Back in the mid-1990s, with right-to-buy well established and delivering a tide of new homeowners, the case for new incentives was not obvious. I remember telling housing conference after housing conference that my priority was to attract private investment into social housing through transfers and to promote a much larger quality private rented sector. Otherwise we would be stuck with the unhappy apartheid between home ownership and social housing. I tried to persuade the Treasury to sanction the creation of housing investment trusts by which individuals could invest in housing in the same way as they invested in unit trusts without being liable for tax on each individual housing transaction. I failed, but even if I had succeeded, the ceiling on the prices of properties that could have been purchased by a trust would soon have been overwhelmed by the house price boom of the past few years.
I set out this little historical detour with a purpose, which is to note that promoting home ownership is back in fashion. The Labour government – partially, no doubt, to head off charges that its limitation of right-to-buy is simply a relapse into its historical dislike of the sell-off of council houses – has set up a home ownership taskforce to deliver more effective assistance to get council, housing association and private sector tenants into home ownership. It is part of the sustainable communities action plan and has been placed under the protective wing of that brisk and, when necessary, combative (and not entirely New Labour) mother hen Baroness Brenda Dean, chair of the Housing Corporation. She has some 20 experts on her taskforce with strong private developer representation.
The starting point is the belief that the overwhelming majority of the 30% of people in rented accommodation (roughly equally split between council, housing association and private landlords) want a stake in their home. While the task force is at liberty to come up with an entirely new product, its short-term focus is likely to be on rationalising the plethora of existing schemes and tailoring them better to meet need, including taking account of the different housing situations across the country. The government's own research, for example, shows that equity share schemes, where social tenants are helped to build up assets, have not yet proved their worth. Tenants are worried about schemes that have strong links between equity shares and house prices and need the incentive of being able to acquire a significant share in the equity, whereas landlords and lenders have concerns about funding and administrative complexity, especially if they convey ownership rights on tenants.
The overwhelming majority of the 30% of people in rented accommodation want a stake in their home
Leaving aside the right-to-buy (the taskforce can examine the way it operates but not its existence), there are at least eight programmes. Some of these have attracted so little interest that they barely tick along: they include the right to acquire and the voluntary purchase grant, which both permit the purchase of housing association properties and do-it-yourself shared ownership. The two most popular schemes – which are being heavily promoted – are Homebuy, under which housing associations invest 25% in the value of a property (some 1000 operations over the past year); and shared ownership, under which purchasers acquire part of the equity of the property (commonly half) and pay rent on the remainder to a housing association. This has delivered some 3300 homes over the past year. One of the criteria to assess schemes will be the extent to which they free up social housing.
Governments always face a dilemma between devising schemes intended to be simple in concept, easily understood and not too expensive to deliver but that may ill-fit particular circumstances, and those more tailored to different circumstances with the attendant proliferation of options – and admin costs.
David Curry is MP for Skipton and Ripon and a former Conservative housing minister.