Low-cost housing plan criticised

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A government programme to help council tenants and lower earners into property ownership has been criticised by MPs.

The Commons public accounts committee said shared equity schemes, which cost about £500m a year, wasted money and did not help enough people.

Under the schemes, tenants buy part of a property and a housing association, lender or the government owns the rest.

The MPs said this did not necessarily serve as a route to full ownership and some "less deserving" people benefited.

'Insufficient information'

They also said there was a "risk" that the scheme could "push up house prices in locations or sectors of the housing market where demand for properties is already high".

In its report, the committee said the Department of Communities and Local Government (DCLG) did not collect "sufficient information" on how many part-purchasers went on to buy the whole of their home.

Increased spending on low-cost home ownership could mean less money for building affordable properties, it added.

The committee's chairman, Conservative Edward Leigh, said: "Increasing the level of home ownership among low-income and other priority groups is a highly desirable social objective.

"With house prices rising at a greater rate than increases in average earnings, however, a growing number of people cannot afford to buy their own places - especially those trying to buy for the first time.

"But inefficiencies and poor targeting of low-cost home ownership assistance are wasting large amounts of money. And information on the effectiveness of the assistance is thin."

'Out-of-date'

He added: "Poor controls on the housing waiting list are also permitting those who are less deserving to gain assistance at the expense of those who are genuinely in housing need."

But Housing Minister Yvette Cooper said: "This analysis is out of date and doesn't take account of the full benefits of shared ownership schemes, nor the ongoing improvements being made to them.

"Nearly 80,000 households have already been helped to get a foot onto the housing ladder, and we will double this by 2010 as a result of improvements to the scheme."

The committee's analysis is based on a 2005/06 report by the Comptroller and Auditor General.

A DCLG spokesman said: "We want to improve schemes further still. As [Communities Secretary] Ruth Kelly has made clear, we are looking at whether all products offered are flexible or ambitious enough.

"For example, we have announced we want to look at whether smaller stakes could be offered to support housing ownership aspirations for those living in social housing.

"But, whilst we are committed to looking at greater efficiency, we do not believe the savings outlined by the committee are based on realistic assumptions.

"There is also no evidence to suggest the scheme is having an impact on house prices."

A government-commissioned report last month by Professor John Hills of the London School of Economics said councils and housing associations should provide homes in areas where there are higher earners.

This would provide a better social mix as, at the moment, half of social housing is in the poorest 20% of places, he said.

The government has said there are "no plans" to end the role of social housing as a "safety net".