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The ghost of Margaret Thatcher wants to sell you a house

April 14, 2015

The Tories have decided that people should be allowed to buy councils should be forced to sell their council houses. Apparently this is because the idea of a “property owning democracy” makes them feel all fuzzy and happy. Here is why this is a terrible idea (from the point of view of the 99%, obviously – for the Tories’ natural constituency it’s a jolly good one).

It is a virtual certainty that within a few years of the houses being sold, they will make their way into the hands of the buy-to-let merchants – people with sufficient spare cash that they can afford to buy multiple properties with the express purpose of renting them out to pay the mortgage on them. Obviously, this is by design. Right-wingers are mortified by the idea of the state doing anything, when private individuals could be doing it instead and making far more money out of the arrangement. Prise assets out of the cold dead hand of the state, let some private sector spiv entrepreneur monetise them, and all is well in the world of the 1% (who are, after all, the intended beneficiaries of Tory policies).

A better idea would be something along these lines:

  • The upper echelons of the 1% are taxed much more (this will be a common theme of most of the solutions advocated on this blog, get used to it)
  • With the money, councils can afford to make improvements to their housing stock and to build more of it (jobs! actual trickle-down of money from the wealthy to the workers!)
  • Councils can undercut the rent charged by the buy-to-let merchants, while offering a similarly attractive product, thus making buy-to-let less attractive as an option, and encouraging private landlords to sell their (now unprofitable) properties. If undercutting the private-sector rent doesn’t work well enough, taxing buy-to-let income or second home ownership ought to do it.
  • Houses thus appear on the market for those who want to buy houses, and rent is cheaper for those who want to rent. One expects that an equilibrium will be reached, and that people will be generally happier now that the element of economic coercion is reduced.
  • Win! (Except for the private landlords who felt that sitting around doing nothing except owning property would be a legitimate and noble way to make a living, but bollocks to them).

There are probably some kinks to be ironed out, but the basic idea seems sound. If we actually want to make it easier for people to buy a house, we need to prevent them from being snapped up by the rentier class, and to do that we need to make it financially (and socially) disadvantageous to be a rentier.

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