Council to sell empty homes for £1 to tenants hit by housing benefit cuts

Council to sell empty homes for £1 to tenants hit by benefit cuts

Stoke-on-Trent City Council wants to offer loans of £30,000 to families hit by housing benefit cuts to refurbish empty homes which it will sell to them for a £1.

The measure is part of a move by the council to support tenants hit by welfare reform, bring back into use empty homes and promote home ownership.

From next April some 660,000 working age claimants will face housing benefit cuts of £56 a month on average for having “spare” bedrooms. In addition to the under-occupancy penalties, a household benefit cap will also apply limiting families to £500 a week.

The council is match-funding £1.5m of the Government’s empty homes funding with £1.5m from its own capital allowance to get the scheme up and running.

The number of properties is as yet unconfirmed but it’s looking at voids in Portland and Bond Street in the city initially targeting hard to let homes owned by social landlords who can’t afford to do them up.  

Councillor Janine Bridges, cabinet member for Housing, Neighbourhoods, and Community Safety, said the £30,000 loan would be like a mortgage with a condition that the homeowner wouldn’t be allowed to sell the property within five years.

If the homeowner then sold the property there would be a “claw back” clause so the council would receive part of the sale price but leave the homeowner with enough to purchase elsewhere.

“The money would be recycled so it would give families a leg up,” she said.

She said that with tenants being hit by housing benefit cuts from next year, managing a £30,000 loan could match the rents charged by housing associations.

For example if the loan was spread over 10 years, repayments would be equivalent to £250 a month without interest.

She said: “They’d be paying a housing association rent of between £200-£300 a month when they could be paying off a £30,000 loan but the upside is, they’ll be getting something back on that investment.”

Although unconfirmed she said the council was looking at administering the loan through a credit union thereby ensuring cheaper interest rates.

Councillor Bridges added: “The scheme would help get people out of the social housing sector and give them motivation to be homeowners. It’s a novel scheme and would give tenants an opportunity on their investment.”

The council added the scheme – which aims to bring voids back into a decent livable standard – would not only be open to those facing housing benefit cuts but to anyone who is willing to personally live in the properties rather than rent out and live elsewhere.