Government set to offer shared ownership to all tenants...

The government was this week expected to announce plans to allow all social housing tenants to buy a stake in their home.

The initiative, which was recommended by the ODPM homeownership taskforce and is also Conservative policy, was set to be unveiled in the wake of Thursday’s pre-budget report.

It follows pressure exerted on John Prescott’s department by No 10, which wants to help more people into homeownership.

A source close to the ODPM said: “The scheme is going to be called Social Homebuy and is likely to form a key part of the ODPM’s upcoming five-year plan. It will give existing social housing tenants the right to turn their tenancy into shared homeownership.”

The move is likely to attract the ire of housing associations and councils because, although it would provide a welcome source of revenue, there are concerns over what would happen if a tenant hit financial problems.

An association source said: “The danger is how the process is managed with poorer tenants. Also, where would resources come from to allow landlords to buy back shares of people who got into money difficulties?”

There are no details yet about what proportion of a home tenants might be able to buy or when the policy might be introduced.

It is also unclear whether the government would help tenants with the purchase price of the proposed equity share, as was hinted at by Stephen Byers on Monday.

Byers – the former secretary of state who often proposes ideas that become government policy – said all 5 million social housing tenants should be able to access interest-free loans of up to £38,000 to spend on deposits.

He added that “a lottery” of homeownership had developed, with “the children of homeowners being the winners and the children of parents who rent being the losers”.

But Byers’ comments have been criticised by housing professionals.

Danny Friedman, director of policy at the National Housing Federation, said: “Byers would do well to remember that there are some people for whom homeownership will always be beyond reach. These people need assistance too and encouraging them into unwise marginal homeownership is not the answer.”

Sue Regan, policy director of Shelter, said: “Homeownership has to be looked at alongside investment and other tenures.”