rents for tenants.
Ben Beadle of the NRLA said: “A strategy to reduce the size of the private rented sector would be a disaster.”
Landlords have been selling in recent months as a series of reforms make it unprofitable and harder to invest in property. Tax changes, plans to improve tenants’ rights and income tax-saving laws have led to warnings that private landlords could leave the second generation in droves.
JRF urged the government to use this as an opportunity to give tenants a new mechanism to become buyers and buy their rental properties below market value.
A new “Right to Buy for Private Tenants” will give tenants the same discounts given to council tenants – currently a maximum of £87,200 in England and £116,200 in London.
The discount is covered by the government, which can pay the difference to the landlord, tenant or lender, JRF said.
He called for first-time buyers to prioritize mortgage lending over buy-to-let investors to reduce the size of the private rental sector and reduce speculative investment.
Landlords who don’t want to sell should get financial support to renovate their homes to meet higher environmental standards, he added. In return, landlords rent their property to a housing provider, who rents the property below market rent.
JRF’s Darren Baxter said housing rationing meant millions of people were trapped in unaffordable tenancy contracts and feared eviction.
“Right-to-buy and the expansion of the private rented sector have shown that rapid change can be achieved in the wake of the global financial crisis,” Mr Baxter said.
“This type of improvement will ensure that the housing market is supportive of investment properties for those looking for a place to call home,” he said.
But the NRLA’s Ben Beadle says the number of rented homes in England has fallen by more than 250,000 since 2017.
The proportion of landlords reporting an increase in rental demand rose from 39pc to 60pc last year, according to the NRLA.
“Policies that cut the supply of private rented homes when demand is so high will only serve to drive up rents, making home ownership unaffordable for many,” Mr Beddle said.
Renovating Britain’s 25 million existing homes is as important a solution to the housing crisis as building more homes, the JRF says.
JRF also called for councils and housing associations to find new funding to buy and improve existing homes to pay truly affordable rents, and to make part-rent, part-buy models such as shared ownership more accessible.
In the year Between 2000 and 2020, the private rented sector grew by 2.7 million homes. The number of homeowners aged 16 to 34 has halved over the past 20 years.