Equity stake schemes must be backed by extra cash, experts warn

Otherwise, they will take money away from the future provision of affordable housing, researchers from the Chartered Institute of Housing and the Institute of Public Policy Research, a left-leaning think tank, said this week.

But rewarding tenants with a share in their home could well replace the right to buy in the longer term, they said.

The authors of a joint CIH/IPPR study of the Labour manifesto pledge to give tenants an equity stake in their home warned any such initiative must not affect future service provision.

CIH policy analyst Mark Lupton warned: "If you give tenants a stake now out of money that's available through landlords or the government, you are effectively taking it away from other objectives like building homes or repairs."

Government funding is now needed to set up pilot equity stake schemes, he said. The results of these pilots would help the sector bid for cash in the next spending review.

The research found no national model was suitable for equity stakes (HT 13 June, page 9). But it did suggest three main models that could work in different areas: asset "accounts" based on length of tenancy, a percentage share in the value of the home, and a collective scheme involving tenants taking a share in the total value of a social landlord's assets.

IPPR research fellow Sue Regan was one of the report's authors. She said the stakes, especially asset-based accounts, would form a vital part of the government's agenda in tackling financial exclusion, dovetailing with initiatives to ensure people on low incomes have access to bank accounts and monetary services.

Stakes must encourage people to "buy into social housing; not buy out of it like with the right to buy," she added. "Reform of the right to buy will be a necessary part of developing equity stakes."

Housing minister Lord Rooker refused to comment until his department has completed its own review of the stakes, which should be published in November. He pledged to "push the matter" as far as possible.