Property rights ripped up for the sake of just a few votes

Second homeowners and landlords are maligned by many – but new rules affecting them are flawed

People often forget that prosperity is not a God-given right. Throughout much of our country’s history – and most of the world’s – the majority of people have existed in the sort of grinding, miserable poverty that many in the West would now struggle to imagine.

The luxuries we enjoy today were enabled by a range of slowly and sometimes painfully developed norms. One of the greatest among them was private property rights.

Yet one policy trailed for yesterday’s Queen’s Speech marked an alarming breach of the contract between citizen and state: the planned Levelling Up Bill. Not only will local authorities henceforth require commercial landlords to hold rental auctions of properties which have been vacant for 12 months, but they could also hike council tax for second homes not let out for at least 70 days per year.

Both groups affected are among the most maligned in modern-day Britain.

Few can muster sympathy for the caricatured greedy and unresponsive landlord, nor the out-of-touch out-of-towners buying up properties that could house locals, even though they are very far from the truth.

But regardless of political leaning, the public should be horrified by the gradual erosion of property rights that these measures represent.

Many ingredients go into the recipe of economic growth, but they are almost all underpinned by the protection of private property.

It ensures individuals have the exclusive right to use their resources as they see fit, which leads them to take broadly rational decisions about their use. That translates into higher standards of living for all.

The former Department for International Development spent years proselytising the importance of property rights in developing nations, and its link with economic prosperity. While DFID is gone, the lesson remains and this Government should practise what it preached.

However, the temptation to appease “Red Wallers” by revitalising high streets through artificially lowering commercial rents, or “Blue Wallers” by placating locals frustrated that second homeowners are driving up house prices, is one politicians are finding hard to resist.

The problem with rental auctions is that most empty shops are that way because there are no longer viable retail businesses coming forward with an offer to pay rent.

Few landlords choose a situation where they have no rental income and incur costs through payment of rates, maintenance and security. The rules will even be counter-productive, as in many cases they will incentivise businesses to avoid leasing high street premises in the hope of a better deal during the “auction”, leading to more empty shops for longer periods.

The plan for empty second homes is also flawed.

Owners will spend the minimum time there to avoid higher taxes, few if any additional homes will come on the market, and the philosophy of property rights will be further weakened.

We shouldn’t be able to do whatever we want with our property with total disregard for others. Some manner of planning system, for instance, is justifiable. But often restrictions are arbitrary, bureaucratic and unnecessarily cumbersome. We need light touch rules, ones that at the very least make sense.

Instead, we have Jeremy Clarkson being refused planning permission for a larger car park at his Diddly Squat Farm Shop in Oxfordshire, despite the fact that cars are already coming and parking on the field.

Nor is it just physical property: businesses are also at risk. A number of measures in the Fan-led Review of Football will involve outright expropriation. Owners would be deprived of the management and deployment of their assets as a “golden share” for fans would allow them to veto any attempt to change the club’s name, sell off the stadium or join a breakaway Super League.

The recommendation to impose shadow boards would significantly hamper the right of the owners to run their business. Controls on cash injections would prevent owners from financing and managing their clubs according to their own judgment of what will bring success and return on investment.

This government has also shown a worrying willingness to seize assets based on decree. Since the Ukraine crisis, it has arbitrarily frozen individuals’ assets without any need to prove a case in court.

At one point, Justice Secretary Dominic Raab even suggested confiscating homes from supposed supporters of the Russian regime in order to house refugees. When the dust from the war settles, these gestures will be remembered by overseas-based individuals and foreign companies. Buy homes or set up businesses in Britain at your peril: our politicians can (and will) override property rights if the political climate is right. It’s symptomatic of a government focusing on populist fiddling in the pursuit of a few votes, or favourable headlines, rather than tough choices.

And the tougher those choices become, the further we wade into the cost-of-living crisis, the more distance Boris Johnson puts between himself and core Conservative values.

Ministers express a desire to deal with the housing crisis.

But instead of engaging with the real nub of the issue – our excessively strict planning rules – they block housebuilding in areas with high demand and low supply.

This puts prices out of reach of locals, slows growth, creates financial instability and exacerbates economic inequality – all of which contribute towards the sense of malaise that is turning voters away from the party.

This can be reversed – but only if Government stops aiding the destruction of principles that made Britain strong. The UK currently ranks ninth globally on property rights, according to the Heritage Foundation’s Index of Economic Freedom, behind Scandinavian nations, Austria and Luxembourg, though still ahead of Germany or the US. If this is taken for granted, we may discover our prosperity is built on shaky foundations.