Loans for tenants to buy property

THOUSANDS of potential buyers could be given a step up on to the housing ladder under proposals being considered by Labour.

Interest-free loans of up to £38,000 could be made available to council and housing association tenants as deposits on their first homes in the private sector.

The plan is being drawn up as a potential vote-winner that could be included in the next General Election manifesto. But it prompted accusations of hypocrisy from the Conservatives.

They said Labour had made home ownership a distant dream for swathes of the population by undermining the 'right to buy' for council tenants, and raising property taxes.

Under proposals from former minister Stephen Byers, seen as a policy 'outrider' for New Labour ideas, Government loans could be as much as £38,000 in London and the South East. They would be £30,000 in the South West, £26,000 in the North West and West Midlands, £24,000 in the East Midlands and Yorkshire and the Humber, and £22,000 in the North East.

The amounts would closely follow discounts tenants enjoy under the right to buy, but could be used for a home only in the private sector. The cash would be repayable in full on the sale of the property.

Byers insisted his initiative would help overcome a 'new national lottery' in which five million households who rent their homes are missing out on the rising prosperity enjoyed by property-owners.

After growing through the 1980s, home ownership has stuck at about 70% of households since the early 1990s. This has not been helped by Ministers slashing discounts under the existing right-to-buy scheme in large parts of London and the South East.

The Tories have already unveiled plans to extend the right to buy and allow tenants to put their discount amount towards a home in the private sector.

Conservative local government spokesman Caroline Spelman, said: 'The truth is that Labour have knocked a whole generation off the housing ladder through council tax hikes, slashing right-to-buy discounts, abolishing mortgage interest tax relief, and freezing stamp duty thresholds.

'After seven years of Tony Blair's Government, people are paying more tax than ever, without seeing any return for their money,' she added.

'Labour are all talk when it comes to helping first-time buyers - it is the Government which has aggravated the current crisis in affordability.'