Brickonomics

The Mirror says David Cameron is trying to ‘[K?]ILL’ council housing. The Telegraph, for once, is a bit more sober:

Every social housing tenant will be given the opportunity to own his or her home under a Conservative government, David Cameron announced yesterday.

He wants to create a revolution in ownership by allowing any council tenant the right to convert rental payments into a mortgage.

“In this way we can create a whole new generation of home owners,” the Tory leader said. “Millions of people would be able to own their flat, own their home. Millions of people would be able to pass property on to future generations.” …

Under the policy, the opportunity to have a mortgage instead of paying rent would be open to all council tenants and those in housing association properties.

As in current shared equity schemes, the mortgage would allow the tenant gradually to buy the property, with the rest being owned meanwhile by the council or association.

Mr Cameron said the policy – which follows Margaret Thatcher’s hugely successful right to buy plan – would allow greater social mobility.

Addressing a conference examining the difficulties of first-time buyers, he said: “There is a huge gap opening up between those who have achieved the dream of owning a home and those who, although they are working and striving and earning, can’t see how they are going to be able to achieve that dream.”

But critics said that the scheme would worsen the housing crisis by depleting the number of affordable rented homes.

Graeme Brown, of the housing charity Shelter, said the proposal would “exacerbate the nightmare of bad housing for thousands of families suffering at the sharp end of the housing crisis”.

Peter Tutton, of Citizens Advice, said that some people who had taken up their right to buy council properties had been unable to pay their mortgages and faced being left without a home. “For them, the dream of owning a home has become a debt nightmare,” he said …

[Michael Gove, Tory housing spokesman] said it was vital that social housing was replaced as it was sold off. Councils should be able to use the capital from selling the homes to build new houses.

“We are in favour of expanding the housing supply overall,” he said …

The Tories’ right to buy scheme was introduced in the 1980s in the face of fierce Labour opposition. Labour eventually accepted it but introduced restrictions which have made it less attractive and reduced the properties available for purchase.

Labour and the Liberal Democrats dismissed Mr Cameron’s scheme, saying that it was simply a recycling of a failed policy when the Tories were last in power. Labour said the policy had resulted in only 400 sales in the 11 years before it was abolished – fewer than 40 homes a year.

There was indeed a Rent to Mortgage scheme until it was abolished in 2004. Why it was so unsuccesful I’m not quite sure – perhaps anyone who could afford to just opted to take up the Right to Buy instead. But that may be changing now, as since the government fixed the maximum RTB discount to £16,000 in high demand areas and tightened up other aspects of the policy, sales have plummeted, as revealed by Inside Housing today. That should make a rent-to-mortgage where a tenant buys a share instead of the whole property more attractive. But the devil will be in the detail: will the tenant pay rent on the remaining share? Who will be responsible for the costs of management and maintenance? How will the costs of major works to leasehold properties – often several thousand pounds a year in London at the moment – be shared out? This might be a succesful policy for the Tories, or it might end up being a very expensive and time-consuming way to usher a few people into home ownership and a few others into serious debts. And while landlord councils are a natural Tory enemy, I wouldn’t have thought he wants to antagonise housing associations, who now own around half the social housing in England and build the vast majority of the new stuff. It’ll be interesting to see their reaction.