CIH and Shelter launch equity scheme for poorer tenants

A savings scheme unveiled this week will assist tenants on low incomes to buy a stake in their homes and could help to stem the loss of affordable housing through the right to buy.

The Homesave scheme, proposed by the Chartered Institute of Housing and charity Shelter, would enable social housing tenants who cannot afford to exercise their right to buy to purchase an equity stake.

Under the scheme, tenants who have the right to buy can join an instant-access, low-tax savings scheme. After a year of saving they can shift their money to a housing investment fund, which will invest the money in new social housing.

For tenants who meet certain criteria, yet to be decided, the landlord will increase each amount saved by the percentage right to buy discount to which the tenant is entitled.

However, the contributions could be smaller than the current discounts offered on right to buy deals, which have been criticised for depleting the social housing stock.

Tenants who wanted to buy their rented home would be eligible for an interest-free equity loan from the landlord equal to the right to buy discount they would have got.

Merron Simpson, head of policy at the CIH, said: “Social housing tenants who don’t buy property through right to buy currently lose out, and this is unfair. Everyone should be able to make use of their housing assets.”

Independent consultant Rachel Terry, who is overseeing the development of the scheme, said: “We are looking at ways of making right to buy meaningful to people on low incomes.”

The scheme will be reviewed by a selection of registered social landlords and councils over the next two months to assess its viability. The first pilots could take place as early as spring.

The announcement comes as the government is expected to unveil plans to allow all social housing tenants to buy a stake in their home (HT 3 December, page 9).