Housing cash gives new hope to homeless: Mary Braid finds families benefit from Norman Lamont's pounds 577m plan to stimulate the property market

Beryl Canwell, 43, is a rarity these days: someone who owes an upturn in her fortunes to the Chancellor, Norman Lamont.

After eight years of private renting, which culminated in debt and a period in accommodation for the homeless, Mrs Canwell and her two teenage daughters have found a permanent home.

On Saturday, they moved into a new house on a private estate in Flitwick, Bedfordshire, purchased by the Bedford Pilgrims Housing Association. Pilgrims is one of 27 associations instructed by the Chancellor to spend pounds 577m by 31 March transferring private homes to the rented sector to stimulate the stagnant housing market.

Mrs Canwell's new rent is pounds 240 a month compared with pounds 415 in her last private rent. 'I don't understand much about politics but this must be one of the most sensible things the Government has done. It's not just big words, complicated explanations and empty promises. It is something that makes a difference to our lives. The house is gorgeous.'

With 16,000-20,000 homes forecast to be purchased by housing associations in the next few months, there will be many grateful people. But whether the package will succeed in stimulating the housing market is uncertain.

John Perry, head of policy at the Institute of Housing, believes that with so many houses for sale, it will be a 'drop in the ocean'.

Mark Boleat, director general of the Council of Mortgage Lenders, is more optimistic, but even he admits: 'Taking 20,000 properties off the market will not make the difference between a dead and booming market.'

Much may depend on how the pounds 577m is spent. The Institute of Housing and other experts believe that while buying homes from builders may save companies from bankruptcy, it will be less likely to restore confidence than purchasing from individual home owners or buying repossessions.

But under the scheme, housing associations decide where to buy. Early figures from the Housing Corporation, which selected associations for the programme, show a bias towards builders. The corporation has so far approved 712 purchases of private homes, building society repossessions and other properties from financial institutions compared to 2,709 homes from developers.

For Pilgrims, the first association to buy and let a flat under the scheme, speed and value for money come first. It has almost completed 160 purchases: 51 from builders, 27 repossessions and 82 from private owners.

The association was determined to return quickly to the front of the Housing Corporation queue for a second wave of grants. That has meant searching for chain- free properties and there have been few repossession purchases.

Peter Anderson, a Pilgrims' spokesman, said building societies had been slow, their lists out-of- date and their properties in poor condition. 'They should get their act together. We could not afford to hang around and they have missed a golden opportunity.'

With 506 properties to buy, Alan Kilburn, chief executive of the North Housing Association, is trying to purchase as many as possible from individual owners but the March deadline is limiting his options. Such bargains take longer to strike. Of the homes already identified for purchase, 46 per cent are from builders, 42 per cent from individual owner-occupiers and 12 per cent are building society repossessions.

London faces particular difficulties, according to John Perry, of the IoH. While the South-east has been hardest hit by the housing market collapse, high prices and the prevalence of leasehold properties are obstacles to quick purchases. The Family Housing Association, in Brixton, one of the biggest associations in the country, has pounds 40m to spend. It wants to buy 654 units by 31 March and has already identified 317 properties. Mike Langstaff, Family's chief executive, says it is not yet known which of the three strategies will affect the market most. Mr Boleat is also chairman of the Circle 33 Housing Association. He thinks one of the initiative's strong points is that it puts a lot of money into the housing market very quickly.

This week he handed over keys to a new home in Peterborough to Melanie Purchase and Neil McPolin. Now they have a permanent home, the couple, who have a baby son, intend to marry.

Mr Boleat is enthusiastic about the 20,000 new homes the scheme will provide for others in their position. Ms Purchase's home was bought from a builder. Mr Boleat said the scheme had never been intended as a rescue package for mortgage lenders and the Government could not tell independent associations, with their own responsibilities, where to buy.

Mr Perry said: 'The question is, do you drag more people into home ownership they cannot afford or do you change more properties back to places for rent? The Government is still set on boosting home ownership rather than setting up long-term arrangements for renting.'

He said the boost to the housing market was at the expense of public housing: money to fund it has come from future funding for public housing. Mr Perry says some associations will grow by 20 per cent. Local authority housing departments will find themselves increasingly marginalised. He believes the new association properties will be scattered over large areas, creating long-term management difficulties.

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