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.'

News
peoplePaper attempts to defend itself
Voices
voicesWe desperately need men to be feminists too
Life and Style
food + drink
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
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

Account Executive/Sales Consultant – Permanent – Hertfordshire - £16-£20k

£16500 - £20000 Per Annum: Clearwater People Solutions Ltd: We are currently r...

KS2 PPA Teacher needed (Mat Cover)- Worthing!

£100 - £125 per day: Randstad Education Crawley: KS2 PPA Teacher currently nee...

IT Systems Manager

£40000 - £45000 per annum + pension, healthcare,25 days: Ashdown Group: An est...

IT Application Support Engineer - Immediate Start

£28000 per annum: Ashdown Group: IT Software Application Support Analyst - Imm...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits