Housing chief slams Labour housing plans

Published by webmaster for 24dash.com in Housing

The National Housing Federation has slammed Labour's flagship programme promoting homeownership to low-income families.

National Housing Federation chief executive David Orr says the Government's HomeBuy proposals will not work.

The Federation has also criticised the Office of the Deputy Prime Minister's 'cavalier' approach to its assessment of HomeBuy's affordability for consumers.

The Federation believes the scheme is too expensive for low-income households and threatens the long-term viability of housing associations.

Mr Orr said: "We fully support government ambitions to help low income groups into homeownership. But the current HomeBuy proposals are simply unworkable and sadly will fail to deliver the Government's objectives of helping low-income families into their own homes."

Mr Orr added: "We want HomeBuy to work and believe it can, but only if it's made more affordable and flexible for buyers, and financially sustainable for housing associations."

As with current shared ownership schemes, people will be able buy a share of their existing home and pay rent on the other part.

HomeBuy will help housing association residents purchase their existing homes through Social Homebuy; on the open market through Open Market HomeBuy; or through New Build HomeBuy which will provide new purpose-built homes for assisted home ownership

Under the HomeBuy scheme, tenants of Registered Social Landlords (RSLs) and local authorities will be able to buy a home on the open market with the help of an equity loan from RSL equal to 25% of the purchase price.

The remaining 75% would be funded by the applicant through a conventional mortgage and savings.

The loan to cover 25% of the purchase price of a home would not involve the purchaser making monthly payments,

Instead, the loan would be paid back when the property is sold and amount to 25% of the value of the property at the time of the sale.

Funding for the scheme is provided by the Housing Corporation and RSLs can bid for funds from the Corporation's Approved Development Programme.

The National Housing Federation represents 1,400 independent not-for-profit housing associations in England and it recommends that Government adopt a revised version of the scheme. It believes associations should be allowed to sell lower property shares, down to 25%, and be given flexibility on the rent they charge on the unsold portion.

However, Deputy Prime Minister, John Prescott has remained defiant, saying the Government is committed towards low-income earners benefiting from its housing plans.

"Social HomeBuy will help tenants into partial home ownership with the money they pay being used to reinvest in new social housing, This will make new homes available sooner for families in temporary accommodation and on council waiting lists. We want families on lower incomes to get a foothold on the housing ladder but not at the risk of taking on financial responsibilities they can't sustain.

"There will be strict checks to ensure this, with the consultation proposing several measures to ensure anyone entering into home ownership through one scheme is able to sustain the long term costs," he said.

Mr Prescott added that many people would benefit from Social HomeBuy, including nurses and teachers.