Property leaders have condemned Labour’s plans for the nationalisation of hundreds of assets, more state intervention and a crackdown on foreign investment into housing.
Shadow chancellor John McDonnell told the Labour Party conference in Brighton he wanted to move away from the “rentier economy” and criticised “the City” for “channelling investment into property speculation.”
Bill Esterson, shadow minister for business and international trade, said the policy was about foreign investors buying homes and leaving them empty.
He said: “What John is driving at is how do we deal with this challenge of a shortage of decent-quality housing for the very many in our society? [And] with the speculation in property by a few – very often foreign investors – who are not doing anything productive with that property?”
The British Property Federation has criticised the policy proposal, citing a recent report by the Greater London Authority into empty homes which did not expose a significant problem with foreign investment in housing.
Ian Fletcher, the BPF’s director of policy, said: “It is political season, and a bit of positioning on foreign ownership and nationalisation is to be expected, but we should not allow that to act as a distraction from the really big issues facing the country, such as continuing to attract investment against the backdrop of Brexit, and delivering homes to alleviate our housing crisis.”
Labour proposals to nationalise water, energy, rail and Royal Mail assets would deter investment in property, economists and policy advisors have argued.
Toscafund chief economist Savvas Savouri said: “It is, to my mind at least, inconceivable that against the backdrop of what he is proposing, the UK would not suffer capital flight were John McDonnell to somehow become chancellor.
“The pound would plummet, gilt yields would soar and asset prices, particularly real estate, would suffer a disorderly decline.”
Carolyn Fairbairn, CBI director-general, said the policies would scare investors already concerned about Brexit. She said 40% of the CBI’s members were already postponing or cancelling investment due to Brexit uncertainty.
Other areas of concern for the industry include a proposed new tax on financial transactions known as the “Robin Hood” tax, which the party announced earlier this year.
Catherine McGuinness, policy chairman at the City of London Corporation, urged the party to take caution with the proposal, which could have a significant effect on the financial services sector. “It will undermine competitiveness when we are trying to keep business,” she said.
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