Shared Ownership Housing

Tuesday 14th July 2015 Westminster Hall

16:30

[Iain Stewart (Milton Keynes South) (Con)]

I beg to move,

That this House has considered shared ownership housing.

It is a pleasure to open the debate under your chairmanship, Mr Evans. I wish to advance some thoughts that I have had for some time, and which were debated in my constituency at the general election, about how the shared ownership model could be expanded and improved to become a larger and more successful sector of the UK housing market.

Housing issues are rightly high on the political agenda. I do not propose to analyse some of the broader issues about housing supply or schemes such as Help to Buy, rent to own, the right to buy for housing association tenants and so on, although I will refer to them as I explain my proposals for shared ownership. My proposals would assist with the size of the overall housing supply and operate alongside other policies, not replace them. They fit neatly into other recent and planned developments, such as the liberation of pension funds, which the Chancellor of the Exchequer is introducing. I will turn to those later in my speech, but first I shall explore why I and many others believe that the shared ownership housing model has not fulfilled its potential.

At its heart, shared ownership is a simple concept that helps people who aspire to own their own home to get on the housing ladder. Rising house prices increasingly make the goal of raising a deposit and taking out a mortgage beyond the reach of many, even those earning decent incomes in some parts of the country. In addition, for young people, the cost of repaying student loans post-graduation plus the need to begin building pension funds limit the affordability of a home buying. I know from the experiences of many people in my constituency that policies such as Help to Buy are popular and effective, and that will be the same for other welcome initiatives from the Government such as the proposed discount for first-time buyers purchasing a new brownfield property.

Without help from the bank of mum and dad, or if someone is not already in a council or housing association property—for those people the right to buy is, or will be, an option—getting on the housing ladder will remain elusive, and for many people the private rented sector will be their only option. As we all know, rents can be at a level that makes saving for a deposit and mortgage difficult. Shared ownership offers people the chance to gain some equity and move towards full ownership. It also offers greater security of tenure than renting. I do not wish to do down the private rented sector; far from it. It fulfils a valuable role, particularly in areas where there is a highly mobile population, such as in university towns and cities, or in places, including parts of my own constituency, where dynamic economic activity requires shorter-term tenure housing stock. There will always be people who want to rent privately for short or long periods for a wide range of reasons, and the buy-to-let market helps fulfil that goal. As the Chancellor rightly identified in the Budget, the buy-to-let sector cannot become too dominant. The Governor of the Bank of England pointed out that that could pose a risk to the country’s economic stability. In addition, if it is too large, it will continue, through simple supply and demand forces, to push the affordability bar higher still for people who aspire to own their own home.

There is considerable evidence to show that home ownership remains the tenure of choice for most of the population. I see it in my own constituency, where we have considerable new housing development, and large numbers of the new houses are not bought by aspirant owners but by buy-to-let landlords. As well as restricting the supply of new housing to would-be owners, there is also some evidence to suggest that too high a concentration of buy-to-let properties is not as conducive as a broader housing mix to developing community stability. I have noted comments from the National Housing Federation, Orbit Group and the Chartered Institute of Housing that having a stake in their own home makes people more likely to invest in their neighbourhoods. For those reasons, I see a greater role for shared ownership.

Shared ownership is not a new concept. Many residents already use it successfully. Its main advantage is that it allows a route into home ownership for low and middle-income families who could not otherwise afford a full equity mortgage straightaway. There is not one shared ownership scheme; there are various schemes, but they share the common feature of allowing an individual to take out a mortgage on an initial share of a property. They then pay rent on the proportion owned by the housing association and mortgage repayments on their share, with the option to buy more shares in the property later—a concept known as staircasing. The National Housing Federation has shown that, by and large, the combined rent and mortgage payments under shared ownership are considerably lower than equivalent full mortgage repayments or full private sector rental payments for equivalent properties—so far so good, but I believe that there is huge untapped potential in the sector.

The Government’s affordable homes programme will run until 2018. It commits £1.7 billion in capital grant funding for affordable homes outside London, and includes provision for shared ownership. I am also aware, from the autumn statement and the spring Budget, that the Government have been looking at rule changes, which should reduce bureaucracy in the system and remove some of the barriers. Those are all very welcome, but I believe that we can go further still. My motivation in securing the debate is to make some suggestions as to how that might be achieved.

[Jim Shannon (Strangford) (DUP)]

I am grateful to the hon. Gentleman for bringing the issue to Westminster Hall for consideration. In my constituency of Strangford, a great many people are involved in the co-ownership scheme. It has enabled those on low incomes to get on the housing ladder. The only thing that concerns me is this: for someone who is paying 50%, perhaps they should seek financial advice at the beginning about what happens when it comes to buying the other half, moving the other half through, or even legal problems if they cannot make their mortgage payments. Does the hon. Gentleman think that there should be more help to look at the long-term financial implications for those who want to go into co-ownership?

[Iain Stewart]

I will touch on that point a little later, because one problem with expanding shared ownership is that tenants can find it difficult to take a big additional equity share. I will touch on a proposal in a little while that helps to address the problem the hon. Gentleman rightly identifies.

[Mr Stewart Jackson (Peterborough) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I congratulate my hon. Friend on his excellent debate. Does he agree that, with respect to the Landlord and Tenant Act 1985, because housing associations are considered to be private entities, the reasonableness or otherwise of service charges concerns people who wish to staircase in terms of shared equity and shared ownership?

[Iain Stewart]

That is indeed a problem, and I am grateful to my hon. Friend for raising it. A linked issue, which I shall come on to, is that tenants can be liable for 100% of the maintenance costs of the property, but do not own 100% of the equity. That is an unfairness in the system that I hope will be addressed.

The Minister for Housing and Planning can relax; I do not expect an immediate answer to my suggestions today. In fact, some of them go beyond his bailiwick and are rightfully matters for his colleagues in the Treasury, but I hope to make them constructively and he can put them into his thinking box; they are proposals for the long term.

Organisations such as Shelter, the Cambridge Centre for Housing & Planning Research, Orbit, and the Chartered Institute of Housing have, at different times in recent years, conducted reviews of the shared ownership sector and produced some useful recommendations as to how it could be expanded and reformed. I will draw on those recommendations, and indeed the earlier intervention touched on them, too. However, I will also introduce some fresh ideas that are linked to the Government’s reforms of the pension system and also, possibly, to the neighbourhood planning process.

One problem that has been identified with the shared ownership concept is a lack of general information and understanding among the public about what it entails. Schemes such as Help to Buy have very quickly gained popular resonance—Help to Buy is widely understood and widely advertised—but the same cannot always be said of shared ownership. Shared ownership is a complex brand, and it can be hampered by a lack of understanding of what it is, how it works, who might be eligible and what journey a person would take if they started off down the path of shared ownership, which can include knowing what exposure they might have if they wanted to increase their equity share; that was the point made by the hon. Member for Strangford (Jim Shannon).

My first proposal therefore echoes the call that others have made to develop a more effective common marketing branding for shared ownership houses, and perhaps a one-stop shop to advise people who think that shared ownership might be for them. Clear Government backing, simplicity and a standard model would also help.

Another disincentive with the current system is the liability for maintenance costs, which I have already mentioned. In many cases, the tenant bears 100% of the liability for maintenance costs despite not owning 100% of the property. That cannot be right or fair. Surely it would be fairer to have such liabilities in the same proportion as the equity share.

Issues have also been identified with the bureaucracy of the eligibility criteria. One person quoted in one of the studies I have referred to said that the system can seem more like an allocation process than being able to select one’s own home. The system can also be too rigid, and many users find it expensive and complicated to staircase—that is, increase their share of the equity—not least because revaluation costs are incurred at each stage. Hurdles are often encountered if a family wishes to move while keeping a share in a shared ownership property, either because they are moving to another town or city, or simply because they want to change the size of their property because their family circumstances have changed. Such difficulties contribute to a view in the financial world that shared ownership is a complex and risky proposition, which can diminish the appetite to lend and develop new products.

Some solutions to these problems have been suggested, and I am sure that the Government are considering which of them can make the current shared ownership schemes work better. One solution is micro-staircasing, although I hope that it is possible to come up with a slightly better name; it sounds like a flight of steps for very little people, and one of those horrible new words that will encroach into our language. However, it is a good idea. What it means is that, rather than someone having to take large steps up in the share of equity that is owned, smaller and incremental steps of perhaps 1% or 2% at a time can be taken, which would smooth out the path for both sides of the ownership. That would help to address some of the concerns that the hon. Member for Strangford raised.

These suggestions will help and I urge Ministers to look at them, but I am not sure that in themselves they will realise the full potential of shared ownership. So I will outline my principal suggestion about seriously expanding the sector and injecting new capital into it.

The Chancellor has rightly liberalised the pension annuity rules, and many people relish the opportunity of being free not to buy an annuity. Once the temptation to buy Maseratis, yachts or fancy foreign holidays has passed, many people will look for a solid investment home for their capital that will generate a decent income for their retirement. For an increasing number of people, investing in buy-to-let property is the answer, and I do not want to diminish the importance of that option. However, as I touched on earlier, buy-to-let is not without risk, and if too many people choose it, that can lead indirectly to problems.

Why should we not explore ways in which such investment capital could be used to fund an expansion of shared ownership? I believe this could be done on both a large scale and, perhaps more importantly, at a very local and individual level. I do not want to remove the important role that the public sector and housing associations play in funding shared ownership developments; what I am suggesting would sit alongside that model rather than replace it. However, at the large scale I would like the Government to explore ways in which developers and financial institutions could work together to develop investment vehicles so that the capital from pension funds could be used to part-fund the development of shared ownership properties on new housing estates. This is not a new concept. In essence, it goes back to the first principles of building societies before they morphed into something else, with all the associated problems.

However, my suggestion could also apply on a much smaller scale. Let me give a hypothetical example. Imagine I was somewhat older and had recently retired, and that I wished to invest some of my retirement funds in property rather than in buying an annuity. I could choose the buy-to-let option and run the risk of an uneven income stream if it was not always possible to find tenants, and I would have to pay letting agencies to find and vet tenants. There is also the risk of having antisocial tenants, and I would still be liable for the general maintenance and upkeep of the property.

Alternatively, I could invest in a shared ownership property with another individual. I would still have a capital investment and would gain an income from a mix of rent and releasing further stakes of equity over time. I would have greater security of tenant, and a tenant who would have a keen interest in maintaining and even enhancing the value of the property. Again, I would like the Government to explore the viability of a legal structure through which such a small-scale shared ownership arrangement could work. Such a structure may require some financial incentives, but in the Budget last week the Chancellor gave one in the rent-a-room scheme, improving the tax incentive for that scheme. Once again, I accept that that goes beyond the powers of my hon. Friend the Minister for Housing and Planning, but the Government may wish to consider it.

Finally, this model could be applied at a community level, whereby a consortium of local residents could invest in new shared ownership developments for their particular area. We often hear complaints that young families are priced out of their home villages because of soaring property prices. This model could be a way round that. It could also link into the neighbourhood planning process, helping communities to plan for the extra housing that they want to see rather than the enormous and out-of-character developments that they often fear.

I freely admit that I am no expert in housing finance or planning. I am sure that there will be many experts and professionals who can shoot holes in what I have just proposed. However, Parliament is a place for debating ideas and presenting new concepts, and I give these ideas freely to the Minister, and indeed to anyone else who cares to listen to them and take them forward in a way that I genuinely hope will help more people to realise the noble aspiration of owning their own home. Let us not try to find a myriad of reasons why we should not do something; let us try to find lots of ways in which we can make it happen.

16:39

[James Cartlidge (South Suffolk) (Con)]

It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate my hon. Friend the Member for Milton Keynes South (Iain Stewart) on securing this debate. I declare my interest: I am a director of a shared ownership property portal, so I have a very direct interest in—and, obviously, experience of—this subject.

Before making my points, I will make one comment about my hon. Friend’s proposal. It is very interesting and ingenious, and focuses on an important issue for me—the growing intergenerational issue that we are starting to face as a country and about which we need to think creatively. However, the historic problem with private shared ownership or shared equity schemes, shall we say, is the horrible issue of mortgagee and repossession. In other words, what happens if someone fails to pay? The reason why shared ownership has been very successful historically is that shared ownership leases contain a mortgagee protection clause. The housing association is a regulated social landlord; it will not go bust. Mortgage lenders trust that system and therefore, in effect, in the event of repossession there is a structure to operate.

There is much potential in my hon. Friend’s suggestion, but it would probably still be necessary to involve a regulated social landlord. For example, a property could be purchased and the applicant would take out a shared ownership mortgage in the usual way, but perhaps the investment would be used to part-fund the regulated social landlord simply because of the issue of landlord and tenant. If people simply go into partnership, there would be the horrible issue of what happens in the event of repossession, which always complicates matters.

I have had significant involvement in shared ownership, which is underestimated. One of my hon. Friend’s best points was that share ownership is perhaps not as well known now as Help to Buy, even though it has been running since the early 1980s. Help to Buy is a strong brand, but there is a key difference: it generally refers to equity loans, or shared equity schemes, which in essence mean that people buy 100% of a property but take out a loan for 20% of the deposit, normally paying no interest in the first five years, but legally owning the whole property.

With shared ownership, uniquely, a tenant owns part of a property, and just that part. They pay rent on the remainder, but are tenants of a social landlord and able to buy more shares through staircasing, as my hon. Friend mentioned, until they own the whole property. It is the best product for supporting home ownership, because it is the most sustainable. Say, for example, that I can afford 35% of a property and pay rent on the remainder: I staircase only when my circumstances allow me to. If I can afford only to remain on 35%, I can remain.

Another great strength of the shared ownership product is resales—a secondary market, important in towns such as Milton Keynes. People who type “£100,000 in Milton Keynes” into Rightmove would not expect to see any properties, but lots will come up, and I guarantee that nearly all of them will be shared ownership properties. People who have bought a shared ownership share of a new property can resell their share on the second-hand market. It is incredibly popular and the only system available in which people can buy a low-cost home ownership product relating to a second-hand home. That allows properties to come on to market if people cannot do any more staircasing. It is one of the great strengths of the property market.

London in particular is incredibly dependent on the product. In my property portal, resale properties go quickly when they come on to the market in London. Some critics of shared ownership have mentioned the difficulty of reselling, but, as with any property, it depends on location and other factors. In London, I believe that 97% of properties resell quickly. That has certainly been our experience.

There are weaknesses with the product. It can be complicated, but that is partly because it is restricted to those on lower incomes. The Help to Buy equity loan scheme has no income restrictions at all: there are good and bad reasons for that, but it is a different type of product. Shared ownership is targeted at those on lower incomes so it is not surprising that it has stricter rules. In London, local authorities will often overlay their own priorities and it can become quite a complicated product. There is an argument that, when the public purse assists people on to the property ladder, rules and restrictions should apply.

For me, the most important point is that shared ownership has less of an impact on the broader market. My worry about the equity loan product and Help to Buy is that there is a danger that it underwrites higher prices than there would otherwise be. With shared ownership, housing associations will take any profit and recycle it in building rental social rented properties and so on, for those on low incomes. Obviously, the same does not necessarily happen with equity loan properties. I am concerned that buying with a Help to Buy equity loan is simply maintaining prices at a higher rate than would otherwise be the case.

This is such a huge issue for our country, as I hope to say in the Treasury debate quite soon. I apologise to the Minister if I am not around to hear his speech. A long-running issue with Britain’s economy is boom and bust related to the housing market. It is a fundamental weakness of our economic history—I hope it will not be one of our economic future—so we have to be ultra-prudent with products that intervene in the housing market.

Shared ownership’s record is sustainable: it does not stimulate prices to the same degree as equity loan; it encourages sustainable home ownership, because people buy what they can afford; and it is more affordable for people starting off in the market. If I wanted to buy a £250,000 property with an equity loan, I would have to get a mortgage of 75%, but if I bought it on shared ownership I could buy a share of as little as 25%. There is a danger that people who buy shares that are too small may never staircase—that is a risk with shared ownership—but of course they can sell that share to others on the second-hand market, which has a balancing effect.

Overall, the proposal is interesting. Something has to be done about the inter-generational gulf: people are retiring with significant capital and young people are working hard but do not have the capital to access the property market. There is a kernel within what my hon. Friend is proposing, although, as he admits, it will need a lot of detail and thrashing out. I think he has hit the nail on the head. This could be the way to take shared ownership forward to the next generation. Shared ownership certainly needs more support, because it is the best product available to support sustainable home ownership.

16:55

[Mr Stewart Jackson (Peterborough) (Con)]

It is a pleasure to serve under your chairmanship, Mr Evans, and to follow my hon. Friend the Member for South Suffolk (James Cartlidge). I congratulate my hon. Friend the Member for Milton Keynes South (Iain Stewart) on his thoughtful contribution to a debate that is in some ways provocative. I have taken a great interest in this subject for many years, having been a local authority councillor for eight years and having had the privilege—many moons ago—of serving, in opposition, on the Department for Communities and Local Government Front Bench.

This debate is important because it leads us to some fundamentals. It cannot get any more fundamental: the debate about housing is the debate about who owns capital. If one is broadly supportive of owner-occupation, and of fairness and social equity, shared ownership is one of the best engines and catalysts to apply.

There is a crisis. Although I would, as a Conservative Back Bencher, say that the Government have done a pretty good job and have a strong track record in many areas—not least Help to Buy, the new policy on housing association right to buy, and other areas—in some respects there is a crisis of affordability, which is a function of a successful economy. I ask the Minister to bear in mind an important caveat: the London property market is not the national property market. London is, in a sense, a city state or economic microclimate and what applies to London would not necessarily apply to Milton Keynes, Stevenage, Peterborough or other parts of the country.

There are still significant issues around the need to drive up owner-occupation, which has fallen to about 64% of housing tenure now; it was hitting 70% 10 years ago. As Conservatives, and as a Conservative Government, we need to show strong support for home ownership and to make a value judgment about whether we can support the social rented model any longer. I understand that there is not really any ring-fence funding for social rent, other than specialist social rent such as extra care facilities for older or disabled people, where social rent will always be needed. There is now a different paradigm in play and a question about whether it has become too easy for housing associations, which are registered providers, effectively to warehouse social welfare dependency using social rent. We should not be nonchalant about that.

We need to ensure that housing associations really step up to the plate and do what they can to provide an all-round service for their tenants. Shared equity is part of that. In my local area in Peterborough, there is a good registered provider, Cross Keys Homes, which, among other things, goes into elderly people’s homes to check their wellbeing. It has an apprenticeship school to help young people and does a good job on antisocial behaviour and crime. Not all registered providers are like that.

Like everyone else in receipt of public money, registered providers make rational choices. If the rational choices are to carry on with a limited model of social rent, rather than developing their own products with market sale and particularly shared ownership, then they will continue to do that, because they have a vested interest in so doing. Other factors make that probable, too. It is a fact that since the downturn in the economy, there has been a consolidation with large developers. These behemoths—I will not name these massive companies, but they are aware of who they are—are limited in their strategic plans. They want a certain number of houses to be built; they do not like innovation, particularly; they want a very simple contractual relationship with a registered provider; and—let us be honest—they do not really buy into shared ownership as much as they should.

One of our institutional problems, which arises from the financial crisis, is a paucity of understanding, across the whole sector—not least from homebuyers—about intermediate mortgage products. People often do not like them because they do not understand them. The very helpful Library briefing that accompanies the debate makes the point strongly that it can be extremely difficult for people to sell on properties. My hon. Friends the Members for Milton Keynes South and for South Suffolk made that point, too, and we need to look at it. We need to find a way to give a fiscal incentive through the tax system for people to develop better intermediate mortgage products to support shared equity and shared ownership. That is extremely important.

A lot of these marginal housing developments that might support more shared ownership are on brownfield sites. We all support development on brownfield sites. The Government in the Budget and the previous Government have done a lot to flag that up as an important area. It is important to encourage people to build on previously developed land. We always have problems with joint ventures, such as with European Union procurement rules, so we have to look at the matter holistically.

Another area related to shared ownership that the Government still have not got a grip on is real estate investment trusts—in fact, no Government have tackled the area properly in the past 20 or 30 years. Although shared equity and shared ownership are important, so is good quality housing. We have not yet been able to tackle the long-standing legal and financial difficulties that have been overcome in other places—in Europe, Canada and the United States. As my hon. Friend the Member for Milton Keynes South mentioned, REITs mean serious money going into the housing market to provide for pension funds and other institutional investments. We still have not got them right in this country, and I do not quite know why that is.

We can make things a lot simpler. It seems strange to me that the basic model lease contract that the Homes and Communities Agency has published for shared ownership properties precludes sub-letting. In a housing crisis, the simple question is: why? Is it an issue around ownership and the difficulties with dispute where the mortgage or rent is not paid? The Minister would be wise to look at that in the context of the Landlord and Tenant Act 1985, which I mentioned earlier. There is no evidence that expanding the shared ownership market would have any cumulative macroeconomic impact on the housing market. There is no empirical or academic evidence that it would drive up inflation. I stand to be corrected by any Members here or by any erudite and intelligent academics who are spending their afternoon watching this Westminster Hall debate, but I do not think I have seen the evidence. The Public Accounts Committee looked at the issue not that long ago.

We cannot necessarily rely on owner-occupation to drive up home ownership; I do not think it is possible, not least because of the issues I raised about London. I bought my house in London many moons ago, and it strikes me as astonishing—I will not give too much away, because Mrs Jackson will not be pleased if I do—that I could not buy that house now on my and my wife’s salaries, and I am a Member of Parliament.

What is it like to try to buy a property in any of the 32 boroughs of Greater London for a probation officer, a police officer, a student nurse or a teacher? It is nigh on impossible. While we are at it, call me a little Englander but I do not think it is edifying to read of offsite flats overlooking Canary Wharf flying off the shelf in a matter of hours, with half of them bought by foreign investors. It is a skewed housing market where that happens while there are large numbers of homeless people in Greater London and many people on housing waiting lists.

We need to look at service charges and the HCA guidance. The HCA needs to give stronger guidance, as well as use money from the allocations of the affordable homes programme to encourage registered providers and housing associations to push forward with shared ownership. That is extremely important.

My final point is slightly tangential to the substantive debate; it is about housing allocations. We have to do something to boost shared ownership. We rely on home ownership at one extreme and social rent at the other. The parents of the young people who live on the Dogsthorpe estate in my constituency come to me and say, “My daughter or son is working. They are good, decent, law-abiding people, but they only earn £18,000 a year. They are band 3 or band 4, and they will never have a home of their own.” I have to look them in the eye and say, “There is nothing I can do about that”, but I do not want to be in that position. The Government and housing associations can contribute practically, and there is political will from the Treasury.

My hon. Friend has started an extremely important debate. The Minister has been experienced and thoughtful as both a local council leader and a Minister, and I am sure he will take the points on board and pass them on to the Secretary of State and the Treasury.

17:07

[Hannah Bardell (Livingston) (SNP)]

It is a pleasure to speak under your chairpersonship, Mr Evans. I thank the hon. Member for Milton Keynes South (Iain Stewart) for securing this debate, which has been interesting and informative and has heartened me in the wake of a Conservative Budget that has much in it that worries and saddens me. There seems to be consensus around the Chamber on shared ownership. As Members will be aware, housing is a devolved matter for Scotland, and that has allowed the Scottish Government to create a different story from that in the rest of the UK.

I will draw briefly on some of the interesting points that have been raised. The point on students being hindered by student debt is important. We heard in the Budget that student grants will be ended, so we need to look at the gulf that will develop between those on much higher incomes who have owned homes for a long time and the next generation of homeowners, many of whom are being locked out because of the disparity in house prices and other challenges.

Let me give some information about how we have dealt with the issue in Scotland. The latest figures show that the total of new build completions was up 4% to the end of 2014, and that was driven by a 16% increase for private-led sites. We had 15,541 homes completed in 2014, which was 657 more than in 2013. Total new build starts were up 15% in the past year. The Scottish Government outperform other parts of the UK. In Scotland, we have 63 new build social sector completions per 100,000 of population, compared with 46 in England and 25 in Wales. In the year ending December 2014, the rate per 100,000 of population for private sector completions was higher in Scotland, at 228, compared with 173 in England and 175 in Wales. In the latest year, an additional 30,000 or so private sector homes would have had to be built in England to match the Scottish completion rate. We have put that very much at the heart of what we want to do to provide affordable housing throughout Scotland.

A point was made about rural areas, which are particularly challenging. In some areas, people come from elsewhere in the country to what are considered beautiful parts of Scotland, such as Arisaig, where I have spent a number of summers over many years. I know stories of local people who have either returned to live in the area or tried to get out of social housing and into private housing but cannot because they are priced out by people coming from other parts of the UK and the world.

On shared ownership in Scotland, the SNP and Scottish Government have shown their commitment to supporting home ownership in a balanced, sustainable way by helping people on low and moderate incomes to become homeowners, if it is affordable for them. The low-cost initiative for first-time buyers—LIFT—programme brings together several ways of helping households to access home ownership. The new supply shared equity scheme allows first-time buyers to buy new build properties from housing associations, and the Scottish Government give grants to registered social landlords—normally a housing association or housing co-operative—to help them to build or buy new homes for sale.

In March this year, the SNP Government announced £70 million of funding for the open market shared equity scheme, allowing first-time buyers to buy properties on the open market. Priority access will be given to social renters, disabled people, members of the armed forces, veterans who have left the armed forces in the past two years, and widows, widowers and other partners of service personnel for up to two years after their partner was killed while serving in the armed forces. There is a marked difference in Scotland from the UK Government’s approach to housing. We are looking at investment, not austerity. Nevertheless, the £107 million cut from Scotland’s budget, on top of an overall 9% budget cut since 2010 and a 25% cut to the capital budget, is unacceptable and prevents the investment in housing projects that create jobs, forcing austerity on Scotland.

We have shown in Scotland that investment in affordable housing can keep costs down, create jobs and, importantly, help to give people better lives. Commenting on the Budget measure that will remove automatic housing benefit for those aged 18 to 21, Shelter Scotland called it “shameful…unjustified and cruel”. If we are going to invest in the next generation of homeowners and people, we have to have good housing and good education, and the best start in life is imperative. This Budget is not going to do that.

17:12

[Dr Roberta Blackman-Woods (City of Durham) (Lab)]

It is a pleasure to serve under your chairmanship again, Mr Evans, and to participate in this important debate. I congratulate the hon. Member for Milton Keynes South (Iain Stewart) on securing it. It is interesting that there has been pretty much consensus across the Chamber on the importance of investing in shared ownership.

We know that there is a housing crisis. Low to middle-income households earning between £20,000 and £40,000 were once able to afford a decent-quality home for their families. That is no longer the case. We are seeing a steady decrease in the number of homeowners as prices rise out of reach for increasing numbers of people. In fact, home ownership fell to a 30-year low of 65.2% in the last Parliament. Coupled with that decline, the crisis in housing supply and affordability is contributing to a whole range of social and economic problems—a point outlined well by the hon. Member for Livingston (Hannah Bardell).

Shared ownership is a clear route to solving the housing problems of those on low and middle incomes, yet it remains on the margins, and as a number of Members said so eloquently, very few people who badly want to get on the property ladder are even aware that it exists. The hon. Members for Peterborough (Mr Jackson), for South Suffolk (James Cartlidge) and for Milton Keynes South made that point really well. It has been noted that the Government’s Help to Buy scheme offers help to those who might be able to get into the housing market anyway, and it is of most benefit to families on middle incomes and above who struggle to save for larger deposits but can meet the demands of a mortgage. The same could be said of the starter homes policy.

Deposits are only one barrier to home ownership, and many low to medium-income households cannot afford deposits or mortgage repayments. For them, shared ownership is really important. They could also do with some financial advice to help them to secure shared ownership—the hon. Member for Strangford (Jim Shannon) made that point well.

In its 2012 report on shared ownership, the Resolution Foundation made comparisons with the private rented sector and cited the case of a couple with one child and a net income of £23,000. Under shared ownership, that couple could afford a 25% share of a two-bedroom home in 87% of local authorities throughout the country, but they could afford only the equivalent of private rented accommodation in 60% of local authorities, which shows how much more affordable shared ownership would be.

Why are user numbers not higher? In answer to a question I asked about shared ownership, the Secretary of State said that it accounts for only 0.76% of the total dwelling stock in England. A 2012 study by the Cambridge Centre for Housing and Planning Research showed only modest increases in the purchase of shared ownership units over the past 10 years. Clearly, a lot could be done.

It would be helpful if the Minister touched on a number of issues relating to shared ownership. Ownership status has not been designed to meet the needs of those who would benefit most. That must change. Mortgage availability is perhaps too limited, and the Government should review the capital weightings. Maintenance charges can be a serious problem for people, as can sector mobility—the low number of dwellings in the sector makes it hard for people to move. The Government should work with sector leaders to realise the sector’s potential and encourage the development of a voluntary code of practice.

I welcomed the Government’s consultation on shared ownership earlier this year. I call on them to set out a clear longer-term housing strategy, with a pivotal role for shared ownership, rather than the many piecemeal schemes that they have pursued to date, and that should be put alongside a serious strategy for increasing housing supply.

17:17

[The Minister for Housing and Planning (Brandon Lewis)]

It is a pleasure to serve under your chairmanship, Mr Evans, for, I think, the first time. I congratulate the hon. Member for Milton Keynes South (Iain Stewart) on securing this debate on shared ownership. Towards the end of his speech, he rightly made the point that Parliament is a place for debating these ideas and putting them out there; he has taken great advantage of the opportunity to do so and given a good example of how our debates play through.

It is just over two months since the general election, and we are well on the way to planting the roots that will enable us to meet our manifesto commitment to helping people to meet their aspirations to own their own home. Shared ownership is an important part of that. Let us remember that when the Conservative-led coalition first came to power in 2010, we inherited a situation in which the banks were not lending, the builders were not building and people were denied the opportunity of home ownership. We had a long way to go from what Labour left us with: the lowest level of house building since the 1920s. There was also a top-down planning system, the regional spatial strategies, which produced not houses but that lowest rate of building.

We are now working to ensure that we can meet people’s aspirations to own their own homes by building on improvements in house building and support. Since 2010, more than 260,000 affordable homes have been delivered in England, including 41,000 for shared ownership. Our affordable homes programme has exceeded expectations by delivering nearly 186,000 affordable homes since April 2011—more than originally planned. In the first quarter of this year, house building completions were up by 21% on the same quarter last year. We will deliver 275,000 affordable homes over this Parliament to achieve the fastest build rate in some 20 years.

I turn now specifically to shared ownership. As hon. Members have rightly outlined, full home ownership can be a challenge for first-time buyers. Shared ownership offers a route through that via the part-buy, part-rent model. Purchasers buy a minimum 25% share in a new build property at market value, generally provided by a housing association, and pay a controlled rent on the remainder. Further shares may be bought until the property is owned outright. Shared ownership has proven over recent decades to be popular and it is clearly effective. Households that are otherwise priced out of the housing market get a chance to get a foot on the property ladder at a lower initial cost. For many people, shared ownership is a stepping stone to full home ownership, which is why it is such an integral part of the affordable homes programme. Some 41,000 shared ownership homes have been delivered since 2010.

We need to look for more ways to help identify and lift the other barriers to extending shared ownership. Following the autumn statement, the Government took a number of steps. We consulted on a range of proposals to streamline the process for selling on shared ownership properties and to increase mobility. We also held discussions with housing associations and lenders. The Homes and Communities Agency now has amended guidance and model leases to remove the pre-emption right for shared ownership properties that have staircased to outright ownership, making it easier for those who have met their aspiration for full home ownership through shared ownership to move on. I am happy to take up the challenge of my hon. Friend the Member for Peterborough (Mr Jackson) to ensure that the Government and the HCA look at the guidance to see what more can be done. We can always try to be better.

[Hannah Bardell]

Will the Minister give way?

[Brandon Lewis]

I will not because of the time.

The change came in to effect across England at the end of April and the Greater London Authority confirmed that it would mirror the changes in May.

I thank my hon. Friend the Member for Milton Keynes South for his ideas, and I am keen to finish in time to allow him to say a few more words. Some of the issues that he raised were mentioned in discussions earlier this year with providers and in the good work done by a range of people looking at extending shared ownership. His speech today included some interesting and new, but challenging, ideas that we will take away and consider. I hope that he will accept my invitation to come and talk to us in the Department for Communities and Local Government. We remain committed to considering suggestions that can enhance the contribution that shared ownership can make to extending home ownership.

My hon. Friend the Member for South Suffolk (James Cartlidge) rightly outlined the benefits of shared ownership. I have seen it for myself on tours around the country, during which I have seen shared ownership properties, not least here in London, with the great examples at the Olympic park that show how it allows people to get into home ownership in a place where they want to be. We have a complicated housing market, and it is absolutely right that the Government ensure that there is a framework that offers a menu of options, so that someone on the demand side looking to get into a home of their own can look across the menu to find the product that is right for them. It could be shared ownership, Help to Buy, right to buy, starter homes or one of the other products out there.

My hon. Friend the Member for Peterborough is right that we must remember that there is a market outside London. We might talk of a housing bubble, but some people around the country will be living in negative equity and will wonder what we are talking about. We must be conscious of that, and my hon. Friend was correct to mention right to buy.

My hon. Friend the Member for Milton Keynes South noted that it is right to do all that we can to support those who want to own a home of their own. We believe in helping people’s aspirations, which is why we will offer more than a million housing association tenants the option to buy their home in the same way that generations of local authority tenants have. Until now, those housing association tenants have received little or no assistance. That is unfair. Aspiration should not be determined or limited by the organisation that manages someone’s home, especially if it was ultimately funded by the taxpayer. That is why we will ensure that housing association tenants have the same rights to buy a home. Housing associations can play a key part in that, and I hope to see them build on the fantastic work that others have already done to develop the shared ownership model further and to help their tenants staircase to home ownership.

The Government are also committed to building 200,000 starter homes during this Parliament to be offered to young first-time buyers at a 20% discount on their open market value. The productivity plan published last Friday announced that we will introduce an ambitious package of planning reforms and proposals to help deliver starter homes and to show commitment through national planning policy changes, and with the housing Bill later this year, we will deliver the homes that we want to see built across our country.

Hon. Members were right to refer to large and small developers. Many large developers started off as small developers, but I would argue that the planning restrictions and the regional spatial strategies and regulations that were brought in under the previous Labour Government actually made it more difficult for small builders to become the larger builders of tomorrow. I suspect that even the larger builders would admit that they would like to see more competition coming through. That is why we want to create a simplified, faster and more efficient planning system that still reflects the loud voice of local people having their say. It is absolutely right that more small and medium-sized businesses come in and that we create an environment where they might be attracted to the shared equity or ownership model. My hon. Friend the Member for Milton Keynes South made an interesting proposal that could lead us that way and we can consider it.

I am proud to have been a part of the previous Government, the Conservative-led coalition, because we were the first since the 1980s to end a term with a larger stock of affordable housing, and we are committed to go much further. We will deliver an additional 275,000 affordable homes by 2020, with billions of pounds of public and private investment. We will support the housing association tenant who aspires to buy their home, which was not possible before. We want to support and help the young family who sign up for a starter home—tens of thousands of people have already expressed an interest—and the couple who have always dreamed of owning their own home. Help to Buy can make the difference in their ability to move up the ladder. We will support their aspirations. We will build more homes in every part of the country, while ensuring that we build the homes that we need for the people who need them in the places where they are needed. Importantly, they must also be of the quality that we all want to see. Shared ownership has a hugely important part to play in that. I support my hon. Friend the Member for Milton Keynes South in his desire to make that point loud and clear.

17:26

[Iain Stewart]

It has been a useful debate and I hope that my contribution and those of the Minister and of other hon. Members have been helpful in sparking some wider interest in the expansion of a concept of housing that is fundamentally sound and enjoys support across the political spectrum. The Minister rightly said that housing should be a menu of options for people. I very much hope that we may have further discussions about how to increase the visibility and effectiveness of shared ownership. I will certainly take up his invitation to discuss ideas further and to sample whatever hospitality the Department for Communities and Local Government has to offer. For now, I thank all Members who contributed to the debate and you, Mr Evans, for chairing our proceedings with such aplomb.

Question put and agreed to.

Resolved,

That this House has considered shared ownership housing.

17:27

Sitting adjourned.