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13.02.15

Tory plan to give away council houses dismissed as ‘genuinely stupid’

Tory plans to give away council houses for free to people who come off benefits have been dismissed as “a genuinely stupid idea” by experts.

DWP secretary Iain Duncan Smith is pushing to include the policy in the Conservative manifesto, which would see council tenants be “gifted” their homes if they get a job and stay off benefits for a year.

Duncan Smith sees it as a method of wooing skilled working class voters away from UKIP, as well as promoting home ownership and rewarding work. He also argues that the scheme would reduce the vast housing benefit bill.

295 IDS c. Isabel Infantes EMPICS Entertainment(Image source: Isabel Infantes EMPICS Entertainment)

Such tenants would become ineligible for housing benefit and be forced to surrender up to 35% of sale proceeds in tax if the property was sold on within three years.

Revenues raised would be reinvested in the housing market, and Conservative policy experts have calculated the savings from the £23bn annual housing benefit bill and sales tax income would, with the help of inflation, outweigh the costs.

But leading housing experts have been severely critical of the plans. David Orr, chief executive of the National Housing Federation, said the policy was a “genuinely stupid idea”.

He said: “My first instinct was to ignore this idea as being just too bonkers to have any traction.

“Of all the ideas I've heard in a career in housing, this is the daftest.”

He added: “We fully support the aspiration of homeownership, but not at the expense of the 1.7 million people currently waiting for desperately needed social housing across England.

“Giving away housing association homes is so preposterous, it cannot be considered a serious solution to our housing crisis. We need a long-term plan to end the housing crisis within a generation, not exacerbate it.”

The work and pensions secretary would also like to see right-to-buy extended to include housing association homes.

Currently tenants in these houses only qualify for limited discounts and can only buy a property that has been acquired by an association since 1997. Discounts vary between areas, but range from £9,000 to £16,000. Council house tenants, by contrast, can get discounts of up to £77,000 across England and £102,700 in London.

The original right-to-buy scheme, introduced by Margaret Thatcher in the 1980s, was hugely popular but has been widely blamed for reducing the availability of social housing. It led to more than 1.5 million homes being sold at discounted rates.

More than 27,000 homes have been sold under the programme since the Coalition came to power in 2010.

Brendan Sarsfield, leader of the G15 group of London housing associations, told the FT that giving away homes at deep discounts would undermine the sector’s financial viability.

“It would mean giving away assets, many housing associations have large loans, what would the banks do if suddenly our assets were eroded in this way?”

Other experts have warned that due to their charity status, housing associations are currently legally barred from selling homes below market value.

The government would need to introduce legislation to allow housing associations to sell houses to tenants at a discount, according to Piers Williamson, chief executive of the Housing Finance Corporation.

(Top image source: Mtaylor848)

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