Baron John Bird, co-founder of the Big Issue newspaper sold by the homeless and vulnerably-housed, is suggesting that landlords give tenants a cut of capital appreciation when they sell.
In an article in the Big Issue, Bsron Bird explains that the buy to let market is dominated by what he calls “small fry” landlords with just one or two properties. He says that BTL has allowed “quite ordinary people to cash in on gaining wealth and property” but that the process has excluded the tenants who have been paying rent while the BTL properties appreciated in value.
He acknowledges that a buy to let landlord risks capital values going down rather than up, but claims: “For the last 30 years making money out of buy to lets has been like shooting fish in a barrel.”
The Baron explains that the advantages to the landlord are then multiplied: “Buy to lets have given people a property portfolio who would not ordinarily have been able to participate in this giant rip-off of the tenant. The tax relief that goes with owning property you let out, a tax bonus to encourage investment, adds to this. Your standing in the community because you own property is reflected in also having to pay less for your credit. And you’ve got something to give the kids.”
He suggests that long-standing tenants should get a share of the capital appreciation of a property when it is sold.
He cites the example of a tenant who has been in the same London property for 20 years; in that time the rent has doubled but the capital value of the property has possibly risen five-fold.
Baron Bird writes: “After 20 years, all the money that Jim paid has not increased his value in the world. Rather, the money he has paid has increased his landlord’s value; but Jim will not be getting a share of that after his three-month notice period is up. He will have to find a new home at a time when rents are increasing because of a scarcity of flats for rent.”
You can read the full article here.
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