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Since 1999, low cost home ownership (LCHO) assistance has helped 40,000 people to buy their properties. The Department for Communities and Local Government (DCLG) has made a commitment to help an extra 100,000 households into home ownership by 2010. But demand for assistance far exceeds supply. In 2004-05, 11,000 households received assistance through Government funded programmes, compared to estimated demand of 60,000 households a year.

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According to a report from the National Audit Office, better targeting of assistance at those most in need of help and more efficient administration of the programmes could help more than 4,000 additional households each year.

Getting on the housing ladder is becoming more difficult: only 36 per cent of new households can afford to buy compared to 46 per cent in the late 1980s; and, since 1999, the ratio of average house prices to average income for first time buyers has risen by 50 per cent. Government assistance has helped social tenants, key workers and other priority groups who would have been unable to afford a home without help.

According to today’s report to Parliament, if the DCLG continues to make improvements to targeting and managing the programme, annual savings of up to £112 million could be achieved:

The DCLG and the Housing Corporation, who allocate grants to RSLs, need to improve their understanding of how funds are being used. In 2004-05, RSLs received over £90 million more in grants than they needed to operate the Shared Ownership scheme, although it is possible that RSLs were unable to anticipate the high rate of increase in house prices between their application for grant and the sale of the properties. The NAO report has also found in retrospect that, since 1999, RSLs have benefited by up to £56 million from the increase in house prices and their current interest in LCHO property is potentially worth up to £720 million. Although RSLs, who are non-profit making private bodies, use these returns to subsidise their housing activities, including the provision of more affordable housing, controls over the returns and their use must be tightened to ensure the funds are being reinvested quickly and properly to maximise the effectiveness and impact of LCHO programmes.

"Low cost home ownership assistance has helped thousands to take their first step onto the housing ladder. But, to ensure that as many other households as possible get the chance to do the same, the assistance needs to be more tightly managed and better focused on those it would benefit most.

"The Department for Communities and Local Government, the Housing Corporation and Registered Social Landlords must work together to ensure that the assistance is being effectively managed and monitored. This will be particularly important in securing value for money as the schemes expand to try to help an extra 100,000 households."

Sir John Bourn, head of the NAO

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