Boris Johnson has unveiled plans to boost home ownership and address the UK’s faltering economic growth in a bid to reboot his troubled premiership.
Days after suffering a major blow to his authority when 41 per cent of Conservative MPs voted against him in a crunch confidence vote, the Prime Minister used a speech in Blackpool to set out plans to extend the right to buy scheme to millions of people who rent their homes from housing associations.
He also announced a review of the mortgage market which could open the door to people on benefits to borrow money to buy their own homes.
The Prime Minister said: “We will finish the right to own reforms Margaret Thatcher began in the 1980s, ending the absurd position where first time buyers spend their life savings on flats, only to find themselves being charged hundreds of pounds for painting their own doors or unable even to own a pet dog.”
Mr Johnson said his plans would help 2.5m people who were “trapped” in homes belonging to housing associations buy their own property.
He added: “They cannot buy, they don’t have the security of ownership, they cannot treat their home as their own or make the improvements they want.
“And while some housing associations are excellent, others have been known to treat their tenants with a scandalous indifference. So it’s time for change.
“Over the coming months we will work with the sector to bring forward a new Right to Buy scheme. It will work for tenants, giving millions more the chance to own their home.
“And it will work for taxpayers: responsibly capped at a level that is fully paid for; affordable within our existing spending plans, and with one-for-one replacement of each social housing property sold.”
The Prime Minister said the annual bill for housing support stands at £30bn and could rise to £50bn annually, according to the Office for Budget Responsibility.
He said: “This is cash that is being simply swallowed to pay the mortgages of private sector landlords or by housing associations. It is time to put this huge wall of taxpayers’ money to better use. It is time to turn benefits to bricks.”
As part of the scheme, Mr Johnson said there would be a “comprehensive review of the mortgage market”, which would report in the Autumn, and which would “give our nation of aspiring homeowners better access to low-deposit mortgages”.
He added: “Now is the moment to widen the possibilities, and to give greater freedoms to those who yearn to buy.”
But the new scheme was criticised by Labour, housing groups and financial experts who questioned whether banks would be willing to lend to those on lower incomes and argued it could worsen a shortage of affordable homes.
Laura Foll, portfolio manager at asset management firm Janus Henderson Investors, told the BBC that while it would be a “politically popular policy” there were obstacles that needed to be sorted.
“The lenders in the UK, the large banks, are very conservative in their lending practices. For this to work the government would need to work hand in hand with the banking industry to make sure the banks are willing and able to lend.”
Catherine Ryder, from the National Housing Federation, a body which represents housing associations, said the government had not discussed the new policy plans with them, adding that there were “particular challenges around extending the right to buy”.
Polly Neate, chief executive of Shelter, said: "The Prime Minister's housing plans are baffling, unworkable, and a dangerous gimmick.
"Hatching reckless plans to extend Right to Buy will put our rapidly shrinking supply of social homes at even greater risk.
"For decades the promise to replace every social home sold off through Right to Buy has flopped. If these plans progress, we will remain stuck in the same destructive cycle of selling off and knocking down thousands more social homes than get built each year.”
The Treasury’s former permanent secretary Nick Macpherson tweeted: “One day many years hence HMG [government] will accept that the way to make housing affordable is to ensure supply outstrips demand: that would be leadership.
“Until then, expect numerous initiatives to pump up demand to support those who own property at the expense of those who don’t.#politics.”
Labour leader Sir Keir Starmer accused the government of rehashing old policies and said it was a sign that it had run out of road.
Shadow Levelling Up Secretary Lisa Nandy said: “In principle, it’s a great idea to try to get more people the security of their own home, particularly people who find themselves in the benefits system. The problem is that, as always, the Government has not thought through the detail.”
Earlier, the Levelling Up and Housing Secretary Michael Gove said a cap would initially be placed on the right to buy scheme but was unable to say how many people would be able to apply.
He also confirmed that there was no new government money to fund the policy.
“It will come from the overall parcel, the overall envelope, of Government spending,” he said.
Mr Gove said the government was looking at ways to help people on benefits gain access to mortgages and save for deposits.
But critics pointed out that universal credit was only available to those with savings of less than £16,000.
Downing Street said the move to allow housing benefits to pay for mortgages would effectively discount savings into ISAs from the Universal Credit eligibility rules.
The Prime Minister's official spokesman said: "This would enable people who are privately renting also to save, for people on benefits to save to get a mortgage, effectively by exploring discounting savings into lifetime or help to buy ISA from Universal Credit eligibility rules.
"So, anyone who is able to save specifically for a deposit will be exempt from the UC taper and will be eligible for the Government top-up, which is a 25% bonus to your savings up to a maximum of £1,000 a year."
