Homes for families, not investors

JANUARY 17, 2025

Labour should emulate radical policies being adopted elsewhere, argues Andrew Fisher.

Housing is an essential need and therefore a basic human right. Democratic governments should therefore protect the right to housing.

In common with many other countries, the UK has a housing crisis – a crisis of availability, affordability and quality. But in the UK the crisis is particularly acute: this week a Resolution Foundation report found housing in the UK costs 44% more than the OECD average.

This week Labour’s Renters’ Rights Bill was debated in the Commons. It will ban no fault evictions and cap the level of deposit that landlords can demand. These are modest improvements, but will do little to address the overall housing crisis.

The Labour Party needs to get more radical and to do so it need only look to other centre-left governments which have taken more decisive action.

This week the Prime Minister of Spain, Pedro Sánchez, announced that Spain would impose a tax of up to 100% on the value of Spanish properties bought by non-residents from countries outside the EU.

It’s a good policy, and something we should consider in the UK. Housing should provide homes for people, not investment opportunities for international speculators.  

During the pandemic, the Sánchez government also capped rental increases to protect renters, capped energy price rises and increased taxes on the richest. His left-wing government was one of the few incumbents to buck the trend in 2023 and hold onto office.

In the UK, Labour could go further and ban foreign ownership of housing as the Trudeau government in Canada did in 2023. That ban has just been extended until 2027. The Trudeau government has also increased investment in federal housing.

Our Labour government can also look closer to home for inspiration – where the devolved governments of Scotland and Wales have both outright banned right-to-buy, to stop the leakage of council homes that in England has meant the social housing stock continues to dwindle – 40% of the homes sold under right-to-buy are now owned by private landlords.

The Scottish government, pushed by Scottish Labour, introduced a rent freeze in 2022, which was followed by a 3% cap in 2023. Unfortunately by announcing this in advance and not making it retrospective, the SNP government gave landlords time to hike rents before the freeze could take effect.

In Wales, the Labour government allowed councils to charge significantly higher council tax on second homes. From April 2023, the amount of council tax paid by second-home owners in Wales rose by 200%.

If you are not resident in a country there is an easy political argument to make that you have no reason to own a property there. That ban should also apply to foreign-owned companies and offshore trusts, which also have no need to own property.

But more radically, we also need to think about limiting the number of homes a person can own. Welsh Labour has taxed second homes, but why not cap home ownership to two? Why should some people have dozens, when many cannot afford one? Housing is not a luxury good, but an essential.

I have no problem with investors buying up artworks, antiques, stamps or any other non-essential goods, but housing is an essential good – a necessity, and cannot be left unregulated.

The Labour government needs to show working class people it is on their side. Protecting homes for families – and blocking or taxing investors – is good policy and good politics.

Around the world, governments of the centre-left are becoming more radical on housing. Labour should learn from them or it will pay the price.

Andrew Fisher was Director of Policy of the Labour Party 2015-19.