Howard seeks cash boost for rented sector: Ministers want to encourage mobility by providing funds for new homes or conversions

A NEW attempt to revive the rented housing sector may be made by offering private firms the chance to bid for funds in competition with housing associations.

Michael Howard, Secretary of State for the Environment, wants extra funds to be made available through the Housing Corporation for builders to provide new homes to rent or carry out conversions for letting at market rents, a ministerial source said.

The aim is to subsidise people who wish to rent by giving money to the building sector, which is suffering a slump and has been lobbying hard for the Government to help to lift it out of recession. Builders are loath to build or convert properties which are difficult to sell, and they cannot make a profit through letting.

The scheme would encourage renting and fulfil the Tory long-term hope of allowing the workforce to become more mobile. It may also help to provide more accommodation for the homeless, currently housed in bed and breakfast establishments by local authorities.

It will mark a further shift of resources from council housing, which the Government has been passing to housing associations, and is certain to cause outrage among Labour MPs and councillors.

Mr Howard will be bidding for the money in the annual review of public expenditure which is already under way. He will argue that the Government should not end the Business Expansion Scheme - offering tax relief at 40 per cent to investors for letting residential property - this year without putting something in its place.

But the new scheme will be seen by the Government's critics as an admission that the 1988 Housing Act failed to work. In spite of the increase in homes to let during the recession, ministers privately believe more could be done to provide rented accommodation.

Many young people still believe it is better to buy than rent, in spite of the losses during the recession and the fact that more than 1 million home owners are faced with negative equity - mortgages that are greater than the value of their homes.

Ministers have been considering offering a tax discount, similar to mortgage tax relief, for those renting property at market rents. But it is believed Mr Howard has decided to press the Treasury for new funds to allow private firms to bid for money to use in building or converting property to let at market rents.

The money would be distributed by the Housing Corporation, which acts as the umbrella organisation for the housing associations with a budget of pounds 1.7bn. Tory MPs are backing the plan, and are likely to urge the Commons environment select committee to produce a similar proposal after its current inquiry into the Housing Corporation's operation.

The 1988 Housing Act was a compromise, which fell short of the demands by Tory right-wingers for all the protection for tenants under the Rent Act to be abolished. It did not remove restrictions on the rents set for existing tenancies, but it freed up the market for new homes to rent.

Tenants who are not able to afford the market rent can claim housing benefit provided they are not in accommodation that is regarded as too big for their needs.

The Tory election campaign guide said: 'The Conservative approach is to encourage landlords to rent out their property by allowing them to set rents which are economic, and by allowing them, in agreement with their tenants, to repossess their property after a fixed time, settled beforehand, has expired.'

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
AKB48 perform during one of their daily concerts at Tokyo’s Akihabara theatre
musicAKB48 are one of the world’s most-successful pop acts
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
News
The headstone of jazz great Miles Davis at Woodlawn Cemetery in New York
news
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Eminem's daughter Hailie has graduated from high school
music
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Dynamics CRM Developer (C#, .NET, Dynamics CRM 2011/2013)

£40000 - £60000 per annum + Benefits + Bonus: Harrington Starr: Dynamics CRM D...

Web Developer (C#, ASP.NET, AJAX, JavaScript, MVC, HTML)

£40000 - £45000 per annum + Benefits + Bonus: Harrington Starr: Web Developer ...

C# R&D .NET Developer-Algorithms, WCF, WPF, Agile, ASP.NET,MVC

£50000 - £67000 per annum + Benefits + Bonus: Harrington Starr: C# R&D .NE...

C# Developer (Web, HTML5, CSS3, ASP.NET, JS, Visual Studios)

£40000 - £50000 per annum + Benefits + Bonus: Harrington Starr: C# Developer (...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?