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.'

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
News
i100
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
science
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
News
A voter placing a ballot paper in the box at a polling station
i100
News
people
Arts and Entertainment
The Queen (Kristin Scott Thomas) in The Audience
theatreReview: Stephen Daldry's direction is crisp in perfectly-timed revival
Sport
football
  • Get to the point
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

SThree: Trainee Recruitment Consultant - Dublin

£13676.46 - £16411.61 per annum + OTE: SThree: SThree Trainee Recruitment Cons...

Ashdown Group: Marketing or Business Graduate Opportunity - Norwich - £22,000

£18000 - £22000 per annum + training: Ashdown Group: Business and Marketing Gr...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + Commission: SThree: Are you great at building rela...

Ashdown Group: Database Analyst - Birmingham - £22,000 plus benefits

£20000 - £22000 per annum + excellent benefits: Ashdown Group: Application Sup...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power