Self-build and Custom Housebuilding Bill
Lord Best (CB)
My Lords, I am grateful to noble Lords for their presence on this late Friday afternoon to consider this Private Member’s Bill, which comes to us from the other place. I congratulate the Member for South Norfolk, Richard Bacon, on bringing this Bill forward. He has been a passionate supporter of self-build and custom housebuilding, which this Bill seeks to promote. He has played a pivotal role as chairman of the All-Party Parliamentary Group on Self-Build, Custom-Build and Independent Housebuilding in connecting Westminster with this fledgling industry.
The Bill, which passed, happily, through all its stages in the other place and comes to this House unamended, is intended to boost the number of homes which people create for themselves as an alternative to buying properties off the shelf, already fully fitted out. The participation of the future occupier may range from close engagement in the whole process on a greenfield site, through to taking on an empty shell—a concrete box, with no bathroom, unplastered walls and only the drainage and electricity laid on—and kitting it out to their own specification. Whatever the format, this co-production process is likely to involve a partnership between the customer and a builder, developer, housing association or a specialist firm, such as Inhabit, which has given me helpful information for this debate.
This way of producing new homes contrasts with the usual model in the UK, where a small number of volume housebuilders, such as Barratt and Taylor Wimpey, build the vast majority of homes. The nation needs the skills of these major players to help us generate the significant number of extra homes required each year. However, the housebuilding industry, prior to the banking crisis and the credit crunch, also comprised many smaller builders working at the local level. To increase present output from some 150,000 homes a year to at least 200,000, it is imperative that we bring back these SME builders. These are the organisations best equipped to take on awkward, smaller sites which do not suit the big national firms. Custom housebuilding could be hugely significant in creating the opportunities for additional supply over and above the efforts of the handful of huge housebuilding companies. Self-build and custom housebuilding not only generates an alternative and additional source of supply, it also brings variety, diversity of design and innovative practice into the industry. Surveys indicate substantial appetite for engagement in the housebuilding process by its future occupiers, and very high levels of satisfaction for those who solve their housing needs through this route.
It is revealing to note that the UK differs from its European neighbours and from the USA, Australia and elsewhere in its low levels of self-build and custom-built homes. While they have accounted for 5% to 10% of completed housing in the UK over the past decade, they have comprised more than 50% of all new homes in Germany, France, Sweden, Italy, Belgium, Ireland, Austria, Switzerland and others. We are clearly missing out on a significant stream of extra and much appreciated new homes. It is worth adding that this approach to building new homes also saves the future occupiers up to 25% on the cost of the equivalent home on the open market. Savings can come from the input of actual labour by the self-builders or from shopping around for goods and services. I heard of the purchaser of a basic shell who bought all the kitchen units second-hand on eBay, saving a small fortune in the process. There are fantastic examples of groups of people working together to create the homes they want, often through the vehicle of a community land trust, and indeed including affordable rental accommodation in the mix of homes.
I am glad to report that the Bill had strong cross-party support in the other place. In introducing the legislation, Richard Bacon pointed to the serious issue of underprovision of housing that has not been solved for a generation. He said:
“I contend that if we open up choice and empowerment to the customer—I mean ‘customer’ in the broadest sense, including those in the market for affordable rental properties—we will start to make a significant difference”. —[Official Report, Commons, 24/10/14; col. 1167.]
For the Opposition, Emma Reynolds, the shadow Housing Minister, expressed her party’s backing for the Bill, saying that it would increase choice and quality in the market and promote self-build to a “wider range of people”. Brandon Lewis, the Minister for Housing and Planning, said that the Government strongly believe that custom and self-build housing can play a crucial role,
“in securing greater diversity and helping to deliver the homes people actually want”.—[Official Report, Commons, 24/10/14; col. 1181.]
Turning to the details of the Bill, the legislation aims to engage all relevant local authorities with this route to new housing. It would require the authority to establish, maintain and promote a register of persons, whether individuals or associations of individuals, who wish to acquire serviced plots of land in the authority’s area to build or commission their own homes. While there are some great examples of local authorities supporting initiatives of this kind in their areas, the requirement will raise the profile of self-build and custom housebuilding in every area. The Bill will then require local authorities to have regard to the demand for custom and self-build on the new register when the council carries out its plan making, housing, regeneration and land disposal functions. Through the creation of the register and the requirement on authorities to have regard to it, the Bill addresses the key problem of land supply for the growth of this emerging sector. It makes self-builders and custom builders more visible when local authorities are allocating land for housing in their local plans, regenerating their areas and disposing of surplus public land.
It does not, I am glad to say, impose any significant cost on local authorities, with the Government funding any net cost burden, which is estimated at up to £5 million a year, across the whole of local government. I have also been very pleased to see the Government bring forward a repayable loan fund to assist projects by providing on-site infrastructure; that is, funding the services and utilities for these homes. Some £150 million was set aside last June and this fund is being administered by the Homes and Communities Agency.
I think that noble Lords will be heartened, as I was, to hear about examples of support for custom and self-build by vanguard local authorities such as Cherwell District Council, which is developing some ex-MoD land to include custom-built projects where owners design their homes and employ local contractors to build them. Stoke-on-Trent City Council has created new access, drainage and utility service connections to make a development site “shovel-ready” for buyers to build their dream homes on six plots. Another of the so-called vanguard authorities, Teignbridge District Council, is including a specific custom-build policy in its adopted local plan to require a proportion of self- build plots in all large developments. Oldham Council is working with a community build group to develop 37 homes on land previously in the council’s ownership, and so on. My hope is that the Bill will stimulate similar engagement by all relevant councils up and down the country.
I know that your Lordships’ Delegated Powers and Regulatory Reform Committee has criticised the drafting of the Bill in two places. I completely understand the points being made. I feel sure that the Minister will wish to comment on these criticisms; namely, that the definition of a “serviced plot of land” in Clause 5 ought to be in the Bill, not in regulations; and that guidance about the register in Clause 3(1) and (2) ought itself to be laid in draft before Parliament and subject to parliamentary scrutiny. I would just make the comment that there seems to be some rather exceptional justification for the approach taken by the Bill. The definition of a serviced plot has to take on board the views arising from the extensive and welcome consultation process just recently concluded and ought to await the feedback from the 11 vanguard local authorities that are due to report in the spring. The definition is likely to benefit from the refinements which that evidence should provide; for example, it is not yet clear whether a derelict building ripe for conversion could fall within the definition. The agreed definition will then go through the negative resolution procedure in both Houses of Parliament.
In relation to the guidance from central to local government, I know that the idea is to have a full consultation period with all interested parties before any guidance is formulated. I am sure that copies of the draft guidance will be deposited in our Library and that of the other place. But it is also envisaged that the guidance will then evolve over a year or two, with variations in that guidance for the relevant authorities, which are as different as the City of London and very rural national parks. It would be difficult, I can see, to satisfy requirements for statutory consultation taking a minimum of 12 weeks each time for each part of this emerging guidance. I am sure that the Minister will be able to add to this and I hope your Lordships will agree that the circumstances justify the way forward taken by the Bill.
In conclusion, this is a modest Bill that will not overnight change the way we create new homes, nor make sufficient difference to the chronic shortage of homes in so many parts of the country. But what it could do—and I believe it will—is start a process which, bit by bit, could prove of fundamental importance in raising the quality and quantity of much-needed new homes. I underline my indebtedness to Richard Bacon MP for his invaluable commitment to self-build and custom housebuilding, and for bringing this potentially very significant Bill forward. I strongly commend it to your Lordships’ House. I beg to move.
Lord Young of Norwood Green (Lab)
My Lords, I will do my best to act as a stand-in for my noble friend Lord McKenzie. I do not profess to be an expert on this subject but it is one that I have a lot of enthusiasm for.
It will be clear from the deliberations in the other place that we support and welcome the Bill. As we have heard, it aims to make it easier for prospective self-builders and custom builders to seek a suitable plot of land for their homes. We offer our congratulations to Richard Bacon MP on using his place in the Private Members’ Bills ballot to address this important issue and on his skilful steering of the Bill through the Commons. It is a particular pleasure to see that the noble Lord, Lord Best, has taken the responsibility of steering the measure through your Lordships’ House. His engagement in matters of housing we see as a quality assurance mark, which noble Lords can see from the quality of the contribution we have just heard.
It is also important that the Bill has the full support of the Government, who are focused on the right to build and see its provisions as enacting the first element of the right: that is, the establishment by local planning authorities of a register of prospective custom builders who are seeking a suitable serviced plot of land. The Minister may wish to say something about the timing of later stages, given how close we are to the end of this Parliament.
We support the Bill for a number of reasons, but fundamentally because we see self-build and custom housebuilding as being able to make a more significant contribution to meeting housing needs than hitherto and because, in part, it would give opportunities to those who believe themselves shut out of home ownership —a considerable number of people these days.
Of course, this is not just about first-time buyers. It is as much about existing homeowners wanting a bigger—or even smaller—property than the one they currently own. Evidence submitted to the independent housing commission chaired by Michael Lyons suggested that it would be possible to contribute a further 10,000 to 20,000 units per year—a reasonable ambition. The two strands of this—self-build and custom build—are becoming distinct, the first being more hands-on and the latter where the individual is more reliant on a specialist developer or expert. But each leads to the prospect of better design and quality, greater focus on energy efficiency and more regard to what the surrounding environment will be. In particular, custom build can act as a catalyst for more diversity of providers and more opportunities for smaller housebuilders. I cannot help but reflect that it will also mean that a greater group of people will acquire skills that they did not previously possess. Who knows, it might even enhance the number of apprenticeships.
Our briefing note tells us that there is no conclusive figure for the number of self-build and custom-build properties completed each year but that the sector generally accounts for between 7% and 10% of new housing across the UK. The UK Self-Build Market Report suggested that the second quarter output for 2013 represented around 8% of all new housing completions and 28% of new detached homes. Indeed, as my honourable friend Emma Reynolds said in the other place when the Bill was discussed, research by the University of York found that the market is dominated by an older, asset-rich demographic. This underlines the need to promote custom and self-build to a wider range of people. Having said that, we know that there are good examples of custom build being used to create social housing—a point made by the noble Lord, Lord Best. He also stressed the added advantage of better participation and satisfaction. He gave some very interesting statistics showing that the UK is missing out in this vital area.
We are building about half the number of homes we need to keep up with demand. The shortfall has not only arisen under this Government. We know that home ownership is continuing to decline. A record number of young people in their 20s and 30s live at home with their parents. Some 9 million people live in the private rented sector—with some difficulty, given the rising cost of rents. Of course, this Bill will not fundamentally change all that, but it can make a difference. We need a comprehensive and sustainable plan to tackle our housing crisis. We need specific measures to help self and custom housebuilding, where some of the more general problems are more acute. Those problems are, as we know, access to suitable sites and appropriate funding, the challenges of the planning system and the capacity of smaller developers.
The Lyons review offered prescriptions, some following the experience of European countries, which include encouraging local authorities to act as master developer on assembled sites, local authorities having a more proactive role in site assembly, and giving some form of priority to the use of surplus public land. Each should be taken forward. The noble Lord, Lord Best, gave really good examples of proactive local authorities having real impact and making a difference in this area. I hope that the Minister will address this; surely we should encourage that kind of approach.
It is acknowledged that the Government have and are looking at a variety of initiatives, but we are faced with uncomfortable statistics suggesting that fewer people are building their own homes than at any time in the past 30 years. This is attributed in part to the slow recovery of the self-build mortgage market. Our briefing also makes reference to the limited impact on actually increasing the number of additional homes because the self-built home is built on brownfield land where existing dwellings have been demolished.
As to the specifics of the Bill, we support the duty to keep and publicise a register of those who seek to acquire serviced plots for individuals to build properties that must be homes. It would become a mandatory requirement and would help better understand levels of demand. That raises a number of issues which are explored in the Right to Build consultation and the experience of the 11 Right to Build vanguard authorities. These would feed through via regulations and statutory guidance. The consultation quite properly explores some of the detail that might emerge in those regulations and guidance, particularly around the scope of preferences that can be expressed and a local connection test.
Of course, the other leg of the Bill addresses the supply side—the requirement for local planning authorities to have regard to the register when exercising relevant functions, which include housing, planning, land disposal and regeneration. We recognise that “having regard to” is a somewhat imprecise requirement on local authorities, and suggest that future legislation might impose a new statutory duty to bring forward land to meet the demands of the register when it is reasonable to do so—a debate for another day, perhaps.
This is a worthy Bill that demands our support. The timetable may prevent its further advance during this Parliament, but it has caused a necessary focus on an important element of housing provision and helped to raise its profile. The political consensus that it has demonstrated should encourage further action in the next Parliament.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con)
My Lords, first, I join in thanking the noble Lord, Lord Best, for bringing the Bill to the House and for his contribution to developing the custom and self-build housing sector. We are indeed fortunate in your Lordships’ House, and it is entirely fitting, that someone with a lifetime’s experience in housing is taking the Bill forward, and I am extremely grateful that it will benefit from his expertise through its progress.
It is always a pleasure to welcome the noble Lord, Lord Young, to the Dispatch Box. He said that he perhaps did not know the in-depth detail of the issue, but enthusiasm is always a welcome addition to any debate. I am encouraged by the fact that we may have aspiring self-builders in the House, as the House is beginning to attract some attention from noble Lords who are entering it.
It would be remiss of me not also to pay tribute to my honourable friend Richard Bacon, the Member for South Norfolk, as did the noble Lord, Lord Best, for his handling of the Bill in the other place. As many know, he has been a passionate advocate of custom and self-build, not only through the Bill but in his sterling work for the all-party parliamentary group, where he has fostered cross-party support. We have seen that in evidence in the debates on the Bill in the other place and in your Lordships’ House today. As the noble Lord, Lord Best, rightly said, there was consensus in the other place that the Bill is a tremendous opportunity to develop the custom build sector and increase housing supply. He made a strong case for the Bill, and I take this opportunity briefly to explain why the Government are pleased to support it.
The Government are committed to increasing and diversifying housing supply and helping more people to own a home of their own. We have worked hard to speed up housing delivery, which was at its lowest levels since the 1920s when we came into office. More than 500,000 new homes have been built since April 2010, and the number of starts on new homes is at its highest since 2007.
We also want greater diversity in the housing market. More competition, more new entrants and more new development should mean not only more new homes but improved standards of design and sustainability.
We are indeed actively supporting small and medium-sized house builders—a point well made by the noble Lord, Lord Best—and encouraging them further. The custom and self-build housing market provides the means for diversifying the market and delivering more high-quality homes.
As we heard from the noble Lord, Lord Best, only 10% of homes in the UK are custom or self-built compared with more than 80% in Austria, 50% in the United States, and almost 60% just across the way in Ireland. That is despite research showing that 1 million people want to build their own home in the next year.
We heard the noble Lord talk about eBay. Perhaps that is another area to explore, but at present the market is relatively undeveloped, contributing about 12,000 self and custom-built homes a year in the UK. This is a direct result of three identified key barriers: limited availability of suitable land, access to finance, and access to advice. We have worked with the industry to overcome those barriers, and we are encouraging more land to be made available by requiring authorities to assess and plan for housing need, including for custom and self-build. As noble Lords will know, we have launched the £150-million serviced plots fund to finance up to 10,000 plots. We are also engaging with lenders to improve the number of mortgages available.
The Self Build Portal now provides advice for prospective custom builders, local authorities and industry as a whole. Exemptions from the community infrastructure levy and additional changes to Section 106 affordable housing contributions will potentially save self-builders thousands of pounds and, of course, speed up developments. These policies are having an impact. There are now more than 5,000 new plots in the pipeline. We want to go further and double the output of the sector over a decade so that more than 20,000 homes are built each year, but people struggle to access suitable plots of land.
The Government consulted in the autumn on a new right to build. We are working with 11 vanguard authorities to test how the right will work across the country. These vanguards, and learning from the consultation, will further inform the regulations from this Bill. I assure your Lordships that we are legislating only for the first element of the right today: the requirement for authorities to establish a register. I also assure the noble Lord, Lord Young, that our intention is to take forward the full right in the next Parliament. We want to ensure that the right builds on existing planning policy, including protections for precious landscapes, and that we have fully considered the role of local authorities in bringing forward land without creating unnecessary burdens.
The noble Lord, Lord Best, rightly pointed to the report published yesterday by the Delegated Powers Committee. We will in due course reply as appropriate to that report, with the input of the noble Lord’s expertise and that of my honourable friend. Let me say briefly in response that the regulations that we are seeking to build on will learn from the parliamentary debates, the consultation responses and the vanguards. The guidance will of course support local authorities in interpreting and applying complex and technical issues contained in regulations about the operation of the register, and provide a steer about how local authorities should have regard to the register when exercising their planning and other functions so that their response is proportionate. I assure the House, and the members of that committee, that the department is totally committed to consulting local government and other partners about the content of the first guidance.
In conclusion, the Bill provides an opportunity to take the first step in mainstreaming custom and self-build. The Government support this Bill, and we thank the noble Lord, Lord Best, for taking it forward. I hope that it will have a speedy passage on to the statute book.
Lord Best
My Lords, I am very grateful to the Minister and the noble Lord, Lord Young of Norwood Green, for their input to this debate and for demonstrating that there is absolutely cross-party support for this legislation. My hope is that we can fit within the timetable by taking this forward, and see it on the statute book within this Parliament. That is our aim and I hope that the foot is on the accelerator now. I know that the noble Lord, Lord Young, delivered a speech prepared initially by the noble Lord, Lord McKenzie of Luton, who I thank for his work. The noble Lord, Lord Young, added his own enthusiasm in that helpful contribution, which was greatly appreciated.
The Minister underlined the Government’s support for this and I congratulate the Government on the steps already taken to take forward self-build and custom housebuilding. It is good to know that this is just a first step and that there is a firm intention, as I think there is on all sides, to take this concept forward to a full right to build in the next Parliament. That is something to look forward to, but at this stage I conclude by asking the House to give the Bill a Second Reading.
Bill read a second time and committed to a Committee of the Whole House.