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When Ed Davey tabled an early-day motion in the House of Commons on 4 March, he added the Liberal Democrats' voice to a chorus of anger over the abolition of social housing grant. The text of his motion was to the point: "The government has thrown … social housing programmes into chaos and may seriously undermine the early provision of desperately needed affordable homes." The next day, the Office of the Deputy Prime Minister announced a partial U-turn, finding £110m to fill the funding gap it had opened up a month before. Given the slow turning speed of Whitehall machinery, it's unlikely that the motion from Davey – deputy prime minister John Prescott's Liberal Democrat shadow – triggered the change of heart. On the other hand, it may have oiled the wheels to progress it more quickly. And as far as housing goes, the motion adds weight to the Lib Dems' claim that their party is the true opposition.

Of 468 councils across the country, 35 are Liberal Democrat-controlled and three more are Labour-Lib Dem alliances. This might sound like small beer but in the past few years Labour has lost former bastions such as Liverpool, Lambeth and Islington to the Liberals. This time round, the party is tipped to make gains in the South, particularly at the expense of the Conservatives in areas including Torbay in Devon, south Somerset, north Wiltshire and Windsor and Maidenhead. In last year's local elections, Davey's party won 30% of the poll share compared to the Tories' 28% and Labour's 36%.

This year, the party's housing-related proposals are at the forefront of its manifesto. It is promising to create a "community safety force" to coordinate the work of council officials, police and community representatives in tackling antisocial behaviour, and to bring empty homes back into use in areas of high demand through "empty home management orders" – similar to compulsory purchase orders.

To use empty homes in the South-east, Davey wants empty homes strategies spanning local authorities, private landlords and housing associations, best-practice guidance and compulsory leasing powers for local authorities. "It could be brought in relatively quickly," he says. "[The current situation] is outrageous, and dealing with it is a major part of the Lib Dem alternative."

The Communities Plan opportunity
Although he broadly supports and welcomes the Communities Plan, Davey believes its gaps and omissions will yield further political capital for his party. In particular, Davey and his team are preparing a detailed policy paper on affordable housing for the Lib Dem autumn conference, and setting up a working group on housing. He says: "An alternative and effective housing policy by the next election is one of my priorities. In 18 months' to two years' time, we'll have an all-singing, all-dancing policy to put to voters."

He has plenty of early candidates for the chorus line: new types of landlord for "mutual" housing associations for transfer estates, more borrowing powers for councils, "golden share" schemes where local authorities keep control of local housing.

"I'd like to think it could be quite radical and far-reaching," Davey says.

Davey, MP for Kingston and Surbiton, views housing through a long lens – and one with an economic filter – rather than from close-up experience of substandard estates. His background is in economics and management consulting and he draws his ideas from research and think tanks such as the Social Market Foundation, which is conducting a study on the housing market and of which he is a member. "I can't help but think about things with an analytical, economics framework," he says.

Transfer votes are lost because tenants don’t trust the landlord; if the landlord was themselves, they would feel more relaxed

The sine qua non of that framework for Liberal Democrats is a belief in decentralising power to local authorities. "I asked Charles Kennedy for this portfolio. If you want to empower individuals and communities, the local government portfolio is where you can develop the most relevant policies."

Within the Lib Dems, 37-year-old Davey is something of a mascot. He won a surprise victory in 1997 with a majority of 56, which he had converted to 15,676 by 2001. An energetic, campaigning MP, he has risen rapidly in the parliamentary party, winning his shadow ODPM role in October 2002. "He's one to watch, and he's certainly in the right age group to get to the top," notes Stephen Knight, a Liberal Democrat councillor in neighbouring Richmond. Davey's chief asset in that upward progress must be his air of affable openness: even his website has a disarming "get to know me" section with stories such as how he once saved a woman from the path of a train. "People like him because he's accessible and approachable," says Knight.

Autonomy for councils
One of Davey's favourite topics is the second pillar of Lib Dem ideology (after proportional representation): giving local authorities more autonomy and, as is clear from the local election manifesto, the freedom to raise and spend local income tax as a replacement for council tax. The idea is that, freed from Westminster's apron strings, councils could pursue innovative policies in housing, social care or education. The true era of "freedoms and flexibilities", Davey says, will only dawn under a Lib Dem sun.

That day could be a long time coming but, in the meantime, Davey would like to see more borrowing powers for local authorities. "Councils are more constrained than housing associations – there should be a level playing field," he says. Applying that tenet to the transfer-versus-arm's-length debate, he criticises the "significant financial incentive to bribe people towards voting for stock transfer. The decision should be taken on the basis of being a better landlord."

Hence the Lib Dem's "third way" to stock transfer: a new breed of tenant-owned "mutual" housing associations, highlighted in a study by think tank Mutuo for the Welsh Assembly. "Transfer votes are lost for a number of reasons but one is that tenants don't trust the new landlord," says Davey.

"If the landlord was themselves, they would feel more relaxed."

But how will Davey advise constituents over a forthcoming transfer vote in Kingston? Davey is quick to acknowledge the imperatives of the "real world". "I may argue in favour [of transfer to a registered social landlord], depending on the terms. It might be the second-best option, but still the best option for my constituents. Who am I to advise people to wait for something that might not happen in five years' time?"