In an interview with FT, Shadow Chancellor John McDonnell said a Labour government could initiate a new right to buy scheme for private rented sector tenants if it succeeds in gaining power at the next general election.

The scheme would allow tenants to buy their rented homes under a price decided by the government.

Mr McDonnell said: “You’d want to establish what is a reasonable price, you can establish that and then that becomes the right to buy. You (the government) set the criteria. I don’t think it’s complicated.”

He presented the idea as a way to make it easier for people to buy the homes they live in. He argued that this would tackle the “burgeoning buy-to-let market” and the issue of landlords failing to maintain their properties.

Apropos by DJ Alexander has said that this new scheme would also increase the number of people without a home, as the number of properties available would rapidly reduce.

David Alexander, joint managing director of Apropos by DJ Alexander, said: “This is effectively a cash grab from the PRS. The state valuing private property and effectively compulsorily purchasing it would cause the PRS market to collapse and have an enormously negative impact on the housing market as a whole as individuals and investors would lose faith in the viability of property.

“Lenders would be unlikely to provide loans to fund the purchase of these properties as values would be in freefall. Why would anyone invest in property either as a landlord or as an individual if the value of the sale price could be anything the government wished to pay and, in the case of individual homeowners if any gains above £125,000 are to be taxed at the highest rate of income tax.”

He added: “With the UK population forecast to increase by 360,000 a year for the next decade there is already a shortage of homes and destroying the PRS because of ill-considered ideology would only increase the numbers of those without a home. The PRS already provides 4.5 million households in the UK accounting for 20% of the total housing market The Labour party would need to commit to building millions of social housing homes in the first couple of years to replace this market and keep up with the increasing demand. Mr McDonnell also said that the PRS has a greater problem with overcrowding when, in fact, the social housing sector recorded its highest-ever figure of 7.8% of all stock experienced overcrowding in 2017-18.”

Mr Alexander continued: “This proposal hits at one of the fundamental tenets of society in the UK that people want to own property and be sure that the value of their investment and hard work is not going to undermine at the whim of government policy. This right to buy scheme would permanently undermine the confidence of individuals and investors in property and cause serious and substantial financial losses for millions of homeowners across the UK.”

Similarly, the Residential Landlords Association (RLA) today also argued that the right to buy proposals would “kill off” the private rented sector.

Responding to this proposal, David Smith, Policy Director for the Residential Landlords Association, said: “Labour’s proposal would effectively kill off a large part of the private rented sector denying a home to many thousands of people. If there was to be any chance of this becoming law, there would be a mass sell-off of properties in advance. The RLA is all in favour of landlords selling to sitting tenants but it must be entirely voluntary. Anything else amounts to a form of compulsory purchase.”