13-05-2025
‘Property is theft' dogma underlies the Labour Party's war on landlords
For those of a revolutionary bent during their student days a few decades ago, there were two indispensable adornments to the bedsit wall. One was a poster of Che Guevara, preferably the image taken by the Cuban photographer Alberto Korda. The other was a quotation from the works of a 19th-century French anarchist, Pierre-Joseph Proudhon.
It was Proudhon who, in answer to his own question 'What is property?' responded: 'Property is theft'. This thesis holds that privately owned property is a form of larceny because it deprives others of the right to access and use resources.
You sometimes wonder whether there is a strand of Proudhonism running through our political masters given the war currently being waged on landlords. This began under the Conservatives with Michael Gove's leasehold reforms and is continuing with alacrity under the current government.
The Renters' Rights Bill to be rammed through the House of Lords on Wednesday is a dog's breakfast masquerading as a socially benign measure that is likely to cause harm to the very people it is supposed to help.
In the Committee Stage, a Tory amendment designed to ensure that the impact of the legislation on the housing market was routinely assessed before proceeding was rejected by the Government. Why on earth would you not want to consider the effects of a new measure, especially amid warnings that it could prove damaging?
The Government says there is no evidence landlords are leaving the rental market yet it has happened in Scotland where these reforms were introduced several years ago. A survey by Paragon, a buy-to-let specialist, suggested a significant proportion of landlords are pulling out, put off by the demonisation they sense, uncertain rental yields, the abolition of Section 21 no-fault evictions, increasing regulation and the requirement to meet strict energy performance criteria by 2030. Lower interest rates may stop the exodus but why make matters worse with more legislation?
The English Private Landlord Survey in 2024 reported that one third planned to decrease the size of their portfolio in the next two years. A reduction in supply when demand is so high will have obvious consequences on rents, placing added cost pressures on tenants, many of them young people who despair of ever saving enough money to buy their own home. Maybe ministers hope a glut of properties for sale will push down house prices, which seems to be the only rationale behind this policy.
The reforms are especially problematic for student accommodation if landlords fear they cannot get rid of their tenants at the end of the college year. Ministers insist the aim is to achieve a level playing field between landlords and tenants; but if thousands of homes fall out of the market how will that help?
In addition, the full impact has yet to be felt of the Leasehold and Freehold Reform Act which became law at the end of the last parliament. Its aim was to strengthen existing consumer rights and introduce new ones by making it cheaper to extend leases or buy a freehold and increase the standard lease extension term to 990 years – up from 50 years for houses and 90 years for flats – with ground rent reduced to zero on post-2022 leases.
It also bans the sale of new leasehold houses other than in exceptional circumstances; gives leaseholders greater transparency over their service charges; and seeks to expand a system of 'commonhold' to replace leasehold in shared flats.
It caps ground rents at 0.1 per cent of vacant possession value hitting the revenue streams of those owning the freeholds, often big estate managers. The landlord's right to recover costs is also being scrapped as is 'marriage value' – the additional premium which leaseholders previously had to pay to their freeholder when extending a lease with less than 80 years remaining.
Freeholders are challenging the provisions of this Bill in the courts in July under Article 1 Protocol 1 of the European Convention on Human Rights governing the protection of property: 'Every natural or legal person is entitled to the peaceful enjoyment of his possessions.'
They want the provisions amounting to the expropriation of property without compensation declared incompatible with the Convention and struck down. Were that to happen, it would be interesting to see how Labour reconcile the judgment with their belief in the immutability of international law.
Most of the Act has yet to be triggered, apart from a new right allowing leaseholders to extend their lease or buy their freehold immediately upon purchasing a property, rather than wait two years.
Proponents argue that ending leaseholds will empower people to take rightful control of their homes, money and lives. The Government now proposes further legislation to restrict the sale of new leasehold flats so that commonhold becomes the default tenure. But if they think that commonhold is the answer they have no real grasp of the difficulties involved.
Estate managers charge a fee to run the property, effect repairs and the like. These tasks would need to be taken over by residential committees and all leaseholders would need to agree about what to spend money on, with some inevitably resisting the expense to the detriment of the building's fabric. Commonhold has been available as an option for many years but has hardly been taken up and yet is now to be the preferred form of tenure, like it or not.
Ground rent which is charged to leaseholders is to be reduced effectively to nothing which freeholders say will cost them billions in lost revenues. The present value of this investment is around £31 billion, much of it locked up in pension funds.
Everyone knows there are bad landlords who rook their tenants, charge too much for repairs or fail to do them at all. But the majority do their best so tarring them all with the same brush is foolish. By all means take action against abusers but don't jeopardise the entire system.
There is a crisis in the rental market which the Left says is easily fixable. It is not that there is a shortage of homes but a surfeit of landlords. They want to beat them down, push them out and control rents. This is not just a war on landlords but on private property. Proudhon would have been thrilled.
