In doing my media rounds today, I noticed that there has recently been a UK Freedom of Information request that revealed that 40% of council houses1 sold under Thatcher’s “Right To Buy” policy have now made their way into the hands of landlords who are renting them out for double their original price, an incredible policy failure that essentially did nothing but increase the effective market price for rentals by depleting social housing stock.
It got me thinking about National’s attempt to sell off our own state houses, and how that scheme was also a failure, ostensibly they were trying to put the houses in the hands of charities, (because the optics of selling them to private owners was so bad) but only very few of them were willing to consider buying them. Unlike Thatcher’s scheme, there weren’t enough people in a financial position to buy out the state houses they were living in themselves, so National had to focus on selling unoccupied State Houses instead to try to bleed out the housing stock, and kicking people out for spurious reasons like trace amounts of methamphetamine to enable those sales.
In pondering the failure of both programs, I started thinking that perhaps an easy win for the new government would be to consider putting a preventative measure in for future attempted selloffs inside some of its new legislation, such as creating a new type of property ownership that doesn’t allow for private landlords to rent the whole thing, while still protecting the right of owner-occupiers to sublet in a limited fashion, and move all of our state houses onto that legal basis, and then entrench the legislation that did it so it can’t be easily repealed. National wouldn’t be able to help making a big deal of the provision, which would bring the whole news cycle back to their failures on housing and privatisation, costing them support. It also explicitly doesn’t prevent privatization as such, it just requires the purchasers don’t intend to be landlords, and essentially want to use the house for residential or charitable purposes, so they can’t even complain that they want to sell state houses to charities or their occupiers: that would still be explicitly allowed, and the Government parties would need only point to the failure of the thatcher-era policy to justify it’s existence, saying they don’t want to build affordable houses just to have them end up being rented back out but on a more expensive basis.
This would also allow people to sell their own private homes under the new legal basis, preventing them being used as rental properties. It’s a bit of a bazooka-level solution to the property speculation problem, but in the medium term it might just be helpful, despite potential problems down the line.2 It does have the advantage, unlike a CGT, of being something New Zealand First would likely vote for.
It also addresses one of the frequent left-wing criticisms of Labour governments: that they don’t do enough to reverse National’s laws and make things difficult for them when they get back into government, when National’s policies effectively sabotage the country for the next left-wing government and make them spend years digging us out of policy holes and infrastructure debt. I say let’s return the favour, but do it with good policy that’s populist, justified, and might even put a small dent in the housing problem if it’s widely adopted.
Photo credit: Eliot Phillips. Used under a CC-BY-NC license.
1 A UK social housing program run by local councils, as you’d expect from the name.
2 Potentially, in the long term, you could end up with condemned properties that can’t be sold even though the owner didn’t want them, because the type of legal title prevents landlords renting them out, and there might be other unintended side-effects. I think though under those circumstances you’d have broad parliamentary support to relax the law. You’d probably want to put the idea in front of some policy wonks to address potential pitfalls before charging ahead, but broadly I can’t see any pitfalls that would eventuate in the next decade or so.
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