Byers – Government Should Provide Interest Free Deposits To Enable Tenants To Become Homeowners
Former Cabinet Minister Stephen Byers will publish figures from the House of Commons Library on Monday 29 November which show that the level of homeownership varies from 58 per cent in London to 75 per cent in the South East. (Full table below)
Stephen Byers will say that with homeownership stuck at just below 70 per cent nationally since the early 1990’s (it was 67 per cent in 1991) and with the increase in house values in recent years there is a new national lottery with the children of homeowners being the winners and the children of parents who rent being the losers. For example, children of homeowners in London will inherit a property whose average value is £258,000.
In order to break through the 70 per cent homeownership barrier he will propose:
(a) a significant increase in the number of houses being built through the speedy introduction of the recommendations contained in the Barker review; and
(b) the making available of interest free loans which could be used as a deposit on the purchase of a home in the private sector. This would be open to all five million tenants in the social housing sector and would free up property for new tenants.
Commenting Stephen Byers said:
“these figures provide a challenge to Labour. If we are to be a party of ambition and aspiration as well as one of fairness and social justice we have to find ways to provide more people with the opportunity of owning their own home.
“Our aim must be to expand homeownership beyond the present 70/30 per cent divide so that a new generation of parents can take pride in owning an asset for themselves and their children.
“Failure to act will see growing inequalities both within communities and from one region to the next with the gap getting wider between the home owning haves and the tenant have nots.
“With the increase in house values over recent years we now have a new national lottery with the children of homeowners being the winners and the children of parents who rent being the losers.
“The government needs to act. First, on the supply side there needs to be speedy implementation of the Barker review so that we see a significant increase in the number of properties available to buy.
“Second, we need to identify simple and straightforward ways in which people can be helped onto the first rung of the homeownership ladder.
“Presently many tenants feel that they pay rent but get little back. With recent rent increases in the social housing sector there is a feeling of injustice amongst those who believe that paying off a mortgage would work out cheaper than paying their current levels of rent. However they are trapped because they are unable to put down a deposit that is required for most first time buyers who are council or housing association tenants.“To overcome this a government that is serious about extending homeownership should provide an interest free loan to cover the deposit. The amount would need to be linked to the number of years they have been a tenant and the price of property in their region.
“This approach would build on the present provisions under the Right to Buy which allow for significant discounts on the value of the council house they are buying (up to £38,000 in London or the South East; £34,000 in the East; £30,000 in the South West; £26,000 in the North West and West Midlands; £24,000 in the East Midlands and Yorkshire and the Humber; and £22,000 in the North East).
“Providing support by way of a deposit, with increases for inflation, to be repaid back to the government on the sale or transfer of the property would enable a tenant to choose a property in the private sector and would free up their present property for occupation by a new tenant.
“Under this proposal over five million tenants would be given the enhanced opportunity of becoming homeowners. This would be a bold and popular measure which would increase social mobility by increasing the numbers who own assets."
Estimated value of the owner-occupied housing stock per head population by region
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