Labour is planning to introduce draconian new restrictions on buy-to-let property owners

Labour is considering restrictions on the owners of buy-to-let properties to try to rein in house prices.

The party said it was looking at capping rent rises at inflation – with the abolition of tax breaks for those charging ‘excessively’.

And it wants to see tighter controls on the ability of landlords to evict renters ‘on spurious grounds’.

This could include ending a property owner’s automatic right to sell. The ideas are contained in a radical report, commissioned by the party, which calls on Labour to try to stabilise house prices.

The report, Land for the Many, called for action to end what it called the ‘buy-to-let frenzy’.

It said landlords should no longer be automatically allowed to evict a tenant if they want to sell the property, and that rent rises should be capped at inflation or the rise in earnings. And it called for an end to mortgage interest tax relief for landlords who charge steep rents

The report said the restrictions on private rent were essential to ‘discourage the use of homes for speculation and rent extraction’ and to ‘reduce the amount of unearned windfall gains that are privately captured’.

John McDonnell speaks at the party’s conference in Liverpool last year. He said this weekend that he was interested in a proposal to replace inheritance tax with a lifetime gifts levy

Shadow Chancellor John McDonnell said at the weekend that he was interested in a proposal to replace inheritance tax with a lifetime gifts levy. Rent controls and an end to no-fault evictions are already party policy.

A spokesman said: ‘We welcome this independent report by a group of experts. As the report makes clear, Britain is a deeply unequal country and we need to start addressing that.

‘Rent controls and tighter restrictions on the ability of landlords to evict renters on spurious grounds are essential to rebalance a rental market which often leaves tenants powerless. House price stabilisation is not Labour policy, but with home ownership at a 30-year low, it is clear there is a desperate need to tackle runaway house prices.’

The Land for the Many report said: ‘We recommend that a Labour government should set an explicit goal to stabilise house prices, so that wages can catch up and the house-price-to-income ratio can gradually fall.

‘Tenancies should be open-ended, and landlords should lose their power to evict a tenant who has not broken the terms of the tenancy agreement for the first three years of the tenancy agreement, and should have to provide grounds for eviction after that point.

The report, Land for the Many, called for action to end what it called the ‘buy-to-let frenzy’

‘There should be a cap on annual permissible rent increases, at no more than the rate of wage inflation or consumer price inflation (whichever is lower). Buy-to-let mortgages should be more firmly regulated and restricted.’

The report suggested ‘Labour should also consider an end to mortgage interest tax relief for landlords who charge the most excessive rents’.

And it said: ‘We also propose compensation (equivalent to three months’ rent) for tenants who are forced to move through no fault of their own.’

This would apply even in cases where the landlord wanted to sell up.