Dispute over uptake of rents-to-mortgages scheme

SIR GEORGE YOUNG, the housing minister, predicted a strong take-up for the Government's rents-to-mortgages scheme, launched yesterday, to enable low-income council tenants to buy their homes.

But housing pressure groups expressed scepticism. So far only 1 per cent of eligible tenants living in areas where pilot schemes were conducted have exercised the rents-to-mortgages option enabling them to buy their homes for payments little more than their rents.

Shelter, the housing charity, said the scheme amounted to a 'one way street' and that to provide real choice the Government should also introduce a mortgages-to-rents scheme to provide those in financial difficulties with a way out of their mortgage arrears.

Yesterday, Sir George unveiled a consultation paper which will be incorporated in the Housing, Land and Urban Development Bill to go before the House of Commons in November. More than 1.1 million council tenants have exercised the right-to-buy their council homes since the measure was introduced in 1980 and Sir George said rents-to-mortgages was an extension of that process.

Up to 1.5 million council tenants in England and Wales who pay their rent without the help of housing benefit, are not in arrears and have been in the property for two years will be eligible for the new scheme.

But critics say that tenants will be put off by the scheme's complexity. It involves a discount on the price related to length of tenancy and a mortgage borrowed in the normal way from a building society with repayments equivalent to the rent. Tenants then own a substantial chunk of the property that can purchased later or paid off when the house is sold.

Sir George conceded the process was complicated, but said that right-to-buy had also been a complex procedure, which buyers had overcome. Once tenants grasped the mortgages-to-rents concept, they would be able surmount any difficulties.

He said he believed that the take-up for mortgages-to-rents would be into 'six figures', though he declined to give a timescale for his prediction. 'It is a further step in our campaign to enfranchise local authority tenants to give them more opportunity and more choice.'

But Dominic Byrne of Shelter said that the pilot schemes showed that the new measure was not popular with tenants. At Milton Keynes, where the pilot ran from March to October last year, and Basildon, still running since February last year, only 105 out of a potential 10,000 tenants exercised their option.

John Perry, of the Institute of Housing, also feared that local authority stocks of two and three-bedroom houses, already reduced under right-to-buy, would be further eroded.

(Photograph omitted)