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Boris Johnson has announced plans for a major housing shake-up – extending right to buy and allowing low earners to use housing benefit towards a mortgage.

The Prime Minister said he would extend Margaret Thatcher’s ‘Right to Buy’ scheme to allow housing association tenants to purchase their homes at discounted rates.

People on housing benefit will be “given a new choice to put benefits towards a first ever mortgage” under the shake-up, Mr Johnson said in a speech in Blackpool.

He added: “It’s time to turn benefits to bricks.”

He also announced a mortgage review, which will report back by the autumn, looking at how low-deposit mortgages could be extended.

But Mr Johnson failed to commit to his own manifesto pledge to build 300,000 new homes a year by the mid 2020s, saying “I can’t give you a cast iron guarantee that we will get to a particular number in a particular year”.

Boris Johnson is battling to shore up his authority after he survived a confidence vote ( PA)

Mr Johnson unveiled the plans in a major speech as he tried to get his scandal-hit premiership back on track.

The PM survived a challenge to his leadership from his own backbenchers but he is clinging on by his fingertips after 41% of Tory MPs expressed no confidence in him.

Setting out his housing reforms, Mr Johnson said the £30 billion a year spent on housing support was being “swallowed” to pay the mortgages of private-sector landlords or by housing associations.

“It’s time to put his huge wall of money – taxpayers’ money – to better use. It’s time to turn benefits to bricks,” he said.

“We are going to look to change the rules on welfare so that the 1.5 million working people who are in receipt of housing benefits – I stress working people – and who want to buy their first home will be given a new choice: to spend their benefit on rent, as now, or put it towards a first-ever mortgage.”

He said he would finish Margaret Thatcher’s “right to buy” reforms, ending “the absurd position where first-time buyers spend their life savings on flats only to find themselves charged hundreds of pounds for painting their own doors or even unable to own a dog.”

Right to Buy housing sales in England ( Press Association Images)

He promised “one for one” replacements for social homes sold under the scheme amid criticism over whether the reforms will reduce housing stock.

In a rambling speech where he jumped from UK production of bananas to the war in Ukraine, Mr Johnson said pressures on household budgets will be “unaffordable” for some families, especially when the price cap rises again in the autumn.

He vowed to “do what we can for as long as it takes” but admitted that no Government can “shield everyone completely from the increased costs caused by powerful global forces.”

The Prime Minister said the country was “steering into the wind” following the global impact of the Covid pandemic and Russia’s invasion of Ukraine – but he vowed “we will get through it”.

But he hinted that public sector wages won’t go up in line with inflation, saying: “If wages continually chase the increase in prices then we risk a wage price spiral such as this country experienced in the 1970s.”

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The reforms sparked alarm from housing associations over fears it would reduce the stock of much needed social housing.

Kate Henderson, Chief Executive of the National Housing Federation, said: “Right to Buy pilots have shown that there is not enough money from sales to build new social homes to replace those sold, meaning a net loss of social housing.

“We support measures to help people buy their own home and housing associations already build thousands of homes for shared ownership every year, helping people take their first steps onto the housing ladder.

“However we are deeply concerned about the long term impact of Right to Buy and any loss of social housing will make the challenge of providing homes for those in need even harder.”

Polly Neate, chief executive of Shelter, said: “The Prime Minister’s housing plans are baffling, unworkable, and a dangerous gimmick.

“Hatching reckless plans to extend Right to Buy will put our rapidly shrinking supply of social homes at even greater risk.”

She warned that the promise to replace every social home sold off had flopped in the past and added: “The maths doesn’t add up.”

Liberal Democrat Leader Ed Davey dismissed the speech as a “desperate attempt” by Mr Johnson to relaunch his leadership.

Boris Johnson has lost the confidence of his party, Parliament and the country, the desperate attempt to relaunch his leadership today will do nothing to win it back,” he said.

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