Housing groups want homes, not loans

Housing groups today called on the government to match its support for first-time buyers with a commitment to increasing the provision of affordable housing.

Last week, the National Housing Federation (NHF), a group representing 1,400 housing associations, reported that house prices in England had risen to eight times the average salary by the end of 2004, pushing homes out of the reach of many potential buyers. It said that the problem had been compounded by a shortage of affordable homes.

Gordon Brown's will unveil plans on Wednesday for a new equity loan scheme aimed at helping first-time buyers onto the housing ladder. However, the NHF said that although the scheme will help to bridge the affordability gap, the government's plans must be backed with the provision of affordable housing.

Danny Friedman, director of Policy at the National Housing Federation, said: "The government's commitment to affordable home ownership is heartening, but mortgage subsidies are not a substitute for more investment in new homes.

"It is important that this new private finance approach supports the provision of additional affordable homes, and that it does not further fuel house price rises.

"The government needs to tackle a range of housing problems. With 100,000 families homeless and in temporary accommodation, and a government pledge to reduce that number by half by 2010, it is vital that there is no substantial diversion of public funds away from building new affordable rented homes.

"The social homebuy equity scheme was proposed some months ago. We welcome the government's recognition that this scheme has to stack up, both for residents and housing associations.

"We don't want to see residents saddled with costs they can't afford, or associations' ability to build new homes undermined."

Housing charity Shelter said the new scheme could leave those in the greatest need of housing facing even greater problems.

Adam Sampson, director of Shelter, said: "At a time when there are record numbers of homeless families trapped in temporary accommodation, we don't think it's right for the government to effectively subsidise the acquisition of personal wealth through home ownership.

"There is a danger this proposal will simply increase demand and lead to further house price inflation - cancelling out the investment. That's why we will be looking to see whether the deputy prime minister will actually now act on the findings of the Barker review and its recommendations to greatly increase the supply of social housing.

"Without a huge increase in the number of homes being built any measures to boost home ownership will leave those in the greatest housing need even further behind, suffering the misery of homelessness or bad housing."

The Barker review was published in March 2004. It suggested that an increase in supply of social housing of 17,000 homes each year is required to meet newly arising need.

On Wednesday, the deputy prime minister, John Prescott, is expected to announce that he will accept most of the recommendations of the report.