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Teresa Pearce (Erith and Thamesmead) (Lab)
It is a privilege, Mr Howarth, to have this debate under your chairmanship. It is testament to the crisis in London that several London MPs are here. I will speak about private landlords, many of whom are excellent, professional and responsible; my comments are in their interests and those of my constituents.
The capital has always been a hot spot for housing, but recent policy reforms and cuts in funding by the Government and the Mayor have resulted in Londoners facing a housing crisis. Recent polling from Ipsos MORI showed that four in five people—82%—agree that there is a housing crisis in London. House building is down, and homelessness and rough sleeping are rising. In 31 of 32 London boroughs, less than 10% of available properties for sale are affordable to a couple on average wages, with children. As an MP, I earn a good salary, but if I were starting out now, I would be unable to buy a family home in most areas of London. In addition, the lack of an adequate supply of social and affordable housing means that many people have no choice but to rent privately.
The situation could become even worse. Statistics from the Ministry of Justice show that one in 56 households in London are at risk of mortgage or landlord repossession, compared with one in 105 households nationally. Discussions tend to focus on building affordable and social housing, but neither can be provided overnight. We must focus on what needs to be done to help people now. I initiated this debate to discuss practical steps that should be urgently taken to regulate the private rented sector throughout London.
In the past 10 years, the proportion of families renting in London has increased from one in 10 to one in four. If population growth is taken into account, that is a 119% increase in the number of families renting. In my constituency, almost one fifth of all families live in private rented accommodation. The private rented sector in London has grown by 75% in 10 years, but rented accommodation is not offering people the opportunity to create secure homes and stable families.
The private rented sector is notoriously unstable. Renters typically have short contracts of six or perhaps 12 months. Rent increases are unpredictable. The life of the private renter is typically unstable, insecure and blighted by anxiety. I regularly meet families who tell me that they are living in substandard properties that are damp and overcrowded, and that their accommodation is making their children ill. They tell me that, for all this, they struggle to pay extortionate rent. They tell me they fear eviction. They tell me that they are desperate, and they are.
One of the biggest problems facing families who rent privately is the instability of the market, and the lack of a statutory system of private rented sector regulation to safeguard standards and of any meaningful security of tenure. The assured shorthold tenancy gives tenants just six months’ protection from eviction, after which landlords can evict them or raise their rent by any amount with two months’ notice. Renters have no long-term certainty, and that is no way to raise a family.
I have met families in my constituency with children under 10 who are attending their third primary school due to multiple evictions over their short lifetime. That is not surprising because, according to Shelter, renters are 11 times more likely to have moved in the last year than people with a mortgage. That has a negative impact on children’s education and well-being. Government research found that frequent movers are significantly less likely to obtain five A to C GCSEs, or to be registered with a GP. That is yet another example of children from the poorest background being failed. We must reform the assured shorthold tenancy and increase security of tenure beyond the six-month limit if we are to have stable communities and give children the best chance in life.
There is not just the emotional cost of moving: uprooting is extremely expensive. Letting agencies can charge excessive fees of hundreds of pounds for administration costs, in addition to requiring deposits and advanced rent. The result is further pressure on renters who are already struggling to balance rising rents and living costs. The instability of the private rented sector means renters face these charges more frequently—the more frequent the turnover, the more money the letting agent makes.
It is time for the industry to face regulation, as the informal code of practice has clearly not worked. The extent and level of activities that can be charged for should also be regulated to ensure consistency. Renters should not have to pay disproportionate amounts for basic services, such as swapping, renewing or editing contracts—and all the while rent is out of control: the cost of renting has soared while wages have dropped. Rent inflation in London is 4.8%, and at the same time, the average wage for ordinary Londoners has fallen by 5%. Excessive and unaffordable rent increases can be prevented only by Government intervention.
Nadine Dorries (Mid Bedfordshire) (Con)
My constituency is just outside London, and many people believe that it is easier to go outside London for cheaper rent if they want to remain together as a family. However, unreliable transport means that one of my constituents who was the family breadwinner but recently lost their job now finds it impossible to go back to London because of the shortage of housing and extortionate rents. Does the hon. Lady agree that moving out of London is not always the answer that some people think it is?
Teresa Pearce
I thank the hon. Lady for her intervention and I agree with her. The Select Committee on Work and Pensions recently visited her constituency, and we heard all about the problems in a rural constituency, such as problems with transport, and people trying to move to London but finding it impossible to obtain properties.
We need rent stabilisation. It is time to protect the consumer while allowing landlords to make a living, but some in my constituency are making a killing. Rent stabilisation is sometimes called second or third generation rent control, and is used in many other countries, including France, Germany, Sweden and Switzerland. Although some critics say that landlords would flee the sector, that has not happened in those countries, nor has it affected the development of large and functioning private sectors. Rent stability is needed to provide people with stability. That is logical, fair and overdue.
Although rents are rising, the same cannot be said about the standard of rental property. According to Shelter, private rented homes are in worse physical condition than homes in all other tenures. My postbag shows an increasing number of families whose physical and mental health is being severely affected by living in overcrowded, damp and unsafe accommodation for which they are paying inflated rent. The lack of regulation means that vulnerable tenants in substandard living conditions can be exploited. We need a fair system of checks and balances, and a national system of landlord accreditation to offer much-needed regulation.
Private properties should be assessed by local authorities to determine whether they are fit for human habitation before they are rented. The Law Commission has called for every tenancy to include the implied term that the dwelling should be fit for human habitation. I support that call. We must grant greater powers to local authorities to root out and strike off rogue landlords. There are many good and reputable professional landlords, but the rogue element shames the whole sector.
Instituting a system requiring landlords to conform to certain standards or face penalties would not only improve the quality of private rented properties, but give private renters the security they are currently denied. It is clear that there is an imbalance of power between tenants and landlords. Tenants will not ask for conditions to be improved because they fear retaliatory eviction, which occurs when a landlord attempts to evict a tenant in response to a reasonable request, such as having health and safety issues addressed. A survey by The Tenants’ Voice in 2013 found that 61% of tenants were worried about complaining to their landlords about anything. It also found that 71% of tenants had paid for repairs themselves rather than asking their landlords.
Legislation protects landlords but not tenants. Section 21 of the Housing Act 1988 provides landlords with a mandatory ground for eviction. They do not have to give any reason and the only requirement is that notice has been served correctly. It is clear that the conditions under which a section 21 notice can be issued should be reviewed urgently.
Emma Reynolds (Wolverhampton North East) (Lab)
Does my hon. Friend agree that a growing phenomenon is the number of people who are homeless because of eviction in the private rented sector? That is extremely worrying and one of the main drivers of the increase in homelessness in London and elsewhere.
Teresa Pearce
I completely agree. In my constituency, the people who present to me as homeless have always spent time in private rented accommodation, and they do not want to go back into it because of the insecurities that it creates, particularly for their children and their children’s schooling.
I understand that housing in London is a complex problem, but it must be confronted. We are facing the biggest housing crisis in a generation. For too long, some private landlords have taken the money without accepting the responsibility, while the rest of us have picked up the costs of unstable communities, marriage breakdowns and children who do not have a secure home life. Given that the private rented sector is likely to keep expanding, we must create a reputable industry that protects the vulnerable and ensures that renters are not at the mercy of unscrupulous landlords. Stable homes make stable communities, which is surely is in the interests of society as a whole.
I have eight questions that I would like to ask the Minister. First, does he agree that the private rented sector needs greater regulation and management? Secondly, I understand that the Department for Communities and Local Government has been considering the need for family-friendly tenancies in the private sector. How many families have benefited from increased security of tenure in the private rented sector since the Secretary of State’s announcement on 1 October 2013 of a package of measures to persuade landlords to offer greater security? Thirdly, does the Minister agree that rents have reached the limit of affordability for most ordinary families across the capital? Fourthly, does he support the Law Commission’s call for every tenancy to include an implied term that the dwelling should be fit for human habitation?
Fifthly, the Government promised some movement on a review of conditions in the private rented sector by the end of January 2014, but we have had no news on that. Will the Minister tell us when we might see that review? Sixthly, what new rights does the Secretary of State’s tenants’ charter give to tenants who face retaliatory eviction after making a complaint about their landlord because of dangerous conditions in their home? Seventhly, does the Minister agree that local authorities should declare to Her Majesty’s Revenue and Customs the payment of housing benefit to landlords? There are people who profit from the tax and benefit system without paying into it. Eighthly, are all local authorities required by statute to have a published housing strategy as well as a tenancy strategy?
Heidi Alexander (Lewisham East) (Lab)
It is a pleasure to participate in this debate, and I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing it. I am afraid that I cannot stay for the whole debate because I am chairing a meeting at 10.30 am, so I will miss the contributions from the Minister and, sadly, from our Front-Bench spokeswoman, the hon. Member for Wolverhampton North East (Emma Reynolds).
When I sat down yesterday to think about what I might say in this debate, I realised that I have made a similar speech in each of the years I have been a Member of Parliament. I make no apology for that, because the housing crisis in London has a direct impact on my constituents. For many of them, that impact is devastating for their lives and those of their families.
The housing crisis in London is of long standing, but I believe it has been made worse by the policies of the Tory-Liberal Government. If the crisis is not addressed, it will continue to cause misery and unhappiness for many. It will damage our economic competitiveness and place enormous strain on our already overstretched transport system, as the hon. Member for Mid Bedfordshire (Nadine Dorries) has said.
Some may think of London’s housing crisis as a problem that affects only certain people—perhaps those on a particular income or of a particular age—but nothing could be further from the truth. With rocketing house prices and sky-high rents, London’s housing crisis is as much about the young professional couple in their 30s who are unable to buy their first home as about the family of five who rent an overcrowded flat from a slum landlord. The housing crisis is as much about the nurse or the firefighter who cannot afford a shared ownership property as it is about the rough sleeper who can find shelter only in a disused garage or on a bench in a railway station.
Emily Thornberry (Islington South and Finsbury) (Lab)
The issue affects all of us across London. I do not know whether I have yet shared with my hon. Friend the story of a firefighter and a midwife whom I met, who lived in overcrowded conditions and wanted to part-buy. When I looked into where they might get a part-ownership property, I realised that the only place they could afford to buy was somewhere out near Redbridge, and only after she had qualified as a midwife. Affordable housing in central London is social housing, in my view. Does my hon. Friend agree?
Heidi Alexander
I do. In my experience, it is especially difficult for people with families who are trying to buy a two or three-bedroom shared-ownership property. They have to be earning in the region of £40,000 a year before they can access such properties.
Nadine Dorries
Many moons ago—some in this room may not even have been born—in 1978, as a newly qualified nurse on a newly qualified nurse’s salary, I was able to buy my own home independently without a partner. Compare that with today, when there is absolutely no possibility of a newly qualified nurse buying a home in London.
Heidi Alexander
I have met nurses in my constituency who might be able to afford to buy a flat elsewhere in the country, but in London that is simply impossible. I have not dreamt up the nurse, the rough sleeper on a bench in a railway station or the others whom I have described; they are real people whom I have met and spoken to in the past few years. I am not surprised when I read that 82% of Londoners think that the capital is in the grip of a full-scale housing crisis, or that 27% believe the affordability of housing to be the most important issue facing the capital, because I hear the same thing week in, week out.
One of the most common conversations that I have at my fortnightly advice surgeries is about the huge mismatch between the demand for and the supply of affordable homes in London. I see family after family living in overcrowded conditions who want to move to a suitably sized property at a rent that they can afford. I say “rent”, because the idea of buying a home is completely out of reach for many. Someone on a minimum-wage job lucky enough to be working full time—that is quite a big assumption—earns less than £12,000 a year. The idea that there is any property in London that they could afford to buy is laughable.
The truth is, as my hon. Friend the Member for Erith and Thamesmead said, that if I had not been in the fortunate position of buying a home with my husband, many parts of my constituency—that is Lewisham, not Kensington or Chelsea—would be unaffordable for me as an MP on a salary of £68,000. I do not say that to plead poverty; I recognise that I am very well off. However, my situation demonstrates that the housing market in London is such that people in many different walks of life cannot afford the modest home that they would like.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
My hon. Friend says that there are parts of Lewisham that she cannot afford on an MP’s salary. Is she aware that there is nowhere at all in Hackney where I can afford to buy a property on an MP’s salary?
Heidi Alexander
My hon. Friend makes an excellent point. I am quite lucky that my husband and I bought a terraced house in Lewisham a few years ago, because if we were buying today, I am not so sure that we could afford it. House prices have gone crazy. The Government are stoking up demand with their Help to Buy scheme, but they are simply not doing enough to increase supply. The result is a potentially massive housing bubble.
With fewer and fewer people able to buy, more people end up living in properties in the private rented sector, even when that would not be their first choice. There is increased demand at both ends of the private rented market, because people are not buying and homes to rent from councils and housing associations are so few and far between. The rents of thousands of working people in London, many of whom rent from private landlords, are subsidised through housing benefit.
Since 2009, the number of people working in London and receiving support from housing benefit has increased by 110%. That has happened on the Government’s watch. Ministers claim that they want to reduce the housing benefit bill, but unless they invest in building significant numbers of homes to be rented at social rents—not so-called affordable rents—that bill will continue to rise.
What needs to change? First, money must be made available in the form of capital grants. The Government’s decision in 2010 to slash the affordable house building programme by 63% was just plain wrong. Housing associations need finance to deliver homes. Councils must be given greater borrowing powers so that they, too, can once again build on a reasonable scale. We must lift the cap on borrowing on the housing revenue account.
I know that the Government have made minor changes, but they do not go far enough. London councils estimate that if the cap was lifted, 14,000 extra homes could be built by 2021. We should also explore the idea of setting up a London housing corporation to build homes directly, as suggested this week by Labour London assembly member Tom Copley. The simple truth is that we need to invest now to save on revenue costs in the longer term. Taxpayers’ money is being used to line the pockets of London’s private landlords on a massive scale. That cannot be right, and the solution is to build more social housing.
Secondly, we must take a more strategic approach to public land. Londoners know only too well that the shape of their public services is changing. Fire stations are closing, changes have been proposed to police stations, and virtually every hospital faces some form of reconfiguration. Such buildings and the land that they sit on are precious public assets and should not be flogged off to the highest bidder simply to end up as expensive flats for overseas investors to leave empty. When there is such housing need in the capital, that is scandalous and should not be allowed to happen.
Thirdly, we must take some difficult decisions about our planning policy, in both London and the areas around it. Do we build up or out? How can we finance comprehensive regeneration schemes on brownfield sites in London? How do we ensure maximum benefit to existing communities? Politicians at all levels have a role to play. If we are to deliver the homes that London needs, there will controversial planning applications time and again. Politicians are going to have to step up to the mark and argue the case as to why something is the right thing to do. It is notable that recent figures from the House of Commons Library show that Labour-run councils in London have built five times as many affordable homes as Tory councils.
Councils need proper powers to deal with developers who sit on land waiting for house prices to rise, and they need to be able to negotiate hard with developers about social rented housing provision. That comes back to my first point: financing mechanisms must be put in place for social housing to be delivered. I do not pretend that solving London’s housing crisis is easy, but we must understand the scale of the challenge and act now to do something about it. I do not want to be stood here in five years’ time making the same speech again.
If we have a Labour Government after 2015, I believe that they will be committed to doing something about the situation; I am afraid that the present Government do not fill me with the same optimism.
Mr George Howarth (in the Chair)
Order. I hope that I will not have to impose a time limit. If Members limit their speeches to around five or six minutes, we should be able to fit everyone in. However, if over the next 10 or 15 minutes it looks like we cannot achieve that by voluntary means, I will impose a time limit.
Mr Andy Slaughter (Hammersmith) (Lab)
It is a pleasure to serve under your chairmanship, Mr Howarth, although it is a shame that not a single Conservative or Lib Dem MP from London is present. I share all the sentiments that have been expressed so far and congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing this debate.
I am going to talk about Hammersmith, which shares the problems that have been mentioned but where they are more extreme for two reasons. First, the average price of any property in Hammersmith is now £700,000, renting a three-bedroom house on the open market would cost almost £800 a week, and last year Hammersmith saw the largest increase in property prices anywhere in the country—25%. A survey done by London Citizens some years ago showed that the only housing in London that is affordable to anyone on the London living wage—not the minimum wage—is social housing. The myth that new definitions of affordable housing are in some way affordable is simply wrong. We need more social housing to address the housing crisis.
The second reason why Hammersmith is in a particularly pernicious state is that the Conservative-run local authority—David Cameron’s favourite council, although most commentators would agree that it is on the extreme edge of the Conservative party—sets out deliberately to exacerbate the situation. It began as a simple Porterite gerrymandering exercise. An article on the Conservative Home website from 11 February 2009 detailed an analysis by the then leader of the council based on figures supplied by the hon. Member for Chelsea and Fulham (Greg Hands). The article identified the fact that many Conservative target seats for the 2010 election—such as Hammersmith, Westminster North and Birmingham Edgbaston—had high percentages of social housing. It cited figures of 36% for Hammersmith, 30% for Westminster North and 29% for Birmingham Edgbaston, and said that as a consequence of those percentages, such target seats did not fall to the Conservatives in the way that they should.
The article specifically stated:
“Today social housing has become welfare housing where both a dependency culture and a culture of entitlement predominate…Conservative principles of freedom, self-reliance and personal responsibility run counter to this culture. Calling for the state to provide a “hand up instead of a hand out” is unlikely to resonate.”
It then went on to analyse the boroughs across London, finding that those with less than 25% social housing were likely to return Conservative councils and that those with more than 30% were likely to return Labour councils. It was as simple as that at that stage—it was all about fixing the result of elections by not building or reducing the quantum of social housing. It has now gone much further. The new buzz phrase is “sweat the asset,” which means demolishing low-rise affordable social housing and building high-rise luxury flats sold off-plan to developers abroad. That is currently happening across my constituency. We have also heard cod sociology about how any subsidy of housing somehow encourages this thing called dependency culture.
I am not making this up—it is all in a document called “Principles for Social Housing Reform” that asked for four things from an incoming Conservative Government: no capital subsidy, no security of tenure, no duty to house people in need and no subsidised risk. The authors have almost everything that they asked for. They do not have no duty to house people in need, but they do have a duty to discharge people into the private rented sector, and the benefit caps and cuts have meant that, of course, that is often outside London—certainly outside inner London. All the other requests have become true within very few years.
Hammersmith council, however, has gone much further. It is part of Hammersmith’s planning policy that no new social housing units can be created. Where there is any affordable housing—there is a target of 40% on any single development, but it rarely exceeds 10%—it is typically a discount market sale, so it costs 80% of market rent or sale, meaning that it is, of course, completely unaffordable.
Across the borough and my constituency, there is area development of which Albert Speer or Ceausescu would be proud. In the north of the borough—at Old Oak, the Earl’s Court opportunity area or White City—hundreds of acres of land have been redeveloped. Over the next 20 years, 50,000 new homes are to be built in one of the most overcrowded parts of the country. Under Conservative policy, not one will be a new social home. On any particular development, typically 70% to 80% are sold off-plan abroad and will stand empty to hide or put away money, or be used as a profit-generating scheme.
Such matters are not only exacerbating the current housing crisis; we are losing for a generation, possibly for all time, the idea that there will be affordable housing in London. I am getting signs, even from my colleagues, that I should wind up—they know that I could go on for a considerable time. We are seeing whole council blocks and estates being emptied out, demolished and sold to private companies for luxury housing. If that is not social cleansing and social engineering, I do not know what it is. This is an absolute scandal.
The final thing I will say is that the latest thing the council has done is to refuse to answer freedom of information requests from me on housing matters, which of course is contrary to law. That is a matter that I will be taking further. I am at least glad to see that the council is embarrassed about what it is doing. It may just be that, because we have local elections in May, it is concerned about those. I hope that the message will go out loud and clear, not only to my constituents but across London, that Conservative councils are about exacerbating housing need and not about solving the housing crisis.
Ms Karen Buck (Westminster North) (Lab)
I also congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing this important debate. Looking around Westminster Hall, once again we see Labour colleagues—but not, sadly, colleagues from other parties—speaking about the housing crisis in London.
In the Ipsos MORI poll in London a couple of weeks ago, we saw the evidence that, for the first time ever, Londoners rate the housing crisis as the most serious issue facing them, with 82% of those polled agreeing that we are in the grip of a housing crisis. That crisis affects just about every Londoner—certainly every younger Londoner, who faces the challenge of finding a home of their own. We see this crisis as a cost-of-living crisis, with people unable to afford to buy the homes that, until a few years ago, they were able to buy, albeit sometimes with a struggle. We now see that it is necessary to have a salary of around £50,000 to get a mortgage on a first-time property in London, and of course that is not far off double the average income in London.
We also see that the rented sector, which is growing so dramatically, is being squeezed in London, with rents up 7.9% last year to an average of £938 a month. Again, what we are seeing is not only a terrifying squeeze on Londoners’ incomes but an enormous increase in the housing benefit bill as a consequence; I will refer again to that increase in a minute.
The situation has implications for how we live and the nature of our society. We are seeing a record number of young people who are no longer able to leave home because they are unable to afford a home of their own. We are also seeing an impact on the London economy, which London First and other employers are raising as a matter of serious concern.
If people live in a family home where there is an opportunity for them to stay into their twenties and even into their thirties, that is not great for the families or the young people themselves, but at least it is manageable. However, if we are looking at the kind of young people whose families are in the private rented sector or social rented sector, the situation is leading to the explosion of overcrowding. Currently, 24% of all Londoners are living in overcrowded accommodation. Tragically, I often see young people thrown out of their overcrowded family homes drifting into sofa surfing and sometimes into homelessness. We have seen a dramatic rise in homelessness, especially among the young.
The situation has not only had a serious impact on people’s lives but caused an absurd increase in public spending on the consequences of failure. I made a series of freedom of information inquiries to London councils last month and found that London local authorities had spent half a billion pounds on emergency accommodation since 2010. My own local authority is Westminster, which of course has led the charge on so many of the policies that the Government are adopting. It has spent a staggering £111 million on emergency accommodation. That accommodation is bed and breakfasts and the replacement for bed and breakfasts, which is the nightly booked annex accommodation, with no time limit—families are stuck, often on the outskirts of London or even beyond.
Glenda Jackson (Hampstead and Kilburn) (Lab)
I entirely concur with everything that my hon. Friend has said, not only in this debate but in the many others we have had about this issue in the past. I can give an example from my own constituency, where a family has been housed—they have to be housed, because there is a statutory duty on the local authority to house them—in a place that is infested with lice and clearly unfit for human occupation. However, there is virtually nothing else that that local authority can do.
Ms Buck
My hon. Friend is absolutely right that some of the conditions that people are living in are shocking in their squalor. That is particularly offensive, given what was in a superb report produced a few weeks ago by Tom Copley of the Greater London authority. It showed that a third of former right-to-buy properties in London are now in the private rented sector.
I have said many times, in Westminster Hall and elsewhere, that it appals me that we can have two households living next door to each other, one in a local authority property where the rent is, say, £110 or £120 a week—allowing people in that household to work and thereby improving their incentive to work—while next door to them is a former right-to-buy property. Many such properties are rented back to the local authority for emergency accommodation, and the rent for them can reach £500 a week. I have been in some of them and seen water pouring down the walls and black fungus growing in the bathroom, including in the toilet. Even for a rent of £500 a week, it is impossible to ensure that such properties are anything other than a slum.
The coalition Government—and, indeed, the Mayor of London—want to see that process intensify; they want to see social housing sold off in central London. They want to see us flogging the last of the family silver, even though these properties are enormously important.
Clive Efford (Eltham) (Lab)
Does my hon. Friend agree that at the moment London’s housing market is being turned into a Klondike for wealthy foreigners to make money? There are examples such as those my hon. Friend the Member for Hammersmith (Mr Slaughter) has given; there is also the Ram brewery in Wandsworth, which has just been sold to Chinese developers who will build 600 exclusive high-development houses with no social housing whatever.
Ms Buck
I agree. In fact, what we are seeing are two types of new build in London; I simplify, but that is broadly true. One type is high-value properties that are frequently being sold off-plan and internationally. Indeed, last week we heard that only 27% of central London properties are being sold to domestic buyers. As the ITEM Club said of the London housing market:
“Arguably, it would be more appropriate to treat it as an investment market rather than a residential market”.
That is an absolute outrage and a betrayal of Londoners. It also leads to the second type of new build, whereby the affordable social rented housing being built—supposedly to balance the first type of new build—has only Kafkaesque “affordable” rents, charged at up to 80% of market rents, so it is not “social housing” in any sense at all that we have ever understood.
Unsurprisingly, we saw the Office for Budget Responsibility in December uprate its estimate for expenditure on housing benefit by an additional—I stress “additional”—£6 billion. That is the cost of failure: the cost of having to keep families and individuals in private rented and high-rent “affordable” properties, which they cannot afford whether they are working or not.
My hon. Friends have said that there is an alternative, and I completely agree with them. The money being poured into benefits and the pockets of private landlords should instead be spent on building genuinely affordable, decent homes for people to live in and bring their children up in, while maintaining their incentive to work.
As my hon. Friend the Member for Eltham (Clive Efford) said, we also have to do something to tackle the trend of all the other new build properties being sold off-plan and to international investors, so that those young people who want to have a home of their own have a realistic chance of owning one. Everything that the coalition Government are doing is taking us in the wrong direction, whether we are talking about the interests of people’s homes or the interests of the public purse.
Emily Thornberry (Islington South and Finsbury) (Lab)
I begin by saying what a shame it is that for the past five years the Mayor of London has refused to meet the leader of the National Union of Rail, Maritime and Transport Workers, that we have a strike on today, and how difficult it must have been for London Members to arrive in time for this debate. Presumably—the Hansard writers can put that I am being mildly sarcastic here—that must be why we have no Tories or Liberals in Westminster Hall to speak in this debate.
I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing this debate, which is on one of the most important issues that any Londoner faces. Indeed, for London and the south-east, this seems to be a pivotal point, in terms of how housing impacts on people’s lives. Politics ought to be about what impacts on people’s lives, so politics in London and the south-east probably starts with housing; I know it does in my constituency. In fact, when I was first selected as a candidate for Islington South and Finsbury, my predecessor, Chris Smith, asked me, “What do you know about housing?” I said, “I don’t know anything.” He said, “Well, you will, because it is your duty to reflect the interests of your constituents, and politics begins and ends with housing in Islington.”
There is the smugness of Islington dinner parties where people sit around and talk about how much their properties have gone up in value; indeed, the property I live in has gone up eight times in value in the 22 years I have lived there. It was nice to start with—people look at the price and think, “Gosh, I’ve made all this money”—but then their children grow up and they wonder, “Where will they live? How will our family be able to ensure that our children live near us?”
We are the privileged ones. Imagine what it must be like to be a third or fourth-generation working-class family from Islington, looking at their children and wondering not whether they will live in Islington, because obviously they will not, but how far away they will have to live. Will they be able to help look after mum at the weekends? Will the family essentially be split up completely? We have seen too many families in Islington split up, and that trend is accelerating. We see the little amounts of land that we do have being used for developments that are sold off-plan and kept empty.
We need to look with clear eyes at what kind of London we want. I accept that London is the best place in the world to live. Of course if someone had any money, they would buy in London, but they should live here as well, and not just invest in London and keep the properties empty. There are plenty of Londoners and London families who want to stay in London. We want to protect the sort of city that we have, and not have an empty shell of a place where there are no lights on in the evenings, no one votes and no one gets involved.
It is not even as though my constituents come out and vote Tory. The gerrymandering that may be happening in my constituency is a hollowing out of engagement in the community. People have a pad in Islington as their second home, whether they normally live in the country or in Singapore, having bought a property for their baby daughter who might do a degree at the School of Oriental and African Studies in 20 years’ time; they keep those properties empty until that time. They might rent them out, but not to people who become engaged in the community.
In the meantime, I have constituents coming to me day after day on these issues. Whenever I speak about housing in Islington, to ensure that I can never be accused of exaggerating, I only ever speak about my last housing case. I suggest that my hon. Friend the Member for Lewisham East (Heidi Alexander) does that. My last housing case was a young woman called Sarah. She has two children: a four-year-old and a six-month-old baby. She came with her mum, who lives about a quarter of a mile away and helps look after the four-year-old, because of the baby. Sarah is in temporary accommodation; her rent is £500 a week. She gets a discretionary housing payment of more than £160 a week from the local authority to help pay her rent and to keep body and soul together, but that assistance will run out, and she will be hit by the benefit cap. That means that she will be getting £500 a week in benefits and paying £500 a week in rent. What does she do?
Her family has lived in Islington for generations. Her mum and the rest of the family are up in arms about it. She is on the housing waiting list in Islington, but so are 17,000 other people. Where does she go? How far away is she expected to move? She cannot work. It is all very well for the Secretary of State for Work and Pensions to say, “People like that ought to work.” Sarah said, “If I was working at the moment, Emily, I would be on maternity leave. I’ve got a six-month-old baby.” Can the Minister tell me where she is supposed to go when the money runs out at the end of March?
Mr Slaughter
There used to be almost 12,000 people on the housing waiting list in Hammersmith, but the council abolished the waiting list. That gives a lovely cover for selling off council homes as they become empty. I have a letter from one of my constituents who has been told that the flat next door is being sold by auction by Savills next Monday. Hundreds of empty properties are being sold by the council when there is chronic housing need.
Emily Thornberry
The Mayor of London’s solution to this problem is affordable rents, which gives us all a hollow laugh in areas such as mine, where a three-bedroom flat would be £600 a week. If the rent was genuinely affordable, we would say, “All right then, pay housing benefit on it.” If we paid housing benefit at 80% of market rent in Islington, we would blow the Department for Work and Pensions budget within a few months; that would simply not be affordable, unless someone was a banker or in charge of an investment fund. I looked today on Rightmove, and the cheapest three-bedroom flat has a rent of £370 a week. A family of five living in that three-bedroom flat would have £130 for the entire family to live on.
We must look at having real social housing and real affordable housing in my area, but where will that come from? One place it used to come from was housing associations. They used to build in Islington and across London, and there used to be a proper subsidy from the Government to assist housing associations in building, but the social housing grant has been slashed. I spoke to the chief executive of one of my local housing associations about that last week. He said that he used to have a business plan, under which he knew that for every pound invested, he would get a pound from the Government to build social housing. He now gets about 20% of that, and the Government’s answer is, “Put the rents up to affordable rents.” So it goes on.
People on average and low incomes in Islington are being pushed out. We will simply end up with a society that is rich, semi-detached and not involved in the community, and the community will die. It is dying in front of us and we have to fight that. We appeal to the Government—although the Minister is not listening to me—to listen to what we are saying: invest in real social housing, give up on the nonsense of affordable rent and tell Boris Johnson that that is no solution. We must find a real solution and we must have a plan. The Opposition have a plan: a Labour Government will build 200,000 homes every year. The question is whether the people of Islington can wait until 2015 for that.
There is the outrage of Mount Pleasant, which is the biggest development site in my constituency. It used to be owned by the public, through Royal Mail. It was sold off for a song, and guess what: the developers are not satisfied with having got the land for hardly any money at all. They want the development to be 88% luxury flats. Imagine the killing they will make from that. The developers will provide 12% affordable housing, but who knows what that means. I know what the development means: my constituents yet again sold short by money grabbers who are allowed to get away with it. No one stands up to them, and if Boris Johnson allows that, he will not be forgiven.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing this debate. As colleagues have said, housing is the most important issue facing Londoners. To those on either side of the House who think that the solution to the housing crisis in London is market-based mechanisms like more supply, I say that we have to start from the basis that the housing market in London is broken. Normal market remedies will not fix things.
The housing market is broken because of the limitless flood of non-domiciled buyers who are buying properties in zone 1, where upper middle class or even middle class Londoners once lived. They are being driven out into areas like Hackney, Walthamstow and points beyond. People who would never have dreamt of living in Hackney 30 years ago are buying three-bedroom family houses there for upwards of £1 million, and that means that I could not buy a family house in Hackney on an MP’s salary if I was starting out now.
In some cases, the non-domiciled buyers leave these properties vacant. Last week, we all read about the millions of pounds of unoccupied property in The Bishops avenue, where 12 houses in a row are completely unoccupied. One of the residents said he thinks that only three houses in the avenue, one of the most expensive roads in London, are occupied all the time, all year round. There is a limitless supply of such buyers, but what is the effect of that and why do they want to buy in London? Yes, London is a fantastic place to live, but those buyers know that even if they do not occupy the house or do anything to it, they will make a profit year on year because of increasing land values. Homes in London and in zone 1 are becoming land banks, investment vehicles for overseas buyers who, if we are lucky, come here a few weeks a year, but if we are unlucky, do not come here at all.
Glenda Jackson
I entirely agree with my hon. Friend, but the issue of absentee landlords is not limited to the top end of the market. In my constituency since the right to buy was introduced, many properties originally built as affordable, with a social dimension, have been changing hands again and again. Nine times out of 10, the landlords do not live in this country and have no interest whatever in maintaining the properties, with any responsibility handed over to managing agents. There is also a constant surge in tenants, with the rent going up every time the tenant changes.
Ms Abbott
I was of course talking about the top end of the market to illustrate how the effect ripples out to the homeless in Hackney or homeless families in Greenwich. There is constant pressure driving up house values in London, and that is what is behind the spiralling cost of rent.
Colleagues have spoken about what is happening in the rental market—my hon. Friends the Members for Eltham (Clive Efford) and for Lewisham East (Heidi Alexander) did so with particular vividness—and about spiralling rents which mean that families do not have security of tenure.
As for the social cost, London is increasingly becoming a city in which people have to be extremely wealthy or quite poor to live. That leads to a society that is inherently unstable. If we leave it to the market, to live in Islington or Hackney people either have to be able to afford a house that is worth upwards of £1 million, or be so poor that they are eligible for what social housing there is. That is an essentially unstable society and one in which it is extremely difficult to recruit public sector workers.
In Hackney, there is a generation of head teachers who originally bought at the end of the 1970s or beginning of the ’80s and who are now approaching retirement. Now, head teachers of that calibre, willing to stay for as long as they have stayed, will be hard to recruit, because no one can now buy a house in Hackney on a teacher’s salary. Young teachers who are very committed to Hackney and similar areas find themselves having to move outside the M25 in order to own a family house.
The housing problem is not only about bricks and mortar or destitution, but about what sort of society we want to see in London. How do we ensure that that society is stable? How do we recruit for the public sector in future, if increasingly people on an average public sector worker’s salary are scarcely able even to rent in the centre of London, let alone buy anything?
What is the answer to the problems that my colleagues and I have set out? We have to begin with what is happening in the private sector and at the high end of it. Something needs to be done about the non-domiciled overseas buyers—by looking at some sort of levy perhaps—and at the same time we need to make it easier for British buyers to buy off plan, although this is not the whole answer, of course. Let us remember that even flats in Dalston are being bought off plan by buyers in Hong Kong, but British buyers who wants to buy off plan two years ahead cannot get a mortgage. We need to look at the availability of mortgages to people here who are prepared to buy off plan one, two or three years in advance; otherwise, they will always be crowded out by foreign buyers who are able to get mortgage finance, which will continually drive prices up.
We need to have a financial levy on the non-domiciled buyers, but we also need to look at private sector landlords and how they are managed. It would be sad indeed if the boom in the right to buy was to turn into a new Rachmanism. Rachmanism gave private rented housing a bad name when I was a child in north Paddington. It would be extraordinary if, half a century later, through an unwillingness to exercise the right controls on the private sector, we went back to the bad old days of Rachman. I am not saying that we are there yet, but that is where the cycle is taking us. Furthermore, although the idea is unpopular, we also need to have rent controls. I do not care what we call them, but we have to bear down on spiralling rents.
My colleagues and I are saying that the crisis in London is a crisis not only for the homeless and for those who are having to rent for longer and later in life than they might otherwise have done, but for perfectly well housed people who are worrying about whether their children will ever be able to afford a house within the M25. Government could do a range of things, and Labour Members are shocked by the unwillingness of Government and of the Mayor of London, Boris Johnson, to take effective action to fix for the well-being of ordinary Londoners a London housing market that is broken.
Mr George Howarth (in the Chair)
I will call Meg Hillier in a moment. Two more Members wish to speak and I will be calling the Front Benchers from 10.40 am, so if the hon. Lady does the maths she will know what it takes to get her colleague in.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Thank you, Mr Howarth; it is a pleasure to serve under your chairmanship.
In Hackney, the borough that I represent along with my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott), a little more than half of residents live in social housing, but I will not talk about that today. I associate myself, however, with the comments made and the concerns expressed by my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry).
One of the increasing challenges in my constituency has been the growth in the private rented sector. Throughout Hackney, owner-occupation is 23%, and the private rented sector is more than 26% of households, so more people rent privately than become home owners. I pay tribute to the organisation Digs and to Hackney council, which are looking at how there can be better rights for private renters, but there are systemic problems, which I want to bring to the Minister’s attention.
The right to buy has been mentioned, but in Hackney last year the number of right-to-buy purchases doubled as a result of Government policy from 35 to 70. As my hon. Friends have said, the price of housing is now so high that even with discounts and so on from the Government, there is not much opportunity to buy. There is a huge gulf between someone who rents in the social sector, or indeed in the private rented sector now, and the opportunity to buy, because house prices are so high. At March 2013, for example—nearly a year ago—the average terraced house in Hackney was worth more than £500,000 and the average flat £363,000. As colleagues have said, even someone on the generous salary of an MP could not buy a flat in my constituency or neighbouring ones. There is a real challenge and issue there.
The depletion of affordable housing to rent is not an answer to the problem. The extension of the right to buy, which may appeal to some in the Conservative party, does not solve any problems for my constituents. I am delighted that Hackney is building some new social rented homes, but that remains a drop in the ocean. I ask the Minister what the Department is doing to allow more money for that to happen. Sorry, I ought to have said this at the beginning: I draw Members’ attention to my entry in the Register of Members’ Financial Interests.
Touching on the private rented sector, the army of landlords in Hackney—throughout London, I hear—is largely made up of two groups: overseas investors, who use London property as a cash asset; and private individuals. According to figures from the Residential Landlords Association, 89% of landlords are private individuals. People in Hackney, or elsewhere, sometimes need to relocate outside London. They own a flat or home in Hackney, but the problem is that if they were to sell and move somewhere outside London, but then needed to come back, the difference in property values is so great and so entrenched that there would be no prospect of them returning to the same level of housing. Some therefore hold on to their property, and that contributes to the army of private landlords.
That is one of the reasons why the council in Hackney is setting up a lettings agency of its own—to work with some of those individuals, professionalise them and make an experimental attempt to get longer-term tenancies with reluctant landlords who are nervous about their position. It is crazy when people hold on to assets for the reason I have outlined, rather than just to have a home. That is a challenge. My hon. Friend the Member for Hackney North and Stoke Newington summed up very well the challenge posed by overseas landlords. There is a need for disincentives to that approach to housing. We want residents and communities, not absentees.
Interestingly, when Hackney council looked at regulation of landlords, we discovered that we do not have as many rogue landlords as neighbouring boroughs such as Newham; we do not have the “beds in sheds” problem. There are some, but it is not the main problem. For us it is the other issue of overseas individuals that causes many problems. I have questions for the Minister. House prices have gone up, but even with modest borrowing on high-value properties in Hackney, many landlords will not be making a great deal of money. They are tied to certain mortgage commitments; this is because of the army of individuals renting privately in the borough.
Are the Government considering vehicles to encourage more long-term professional landlords, who will want to let for a long time, for whom the question of rental income is tied more to an investment vehicle than to personal financial circumstances, so that rents can remain stable, and tenants can sign up knowing that they can stay in the long term, with clear rent limits? I do not mean rent control as suggested by my hon. Friend the Member for Hackney North and Stoke Newington. There can be problems with that, as there were in New York, where there has been a black market in low-rent properties.
What is the Minister doing to persuade mortgage lenders to allow longer-term tenancies in general? Often, that is where the brake is. Mortgage lenders will not lend on, for example, properties above the fifth floor in a block of flats, or those that are concrete system-built. My hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) raised the concern about former right-to-buy properties being sold on repeatedly. Again that is an issue in Hackney, partly because someone who has exercised the right to buy on a high-level property cannot then sell on to anyone with a mortgage, which limits their options. That means that more of the non-resident landlords—businesses that do not need a mortgage—take them on. Is the Minister’s Department thinking about supporting models such as Hackney’s letting agency, which is attempting to improve the situation locally? What it is doing is a drop in the ocean, but we hope that it will lead to other things.
Will the Government examine the impact of rents and house prices on the stability of the work force, particularly in the public sector? A 2001 report from the London assembly on housing for key workers, which I chaired, said that there was a crisis in relation to middle management staying in London. Things are even worse now. We shall lose talented public sector professionals who cannot afford to stay.
Finally, what discussions are the Treasury having on capitalising the huge housing benefit bill, to use that as a fund to allow councils such as Hackney to build properties for social rent, and to pay off the mortgage over 25 years through the rents? That would be a far more productive use of the huge housing benefit bill than chucking money down the drain and into the hands of private landlords.
Jeremy Corbyn (Islington North) (Lab)
I am pleased that we are having this debate. There is a great Labour turnout. I admire but am surprised at the solidarity that Conservative Members have shown with the tube workers this morning by not coming to the debate. Obviously, the Liberal Democrats are of the same mind.
Like many of my colleagues, I represent an inner-city constituency; 40% of housing there is social housing, 30% is owner-occupied, although that figure is going down, and 30% is in the private rented sector. That figure is going up. There is a desperate housing shortage, as my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) outlined, and we are stuck with planning policies that are the opposite of what is needed in London. A good example is the absurdity of the sale to a property development company, for a very small amount of money, of the Royal Mail site at Mount Pleasant, and the proposal to build large numbers of executive homes on the site, when there is desperate housing need throughout central London—not just in Islington but in Camden, Hackney, Lambeth and Lewisham. All the boroughs in central London have a desperate housing shortage.
Furthermore, the Government have a specific, deliberate policy of putting no social requirement on the conversion of offices to housing developments. The Archway tower in my constituency is a large office block, originally built in 1967 by London Underground and later occupied by the Department of Social Security, the Lord Chancellor’s Department and various others. It is empty and is due to be converted to housing. I do not have a problem with that; it could help a great deal. However, I have a big problem with its being bought by a company that will no doubt do the conversion work very well, but will not provide one flat for anyone in social housing need, and will set rents that are unaffordable to anyone who lives in the area or is on the housing waiting list. The opportunity to provide more than 100 good-quality new flats for people on the housing waiting list is being lost in favour of off-plan buying by wealthy overseas residents, who can occupy those flats right next to a tube station. What message is that giving to the people who work and live in the community, who want somewhere decent to live? I hope that the Minister will explain.
Not far away from Archway, which is at the northern end of my constituency—someone would need to cycle only for 10 or 15 minutes, up a steep hill, admittedly—is somewhere wonderful, The Bishops avenue. The Bishops avenue is apparently the most expensive housing in Britain, if not anywhere in the world. More than a third of it is empty. A large proportion of the property is owned by various Gulf state royal families, and the Saudi Arabian royal family. There are huge mansions there, and they are deliberately kept empty as part of a process of land banking. Some of those properties have become derelict, and there is a danger that English Heritage will decide to preserve them on the ground that they are good centres for wildlife. Owls and bats have taken up residence in some of those extraordinarily valuable properties. I wish the owls and bats well.
Jeremy Corbyn
As my hon. Friend says, at least someone is occupying them, and no doubt they are having a good life there; but what kind of city are we living in, if we encourage the development or ownership of large, expensive properties for investment and land banking, and for occupation by wealthy people—I understand that some of the properties are used for up to two weeks a year, for summer vacations—while people are sleeping on the streets and hostels are hard to get into, and young people grow into middle age staying with their parents and sleeping on sofas, because they cannot get anywhere to live?
Clive Efford
My hon. Friend is right, but does he agree that we must rumble the Mayor of London for constantly making promises on which he has no intention of delivering? In 2008 he promised 50,000 houses by 2011. That figure went up to 55,000 by 2012 and it is now 100,000, but between April and November last year only 2,235 of those houses were started. He missed his targets again. He constantly does it, and he is letting down the people of London.
Jeremy Corbyn
I was about to refer to one of the briefings for today’s debate: the work of fiction from the Mayor’s office about all he is doing to improve housing in London. The reality is that he and his planning policies support the development of expensive executive housing, which is unaffordable to the people of London. He is not intervening to get social housing, or to support local authorities like mine, which are desperately trying to build housing to solve the housing crisis in London.
I want to refer quickly to what my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) said. I introduced a ten-minute rule Bill in October to regulate the private rented sector. If we are to deal with the housing crisis in London, we have to tackle it in a number of ways. First, we need a planning policy that enforces the need for social housing content on all sites, including office conversions. Secondly, there must be massive investment by local authorities in affordable council housing, with secure tenancies and affordable rents, not the market-level rent model imposed by the Government.
Thirdly, recognising that a third of my constituents live in the private rented sector, and that the proportion nationally, although slightly lower, is rising very fast, we need regulation of agencies, enforced conditions in tenancies so that there are decent-quality homes, and, above all, affordable rents. I therefore seek a default power for London local authorities to impose a rent model across London to ensure that we keep the diversity of our population and work force, and do not go down the desperate road of housing for the wealthy and homelessness for the poor.
Emma Reynolds (Wolverhampton North East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing this important debate. She spoke eloquently about the problems faced by tenants in the private rented sector.
There is a housing crisis across England, but it is clear that it is particularly acute here in London. We have heard both passion and anger from Opposition Members about that acute shortage of housing and of affordable homes in London. It is no surprise that four out of five Londoners think that the capital is in the grip of a full-scale housing crisis. Earlier this week the economic forecaster Ernst and Young warned, very worryingly, of “bubble-like” conditions in the London housing market. The average house price in the capital is £437,000 and is predicted to rise to an eye-watering £600,000 by 2018. That is simply unaffordable, not only for people on low incomes in London but for people on middle incomes and decent salaries as well. Many of my hon. Friends have made that point.
Moreover, as many of my hon. Friends have underlined, there are massive problems in the private rented sector. As my hon. Friend the Member for Erith and Thamesmead highlighted, whereas 10 years ago one in 10 Londoners was renting, now it is one in four, and that number is growing rapidly. Rents are at record highs, are rising much faster than wages and consume more than 50% of average family incomes in London.
Homelessness and rough sleeping have both risen sharply since 2010, and the number of families in temporary bed-and-breakfast accommodation is, tragically, at a 10-year high. My hon. Friend the Member for Westminster North (Ms Buck) spoke eloquently about the shocking circumstances in which those people have to live. The housing benefit bill is rising and the problem is compounded by the cruel and unfair bedroom tax, which a Labour Government would scrap.
Those facts are symptoms of a wider failure to supply the number of houses that we need. In England we are not building even half the number of homes we need to keep up with demand; in London, we are building barely a third. The Mayor of London does not seem to understand the problem. He keeps talking about numbers, but he is not delivering on any of the targets that he sets himself.
Emma Reynolds
My hon. Friend pre-empts the next section of my speech. The problem is not just about numbers but about affordability. All of my hon. Friends have talked about the distorted notion of affordability that the Government have introduced. The idea that 80% of market rent in London is affordable is plainly ludicrous. It is plain stupid—it just is not the case.
I will give the Minister some figures. In Westminster, to be able to pay 80% of market rent for a three-bedroom home tenants would have to earn an annual income of £109,000. In Southwark, renting a two-bed flat at 80% of market rent would require an income of £44,000. The severe shortage of affordable housing is accelerating what many of my hon. Friends have been talking about, which is social segregation here in the capital and, if we are not careful, a hollowing out not only of central London but of London more generally. My hon. Friends have talked about midwives, nurses, teachers, policemen and firefighters not being able to afford to live in the communities where they work. That was not the case 10 or 20 years ago.
Emily Thornberry
My hon. Friend is making an excellent and passionate speech. Does she agree that we have yet to have an answer from the Mayor or from the Conservative party as to how it can be that affordable rents can be 80% of market rent, yet, for example, in Islington the local housing allowance, which is the amount someone is allowed to get in housing benefit, is a maximum of £370, and the market rent for a three-bedroom flat might be £600? Should the two not be aligned if we really mean to have affordable rents?
Emma Reynolds
The truth is that the housing benefit bill is going up. The Government should try to shift Government subsidy away from benefits to bricks, but when we take into account the bedroom tax and the cap, in London in particular, on the amount of money that families can receive in housing benefit, we see that things are being pushed in the wrong direction and that the housing benefit bill is going up, not coming down.
Meg Hillier
My hon. Friend may be too young to remember this, but when the Parliamentary Secretary to the Treasury, the right hon. Member for North West Hampshire (Sir George Young), was Housing Minister he said that
“housing benefit will take the strain.”
It would be useful to hear this Minister’s view on housing benefit now that the problem has escalated.
Emma Reynolds
I look forward to the Minister’s response.
I want to mention overseas investment, an issue that many of my hon. Friends talked about. My hon. Friend the Member for Westminster North talked about the housing market in London being more accurately described as an investment market, not a residential one. That is truly shocking and scandalous. As my hon. Friends the Members for Islington South and Finsbury (Emily Thornberry), for Islington North (Jeremy Corbyn) and for Hackney North and Stoke Newington (Ms Abbott) all said, foreign buyers are coming to London and using property here as a sophisticated piggy bank to store their money. That is leading to a huge distortion of the market, with Londoners forced further and further out in London and beyond.
I have set out a number of measures that a Labour Government would take. We would ban the marketing of property overseas first, to give first call to Londoners. That is incredibly important, but it will not solve the whole problem. It is wrong that people living in the UK are denied the chance to buy homes because they are being sold exclusively to overseas buyers.
A Labour Government would also clamp down on empty home loopholes. At the moment, to prove that a home is empty all someone needs to do is provide a table and chair. Councils have to spend two years looking at whether homes are empty before they can increase council tax. Why wait two years? I have said that local councils should be able to charge 50% or more extra council tax after a home has been left empty for less than two years.
I am passionate about the private rented sector. It is an issue in my own constituency in Wolverhampton, but I know what a big issue it is here in London. The difference between Wolverhampton and London is that in Wolverhampton it is an issue for people on low incomes and the most vulnerable, but in London it is an issue for low and middle-income earners.
We are seeing incredibly poor standards in the private rented sector. The Government have talked about a tenants charter. That sounds like a nice idea but seems utterly meaningless. We need longer-term tenancies, so that families can have the long-term stability that they need, and we need to enable councils to introduce licensing schemes. This afternoon I am going to Newham—by taxi, not by tube—to see the licensing scheme that has been introduced there, which is driving up standards in the private rented sector. The problem in London is not low housing demand, which is one of the qualifications for the licensing schemes, but high housing demand. That is what is leading to low standards.
Emma Reynolds
I will not, I am afraid, as I do not have much time left.
The Government really need to get a grip on standards in the private rented sector. I am glad to say that Labour councils are outbuilding Tory councils in terms of affordable homes, but the Government also need to do more centrally to lead the way.
In conclusion, the Government and the Conservative Mayor have not understood the scale of the housing crisis that we face, both here in the capital and across England. My right hon. Friend the Leader of the Opposition has announced that a Labour Government would boost house building and build at least 200,000 homes a year by 2020. We know that there are significant problems in the land market and in towns that are constrained because of the amount of land available—that is true for London, as well, given the amount of land available on which to build the number of homes Londoners need.
The housing crisis needs urgent action. The Minister needs to get a grip on the private rented sector and the lack of affordable homes in London, as well as the disastrous standards of some private rented homes. The Government need to take a long, hard look at what is happening with international investors, an example being the situation on The Bishops avenue, which was uncovered by The Guardian over the weekend and which has already been mentioned. That is scandalous. It distorts a market that is already failing to produce the affordable homes that Londoners need.
The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)
I congratulate the hon. Member for Erith and Thamesmead (Teresa Pearce) on securing this debate, which is of vital importance to her constituents and the constituents of many Members of Parliament in London.
It makes a great change for me, as Planning Minister, to face a chorus of opposition from Labour Members. Normally in such debates, I face a chorus of opposition from my own colleagues in the Conservative party. The present position, I must say, is the more comfortable one, though that is not to say that the opposition has not been well argued or passionately felt.
The debate was a fascinating insight into how this House’s proceedings would be improved if 70% of Members were women. With, I think, the exception of the hon. Member for Hammersmith (Mr Slaughter), we heard speeches that were passionate but reasonable and that were inquiring and seeking to find the truth, rather than ones that were just delivering a predictable political rant. No doubt we would all be better off if that happened more often.
Emily Thornberry
I register my objection to the Minister’s description of my speech as not being a political rant, because it most definitely was.
Nick Boles
I unreservedly withdraw that slight to the hon. Lady’s political passion.
The hon. Member for Erith and Thamesmead asked a number of quite searching questions, but I must be honest: I do not have the time to answer them. Nor am I the Housing Minister, so I do not have the expertise. We shall write to her, however, to give her the full answers she deserves and copy in all hon. Members who have spoken today, but I fear that I will not be able to answer her questions fully right now.
The debate is a fascinating and challenging one. Of course no one in this House, on either side, denies that not just in London but most acutely in London this country faces a housing crisis. It is a subject to which I have given a great deal of attention and energy in the short time that I have been Planning Minister. It is important to understand that houses take a while to build. In our planning system, they take even longer to secure consent for. It is therefore not unfair to say that the seeds of most of what is happening now were laid several years ago.
The one thing that I missed in the excellent speeches of all the Opposition Members was any sense of responsibility for the situation we find ourselves in, or any sense of recognition that the seeds of the current crisis were sown not after May 2010 but decades ago, and they certainly have not been changed since.
Nick Boles
I have very little time, and hon. Members all made good speeches, so I hope they will understand if I do not give way further.
I want to remind the House that the number of housing starts in London from 2007 to 2010 was 70,000 units, which was around 15,000 units a year. We all agree that London’s housing need, at a time when the population was expanding quickly, was dramatically higher than that—we might say that it was 40,000 or 60,000 a year. Under the Labour Government, 15,000 units of housing a year, of all tenures and price ranges, were being built. Let us have a little recognition of the previous Government’s responsibility.
Someone listening to the speeches made by Opposition Members would have heard not only anger about the situation, which is totally justifiable, but the implication that there were some easy answers that could make things better. The first such answer one heard, in a number of different forms, was the suggestion that we should have some form of rent control or rent stabilisation. I would point out that rent controls and rent stabilisation were removed altogether by the Housing Act 1988 and were never reintroduced in the 13 years of the previous Government.
Nick Boles
Opposition Members protest from a sedentary position, but they need to ask themselves why most of them here today, who were part of the previous Government as Ministers or were elected under that Government, did not persuade their Government to introduce rent controls. I think there is a good reason why they did not persuade their Government to do so: it is unclear from the evidence that rent controls or even rent stabilisation, the arguments in favour of which we all understand, will make happen what we know needs to happen, which is to increase the number of new housing units.
If we say to investors who are going to build houses for rent that the amount they can put up rent by is going to be controlled, their ability to compete with other investors who are going to build houses for sale, which are, after all, a large proportion of the market, will be restricted. Their ability to bid at the same prices as people who are going to build flats for sale will be reduced. Then we would have to start controlling the ability of people who were going to build houses for sale to enable competition with people who would not be able to put rents up.
Nick Boles
I am not going to give way, because I have only three minutes left, and the hon. Gentleman spoke for a long time.
That is the first question. If Opposition Members truly believe in rent control, they should say so, and they should say why they were not able to persuade their own Government to implement it for 13 years, and why they think that it is the answer now.
The hon. Member for Islington North (Jeremy Corbyn) mentioned the introduction of permitted development for changes of use from offices to residential. He raised a perfectly reasonable concern about the lack of affordable housing achieved by such changes of use. There is the principal argument that people make their contributions to the community when they originally construct a building, but I understand the hon. Gentleman’s argument, and it is a respectable view that many share.
The hon. Gentleman was good enough to say that he has no objection to the particular building he referred to being converted into flats, and he says that that could be a good use. Why was it, then, that the local council, in common with many councils of all political stripes, resisted year after year and decade after decade any proposal to convert that building to residential use?
Nick Boles
I am asking the hon. Member for Islington North a question because he asked me one. The reason why—[Interruption.]
Nick Boles
The hon. Member for Islington South and Finsbury (Emily Thornberry) was passionate, and I listened to her in silence. It would be great if she was not perhaps silent—I would hate it for her ever to be silent—but could just allow me to speak.
The reason why we introduced the permitted development right was because councils across the country were resisting the conversion of low-value, under-used offices to the houses that all of us agree are desperately needed. Since we introduced the permitted development right, it has been estimated that there were more than 2,000 conversions in less than a year of offices into homes that people are going to live in and enjoy, so that they feel that their housing need has been met. That immensely progressive reform is delivering vitally needed housing in the face of the opposition from local authorities that had no good reason to oppose it.
Nick Boles
May I make this clear? I am not giving way.
I want to address the subject of foreign buyers. Listening to Opposition Members’ speeches, one would think they wanted to prevent foreign buyers from buying London properties, which would be entirely logical given the shortage of properties. Then, listening to the hon. Member for Wolverhampton North East, one would think the Opposition were going to make it slightly more difficult to claim, by putting in a table or a chair, that a home was empty—