Tories aim for another 1.5m home-owners

Housing White Paper: No new help for existing owners, but Government aims to stimulate private sector to take over from councils

The Government plans a massive extension of home ownership - with the aim of another 1.5 million home- owners over the next decade - and a big reduction in councils' role as landlords, encouraging them to become "enablers" rather than direct providers of housing.

Big tax breaks are to become available to persuade the private sector to provide rented housing and take over council stock, and housing association tenants and others will become entitled to cash "purchase grants" of pounds 8,000 to pounds 16,000, to encourage them to buy.

It will be a condition of all transfers of local authority housing that tenants will be able to use the purchase grant to buy on request.

But a leaked copy of the housing White Paper Our Future Homes, expected next week but seen by the Independent, promises no help for existing home-owners despite the 1 million with negative equity and the flat or falling state of the housing market.

It says the changes in mortgage interest tax relief - cut to 15 per cent in April - "are necessary" and that the cut in income support payments for mortgage interest will go ahead, subject to one concession. The "very real" difficulties of homeowners in trouble "need to be set alongside the long-term advantages of home ownership".

The White Paper also signals an easing and eventual halt to the policy of driving up council and housing association rents - the flagship housing policy of the 1980s aimed at reviving private renting. To replace that new Housing Investment Trusts, exempt from Capital Gains Tax and paying reduced Corporation Tax, will allow financial institutions to invest in private rented housing without direct management responsiblity.

At the same time, commercial providers will be allowed to compete against housing associations for Government grants to build social housing, while landlords will be able to evict on eight weeks rather than 12 weeks rent arrears.

Single parents will lose their priority on council waiting lists under new homelessness rules. And most mandatory repair grants will disappear.

Frank Dobson, Labour's environment spokesman, to whom the document has also been leaked, said: "It offers no hope to the millions of homeowners trapped in negative equity and threatened with repossession. It offers no prospects for the millions of people living in squalid, damp, overcrowded and unsafe accommodation. It pulls the rug from underneath the thousands of homeless people." Nick Raynsford, the party's housing spokesman, said the proposals to set up private sector housing companies and transfer council stock amounted to "privatisation" of council housing. And while he welcomed the proposal that housing associations will have to re-invest the proceeds of sales in new social housing, it showed the "illogicality" of the Government's refusal to let councils spend more than 25 per cent of their receipts.

The paper's most dramatic aim is another 1.5 million home- owners in a decade - as big an expansion as the right-to-buy has brought over 16 years.

The purchase grant aside, however, the White Paper's only new proposal to achieve that is unspecified "support" for the private sector, public bodies and housing associations to develop on unused "brownfield" urban sites with an emphasis on homes to buy. With 70 per cent of housing association tenants on housing benefit, the impact of the grant is likely to be limited.

Low inflation and interest rates and the hope of more flexible mortgages to suit the self-employed and those on fixed-term contracts will also contribute, the White Paper says.

The Government wants to "break away" from councils being large monopoly landlords, transferring stock to housing associations, which will be freed to "expand their commercial aims".

Local housing companies, borrowing from the private sector, will be created, on which councillors and tenants will sit and to which stock can be transferred.

Unlike Labour's similar proposal, however, these "will need to be clearly in the private sector". However, all transfers will be voluntary and subject to tenants' ballots.

The White Paper's biggest U-turn is over social rents, the doubling of which has massively increased the housing benefit bill.

The Government now says "the most cost-effective way" to giving those on permanently low income decent homes is direct subsidy to landlords, rather than payments to individuals to help them meet higher rents, a move which it now acknowledges increases dependency on benefit.

MAIN POINTS OF THE WHITE PAPER

lAim of 1.5 million additional owner-occupiers in next decade

lNo new help for existing home-owners

lCash grants to encourage housing association tenants to buy

lCouncils increasingly to become "enablers" rather than direct housing providers

lLocal housing companies, new tax-advantaged Housing Investment Trusts and other measures to bring private finance into transferred council stock and new social housing

lNew eviction rights for landlords

lNew "family orientated" homelessness rules

lEnd to mandatory renovation grants

lPrivate sector to compete for housing association grant