Prescott plan 'will sound death knell for social housing'

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John Prescott was accused of killing off social housing as he today announced plans to enable 300,000 poorer tenants a chance to buy a stake in their homes.

John Prescott was accused of killing off social housing as he today announced plans to enable 300,000 poorer tenants a chance to buy a stake in their homes.

The Deputy Prime Minister unveiled a five-year housing plan, with proposals to build tens of thousands of cheap new starter homes on land owned by the Government.

The package will also include measures which will for the first time enable housing association tenants to build up equity in their homes until they can eventually afford to buy them outright.

The overall plan is aimed at helping first-time buyers and key workers, such as nurses and teachers, to get onto the first rung of the property ladder through the creation of more affordable housing.

However the Liberal Democrats warned that allowing housing association tenants to build up equity in their homes - with echoes of Margaret Thatcher's right to buy for council tenants - would simply reduce the available stock of social housing.

The party's housing spokesman Edward Davey accused Labour of entering a bidding war with the Conservatives in the run up to the general election - expected to be held in May.

"The Dutch auction on extending right to buy fails to understand that it's independent charities, not government, that owns these houses," he said.

"By extending right to buy to housing associations, both the Tories and Labour are hastening the slow death of social housing at a time when we need to build more."

The Conservatives, meanwhile, dismissed the proposals, accusing Tony Blair of having spent the last eight years trying to undermine the right-to-buy legislation.

"In fact, many people are in a far worse position now than they were in 1997," said shadow housing minister John Hayes.

"His Government has slashed right-to-buy discounts, frozen stamp duty thresholds, and been responsible for council tax hikes of 70 per cent - all combining to kick a whole generation off the housing ladder.

"If Mr Prescott believes the right to buy to be a valuable aid in helping people to achieve their aspiration of home ownership, why has he spent eight years undermining it?"

The plan to allow housing association tenants to buy equity is reportedly the result of a compromise following a bitter battle between Mr Prescott and Labour's election supremo Alan Milburn, who wanted to extend to them the full right to buy their homes at a discount.

The other main plank of Mr Prescott's five year plan is the proposal for some 60,000 new starter homes on Government land to be offered for sale, reportedly for as little as £50,000 or £60,000.

The homes could be built by private developers or housing associations and the purchasers would buy the house, but not the freehold, significantly reducing the overall cost.

The announcement follows the review of future housing needs carried out last year by the economist Kate Barker, which concluded that between 70,000 and 120,000 new homes should be build each year in order to curb house price inflation.

However, Mr Davey said that a quicker way to make an impact would be to start renovating disused housing stock.

"Labour's timid measures on the eve of the election will fool nobody," he said.

"Empty homes in towns and cities across the UK offer an early solution to tackling the country's affordable housing crisis Labour has created. Recycling and reusing houses is the quickest and most environmentally friendly solution."

Housing Minister Keith Hill insisted the plan would not mean the end of social housing.

"In the next three years we will be building 50 per cent more homes for social housing," he said on the BBC Radio 4 Today programme.

"That is 75,000 new homes for renting. We believe that will make a really big contribution to ending homelessness."

Houses could also be sold for £60,000 because local and central government land would be used, he said.

"We will take out of the cost of house prices the price of land - about 40 per cent - so people will only have to pay 60 per cent," he told Today.

Mr Hill rejected calls for a cut in stamp duty, saying: "Stamp duty is only 1 per cent of the price of the house.

"The real issue is to bear down on the house price itself."

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