Cautious welcome for housing spend plans

The Government's White Paper on housing could see more investment in the market but has only received a cautious welcome in the industry.

The Government aims to increase home ownership by 1.5 million families over the next decade and transfer council stock into privately run companies.

The paper proposes:

n Cash grants of up to œ16,000 to encourage housing association tenants to buy their rented homes. Associations will receive full market price and will be able to build a new home from the sale receipt

n Creation of housing investment trusts to encourage financial institutions to invest in the private rented sector

n Private companies allowed to compete for housing association grant

n No cut in tax relief on mortgage interest

James Tickell of the National Federation of Housing Associations said: 'If the new private companies bring in new investment, that's good, but I'm not sure how it's going to work. I don't think tenants will vote for a private profit making company.

'It looks like for every home sold we can build another, which is good, but it makes repair and maintenance of blocks of flats with a mix of private and association tenants very difficult.'

Alan Cherry chairman of Countryside Properties added another caveat: 'We are concerned at right to buy because a lot of housing association funding is now coming from private institutions and they are very worried at how it is going to affect the security of their income stream.'

The question of contractors bidding directly for housing association grant has also fallen on stony ground. Cherry said: 'I think most companies are opposed to this while funds remain as limited as they are. It seems silly to upset the progress made in the partnership between associations and builders.'