Private rental property should be “acquired” and used for social housing according to a think tank.
And it says tax penalties, laws demanding higher private sector standards, and even possible compulsory purchase should be considered to force landlords into the switch into the social housing arena.
A report from the New Economics Foundation claims that since Margaret Thatcher’s introduction of Right to Buy in 1980, there has been a flow of homes from the social sector to the private rented sector.
The NEF report says: “This has skewed our entire housing system, generating significant unmet, acute housing need and trapping millions in the private rental sector. It follows that reversing the flow of these transactions – from the PRS to the social sector – offers a clear path to resolving many of the deeply entrenched problems in England’s housing system.”
Therefore the foundation says that in addition to the building of new social homes, existing private rented homes should be upgraded to ensure they are energy efficient.
They should then be “acquired” and used as homes for social rent.
The NEF says: “Doing so equitably, sustainably and on a sufficiently large scale is far from straightforward, but the prize – improving the affordability and quality of PRS accommodation and delivering the social homes we so desperately need – is significant.”
The nub of the NEF approach is not included in the executive summary of the new report but is instead buried towards the end.
It says: “We will explore whether specific tax loopholes affecting landlords can be closed. This includes exploring whether taxes to which PRS landlords are currently subject – such as capital gains tax – can be reformed to encourage PRS stock transfer to social landlords. This could also close the gap between the higher rates of tax currently imposed on income than on capital.
“Furthermore, encouraging the professionalisation of landlords to provide higher-quality services means they ought to be treated as other self- employed persons are, and we will therefore also explore whether national insurance should be imposed on all PRS landlords, including short-term lettings.
“We will also examine reforms to short-term and holiday lettings regulations, as well as those regarding overseas property investment.
“Such proposals could therefore have the simultaneous effect of raising additional revenue from which to fund investment in upgrading and acquisition, enhancing fairness across the taxation system, improving the equitable distribution of housing, while also encouraging the overarching goal of transferring stock from the private rented sector to the social sector.”
And the foundation does not shy away from threatening to use Compulsory Purchase Orders in its bid to requisition private homes for social housing tenants.
It says: “We will therefore explore how councils can use revised CPO laws to force PRS landlords to adhere to enhanced lettings standards (deducting the costs of required remedial works from market valuations, for example) while also repurposing PRS accommodation as social housing.
“Furthermore, we will examine whether local authorities could obtain an equity stake in properties on which they can charge social rent and in order to fund any required remedial work, first buyer rights for these properties when the landlord wishes to sell, and/or whether they ought to receive a discount for purchasing it.
“In the event that landlords are to be provided with state finance – either grants or low-cost loans – to fund improvement works to comply with new legal property standards, our view is that the state ought to receive something of social value in return.”
You can see the report here.
