14 July 2006
On July 8, council tenants in south London had one of their first opportunities to hear about an initiative to help them become homeowners.
The London Borough of Southwark, having launched its Social Homebuy scheme last month, gave it a push during its annual 'party in the park'.
Southwark's enthusiasm for Social Homebuy, which allows tenants to part-buy their homes while paying rent on the remainder, is welcome news for the government. While Birmingham has also been running a scheme for nine months, most other councils appear uninterested.
Communities and Local Government Secretary Ruth Kelly berated councils and housing associations for the slow take-up at the Chartered Institute of Housing's annual conference last month.
Jon Rouse, the Housing Corporation's chief executive, has even suggested that the scheme might become mandatory after the 'disappointing' response from registered social landlords.
Since Birmingham launched its scheme last November, just 12 out of 68,000 tenants have applied to buy a share of their home. John Lines, Cabinet member for housing, blames the government for capping discounts. 'We are keen to offer another choice to tenants, but it's very early days,' he says.
Phil Bond, deputy manager for home ownership in Southwark, believes Social Homebuy could be an attractive alternative to the right to buy scheme: 'It lowers the initial cost and makes home ownership more affordable,' he says.
But Ruth Lucas, an adviser to the Local Government Association, says the fact that councils are expected to offer both schemes is one reason why most are steering clear of Homebuy. 'It's an additional administrative burden,' she comments.
Lucas also doubts whether councils have sufficient incentives to get involved. Whereas RSLs receive money from the Housing Corporation to cover discounts offered to tenants, councils such as Birmingham and Southwark are meeting the cost themselves.
One attraction of Social Homebuy is that councils can keep all the money raised to build new homes, rather than pooling 75% of receipts, as with RTB.
But Lucas says this means selling three or four homes to raise sufficient money for one new property. 'It is still depleting the stock of social housing,' she adds.
Four housing associations – Guinness, Notting Hill, Places for People and Sovereign – began Social Homebuy pilots in March. These and 39 other RSLs will receive a total of £18m this year, but the corporation was hoping to hand out £30m. A further round of bidding is planned in September.
Olivia Powis, a policy officer at the National Housing Federation, questions whether the initial response from RSLs is necessarily disappointing. 'The point of a pilot is to see how it goes and then take a decision,' she says.
The Guinness Trust has ten tenants seeking mortgages and one going through the conveyancing process. Sales and marketing manager Kate Needham observes that it takes time to explain the scheme and there is no reason why people should rush into buying a home where they already live.
'It was never going to be a big money-spinner but it's a real winner in terms of customer choice,' she says.
Places for People has received applications from 110 of the 250 tenants who expressed an interest in Social Homebuy. Half of these applications are now at the offer stage and the first sale should be completed in the next few weeks.
Kelly's call for more landlords to draw up Social Homebuy schemes came on the same day as MPs on the Office of the Deputy Prime Minister select committee criticised ministers for focusing on low-cost ownership at the expense of social rented housing. But, having set up an independent review of social housing, Labour seems determined that it is seen as a stepping stone to home ownership.
Powis says housing associations support the aspirations of tenants wishing to own their home but urges the government not to make Social Homebuy mandatory.
'It is one tool for supporting home ownership but it has to meet the needs of the market and tie in with their business plans,' she adds
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