25 April 2008
A government scheme that encourages tenants to buy shares in the homes they rent from social landlords is being largely spurned by local authorities.
Two years after it was launched as an alternative to right to buy, just ten councils are offering Social Homebuy. Only three council tenants had purchased part of their property by the end of March – all from the London Borough of Southwark.
During the same period, 204 tenants bought shares from the 77 housing associations taking part in the scheme. Most of these sales are thought to involve tenants who are ineligible for the right to buy or right to acquire schemes.
Social Homebuy is designed to help people on limited incomes become homeowners. It was meant to be more attractive to landlords than right to buy because they can invest all receipts in new homes rather than paying the majority of the money to the Treasury.
But it was always doubtful whether many tenants would be keen to take out mortgages to buy small stakes in their homes while continuing to pay rent on the remainder.
Ruth Lucas, a policy consultant at the Local Government Association, said Social Homebuy was complicated to explain to tenants and an extra administrative burden for councils. 'For a lot of local authorities, it's not worth putting it on the table,' she said.
About 140 councils still own homes, including more than 70 with arm's-length management organisations. Martin Green, head of home ownership services at Southwark, said interest in Social Homebuy is increasing. He predicted that the council would complete 30 sales this year. 'These schemes normally take some time to kick in,' he said.
Many housing associations were also initially reluctant to participate but, partly under Housing Corporation pressure, the number offering the scheme increased last year from 35 to 77. After just 48 sales were completed in 2006/07, ministers made discount rules more flexible.
The Department for Communities and Local Government has also revealed that, up to the end of February, 4,800 families had bought properties through Open Market Homebuy, which provides equity loans to back up regular mortgages. This scheme is being replaced by new products aimed at key workers and other first-time buyers.
PFapr2008
