Tenants should be helped to buy their own property with a cash sum worth 10 per cent of the value of the home they rent, a Tory policy group will propose today.

By providing long-term tenants with a helping hand on to the property ladder, “deadend ghettos” could be transformed, it claims.

Stephen Dorrell, the former Conservative Cabinet minister, will present the final report of the party’s policy group on public service reform today.

The most eye-catching suggestion - that tenants in social housing be helped to buy property with a state-funded contribution - would help to promote social mobility and free stock for waiting tenants, the final report states.

The payments - funded by the taxpayer and worth up to 10 per cent of the value of their rented homes - would be limited to well-behaved tenants who have held their tenancy for at least five years.

The proposals would give tenants a stake in the rising value of their homes and help to encourage them to keep a good record of rent payments and maintenance.

The Tory policy group suggests that renting council or housing association property should be regarded by tenants as a temporary stop on the path to owning at least a share of their own homes.

“We believe in a new definition for the purpose of social housing. Living in social housing should be viewed as a transition during which support is temporarily required before moving up the ‘ladder’ to some form of shared or outright ownership, or sheltered housing,” it says.

It adds that the right-to-buy (RTB) schemes introduced by Margaret Thatcher in the 1980s are no longer enough to provide tenants with a route to owning their own homes.

“Reduced discounts and rising property prices mean it is time to provide direct help.

“We recognise that many of those living in social housing are unable to afford to buy their own home, even under a discounted RTB scheme or shared ownership.

“Shelter told us that only 5.5 per cent of those in the social rented sector have an income of over £35,000 per year,” states the report.

It adds that waiting list rules should be reviewed to ensure that the right people are being given priority.

It also calls on local authorities and other landlords to do more to ensure a proper mix of tenants to prevent estates becoming a “living tomb”, blighted by crime, drugs and poverty.

“Some housing estates have become epicentres of poverty and crime, fuelling poor public health, truancy and educational failure as well as mental illness. Housing ought to be central to all improvements in wellbeing for the individual and for society. Where you live can indicate how long you will live,” it adds.

“We need to change the mono-cultural estates of our deprived inner cities, replacing them with more cohesive neighbourhoods that have a sense of local pride and ownership.

“Increased mobility within social housing can help more people on to the housing ladder; can help to create mixed-tenure neighbourhoods; and can help to free up social housing stock to meet demand and to address some of the overcrowding that currently exists.”

David Cameron will welcome the report but will not formally adopt any of its proposals today.

The Tory leader has previously identified social housing as a key element behind social breakdown in the country.

The initiative is the latest in a stream of policies announced in recent days which the Tories claim will improve Britain’s public services. They include the option of holding children back in their primary if they show signs of falling behind.

Mr Cameron has made a pledge to “mend Britain’s broken society” a key theme of his leadership.

Housing sell-off

— The right for council tenants to buy their homes was first introduced by Margaret Thatcher in the 1980 Housing Act

— Tenants who had lived in their home for up to three years could buy at a 33 per cent discount on the market value of their home, increasing in stages up to 50 per cent for a tenancy of 20 years

— 300,000 houses were sold off in Mrs Thatcher’s first term and about 100,000 were sold each year during the 1980s. Sales dropped to 40,000 per year in the 1990s

— 1.5 million houses been sold off by 2003 and sales had raised an estimated £45 billion. However, many councils were forced to use the cash to pay off existing debts

— Homeownership grew in the same period from 55 per cent of households to 67 per cent: more than a third of the increase was because of the right-to-buy policy

— Council house sales rose to 54,000 in 1999-2000

Source: Times database

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