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Chris Philp (Croydon South) (Con)
I beg to move,
That this House has considered affordable housing in London.
[Interruption.] We seem to have been attacked by some sort of ghost in the acoustic system.
As long ago as 1946, Anthony Eden laid out a vision of a property-owning democracy, describing ownership of property as
“a reward, a right and a responsibility that must be shared as equitably as possible among all our citizens.”
I hope that both Government and Opposition Members agree with that sentiment. Demand for housing in London is at record levels. The population of our city recently exceeded the pre-war high of 8.6 million, overtaking the peak in 1939. It is growing by 100,000 people per year. That rate is forecast to continue, and by 2030 the population of our city will exceed 10 million. That population growth means that each and every year we need to build 50,000 more homes in the city to keep pace with population demand. I ask Members to keep that number in mind as we continue the debate.
The challenge that our city faces is that for the last 20 years or so we have been building only between 15,000 and 25,000 new homes a year, meaning that each and every year we are building fewer houses than required to meet population demand. That situation is clearly not sustainable. I have done some calculations for the period since 2000: in that time, we have built about 300,000 fewer homes than required to meet population demands, so we have that accumulated under-supply in our city. As a consequence, there are enormous pressures on the availability and affordability of houses in this city, as Members know from their constituency casework. [Interruption.]
Albert Owen (in the Chair)
Order. We have a problem with the acoustics. Will you try switching your microphone off? [Interruption.] I am told there might be no recording, so please turn it on again—we need a report. We shall carry on.
Chris Philp
As Members know from their constituency postbag, there is enormous pressure on the affordability and the availability of housing in our city. That is why 25% of 20 to 35-year-olds are still living with their parents. As the father of two-year-old twins, I very much hope that that is not the case in 18 years’ time. The average age of a first-time buyer in this city has risen to 37, so there are real challenges to do with the availability and affordability of housing.
Some people, such as the hon. Member for Islington North (Jeremy Corbyn), may talk about rent controls and so on, but at the most fundamental and basic level the issue is one of supply and demand: demand is exceeding supply. The demand side of the equation— population growth—is hard for the Government to regulate, and the only component that they can influence is probably immigration, which is clearly a big driver of housing demand in London, so it is right that the Government should want to get immigration under control. The other side of the equation is supply. By increasing supply we can alleviate the pressures to which I have referred.
Mr David Lammy (Tottenham) (Lab)
Does the hon. Gentleman want to qualify what he says? Supply is important, but supply for whom? What we need are affordable homes. With the average income at £32,000, I hope that he will say something about affordability.
Chris Philp
On affordability, basic economics dictate that as we increase supply relative to demand, prices will fall, so irrespective of tenure types, controlled rents and so on, increasing supply will tend to help affordability.
Siobhain McDonagh (Mitcham and Morden) (Lab)
Will the hon. Gentleman address the point that in a capital city the demand is not only from people who live here, but from international developers, who see housing as a good investment? We could increase supply, but none of our communities would be able to muscle their way into getting some of those properties.
Chris Philp
Let me take the latter point made by the right hon. Member for Tottenham (Mr Lammy) before coming on to the hon. Lady’s. On affordability, supply and demand clearly drive prices. I am delighted that under the current Mayor of London we have delivered 3,000 council houses, whereas under the previous Mayor virtually none were delivered. Taken together, the number of housing association starts and local authority starts under this Government is 5% higher than under the Labour Government.
Chris Philp
I would like to make a little progress first; I will give way in a moment. The Mayor of London, my hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), has brought forward 94,000 affordable units during his mayoralty —a considerably larger number than was brought forward by his predecessor, Mr Livingstone. We have a good track record on affordable housing, but more clearly needs to be done.
On foreigners buying property in London, there are two elements: who is buying it, and are they occupying it? On foreigners buying it, the phenomenon tends to be concentrated in prime central London places, such as Kensington and Chelsea—
Chris Philp
It is good that Hackney is a desirable place. Figures produced by Knight Frank suggest that 93% of new build stock in outer London and 80% in inner London is sold to UK residents. Savills estimates that in 93% of all transactions across London, the property, whether new or second-hand, goes to people who live here, so it is possible to overstate things. In 93% of property transactions, the property goes to Londoners.
I am delighted to report that vacancy rates in London under this Government have dropped dramatically. Long-term vacancy—vacancies for longer than six months—stood at 34,000 units in 2010; that has dropped to 20,000 units, which is a reduction of 41%. That is good progress achieved under this Government.
Mark Field (Cities of London and Westminster) (Con)
May I suggest to my hon. Friend that the rather self-serving evidence from Knight Frank and Savills not be given too much credence? There are important points that all of us in London, across the political divide, feel strongly about, and making the debate rabidly party political is unhelpful, not only for London MPs, but for all those we represent.
Chris Philp
It is certainly not my intention to make the debate rabidly party political—I am not sure that I have been called “rabid” before, but I thank my right hon. Friend for introducing the adjective. I want this to be a non-partisan and constructive discussion about London’s housing. I hope there are things that we can agree on during the debate.
Andy Slaughter
Does the hon. Gentleman agree that his Government’s policies to force the sale of high-value council homes in London and to restrict or cut the rents without compensating councils, which is completely decimating council building programmes, are not helpful in providing more affordable housing?
Chris Philp
I am sure that the Minister will comment later, but the sale of valuable houses might provide councils with the opportunity to use the proceeds to build two or three new social housing units. For example, I used to be a councillor in Camden and some of its housing stock, such as some units in Bloomsbury, was worth well in excess of £1 million—one of those units was occupied by the hon. Gentleman’s former colleague, Mr Dobson. Were such a unit to be sold, we could have built two or three council or social housing units elsewhere in Camden or London. There is some merit in that.
On the rent reductions, making housing more affordable clearly means making rents cheaper, which will help housing association and council tenants to pay lower rents. There are opportunities to force efficiency savings in those organisations. Most branches of government—local authorities, the police, every Department—have made savings over the past four or five years, quite rightly, and it is fair to ask other organisations to make savings and pass those on to their tenants.
Andy Slaughter
The hon. Gentleman should have read his brief a little more carefully. In places such as Camden, it will often not be possible to find the land on which to build to replace those houses that are sold. If it can be found, under his Government’s rules, it is likely that the newly built homes will also have to be sold. The fact is that councils in London have tried hard to have house building programmes. The effect of the rent cut may be good in itself, but unless Government money is supplied to compensate for it, there will be no council housing building programme for London. He needs to address those points if we are to take him seriously.
Chris Philp
If there are challenges in inner London boroughs such as Camden and the Royal Borough of Kensington and Chelsea, where it is difficult to find new sites, it is important that houses are built in the wider London area. The Mayor of London has strongly advocated having a London ring fence, whereby the proceeds of council house sales and the like are ring-fenced for use within London. I am sure the Minister will comment on that suggestion in due course.
Meg Hillier
I thank the hon. Gentleman for being so generous in giving way. He seems to be saying that in boroughs such as Hackney—where, under the Government’s proposed right-to-buy policy, large family council properties would need to be sold off, but over a fifth of residents under 16 will need those family homes—we should be content to encourage people to go and live in Ruislip or Mitcham. I am sure that those are fantastic places to live, but they are not where Hackney residents want to live; they would have to take their children out of school to do so, which they do not want to do. Is he saying we should be shipping people out of expensive areas to cheaper areas?
Chris Philp
No. I am simply saying that where there are very high-value council properties, it makes sense to sell them and free up money to build more properties. Ideally, those would be in the same borough, but if there is a lack of land—I am not sure that Hackney has a particular lack of land; that is more a problem for the inner London boroughs, such as Camden, Westminster and RBKC—and it is impossible to find new land in the borough, we should look a little more widely. That seems to be common sense. If we can sell one unit and build three, that seems to be a trade-off well worth—
Chris Philp
I will make a little progress. I have been unusually generous.
The Mayor of London has made progress during the seven years of his mayoralty. He has brought forward 94,000 affordable houses since 2008, which—to respond to the point made by the right hon. Member for Tottenham—is extremely welcome. The 20 housing zones established jointly between the Government and the Mayor of London, with £400 million of investment, are also extremely welcome. In those zones the local authority, the Mayor and the Department for Communities and Local Government get together to put in place the planning, infrastructure and support required to deliver large-scale housing. Those zones will help, and the £200 million London housing bank will help as well.
There are also specific projects that I am sure we are all keen to encourage. For example, the Mayoral Development Corporation is bringing forward 24,000 units on derelict industrial land at Old Oak Common in Ealing. We need to see far more schemes—
Chris Philp
Is it partly in Hammersmith? [Interruption.] The fact that it goes over three London boroughs shows that we need MDCs to step in and make things happen when large numbers of public bodies are involved. In my own borough, the Croydon growth zone is important; it will, I hope, bring forward 4,000 houses. The Brent Cross regeneration project is another important scheme. Those specific projects, in which the Government, the Mayor of London and the boroughs focus together on bringing forward large numbers of houses in a particular area, are very effective. I strongly encourage the Mayor and the Minister to do even more in that way.
I also commend the Greater London Authority for its programme of disposing of its public land for housing. Over the last couple of years, the GLA has disposed of 98% of the land that it owns—that excludes Transport for London, by the way—for public housing. That includes the site of the old Cane Hill hospital in my constituency—which is directly overlooked by my house—where Barratt Homes is currently building 650 houses. That is an example that other public bodies should follow.
In that vein, I welcome the London Land Commission, which met for the first time on 15 July. Its duty is to catalogue surplus public sector land that can be brought forward for housing. TfL has 6,000 acres that could be used across 600 sites; the NHS has 1,000 acres, 15% of which is potentially surplus to requirements. There is a huge amount that can be done by bringing forward public sector land for house building.
I also strongly support the idea of using local development orders to effectively grant outline planning consent on suitable brownfield land, even if the landowner has not applied for consent. The target is to get LDOs for 90% of brownfield sites by 2020. That is a really important initiative. One housing association estimates that there are 8,000 acres of developable brownfield land in our city. It is a matter of absolute urgency that we develop that land as quickly as possible, partly to create new housing and partly to take pressure off the green belt, which it is essential to protect.
I am conscious that other Members wish to speak. In closing, I will briefly put eight specific proposals to the Minister. The first is to consider extending the office-to-residential conversion scheme that has been in operation for the last two or three years, in areas where there is no pressure on office supply. Certainly some clarification is needed about the definition of change of use. At the moment, the change of use has to have occurred by May 2016, but there is a little ambiguity about what the change of use actually is, so some clarification would help developers and investors.
Secondly—this is more a matter for the Treasury than DCLG—the regime for buy-to-let mortgages is currently a bit softer than the mortgage regime for owner-occupiers. For example, most owner-occupier mortgages are repayment, whereas most buy-to-let landlords get interest-only mortgages. In my view, that means that buy-to-let landlords are unfairly advantaged relative to potential owner-occupiers. The Bank of England and the Treasury should look at that, to create a level playing field so that owner-occupiers can purchase on an equal footing to buy-to-let landlords. That would encourage home ownership.
Thirdly, local authority planning departments are often a serious bottleneck, leading to the missing of statutory deadlines for granting planning consent. I suggest that we should consider allowing higher planning fees to be charged in exchange for a guaranteed service level. Planning fees are quite low, and I am sure that many developers—particularly larger ones with big schemes—would happily pay a great deal more money to get a quick, clear decision. That would bring planning consents forward more quickly and get us building.
Ruth Cadbury (Brentford and Isleworth) (Lab)
That is fine, but would the hon. Gentleman’s party support speedier decisions if that meant less time for proper consultation with local residents?
Chris Philp
No. Proper consultation is clearly very important. Quite often, however, it the process with officers that is slow. It is not the planning committee; the officers who prepare the reports and do all the work prior to the application can take a very long time, often because they are under-resourced, because of the understandable pressures on local government finances. I am sure that larger developers in particular would be happy to pay significantly higher fees to speed up the process. Some planning departments and councils are very good, but some are not, and when they are not performing and are letting local residents down by being slow in dealing with applications, we should consider outsourcing planning functions to a third party that can do the job more effectively. That could be paid for by planning fees.
Fourthly, we must make sure that the brownfield register being compiled for the LDOs is given real focus. I suspect that the GLA will play a role in supporting that process, and it may need some financial assistance. It is essential to get the list of brownfield land and develop those 8,000 acres as quickly as possible. I hope that the Department, the Mayor of London and the boroughs will put a huge focus on identifying that land and giving it outline planning consent over the next five years.
My fifth point is a more general one, about talking to developers. I should draw Members’ attention to my entry in the Register of Members’ Financial Interests, as I have a previous and a current professional involvement in the area. Parts of the planning process put up barriers—things like bat studies and crested newt studies. They are less of an issue, I imagine, in Camden and Hackney, but in other parts of the country they can delay developments by months or years. Bats and crested newts are important, but building houses is important as well, and sometimes the balance struck between those considerations is not quite right.
My sixth point relates to the London Land Commission. Its current mandate is simply to identify surplus public sector land. I would go further and give the commission, supported by the Mayor of London and the Department, the power to take on surplus public sector land—whoever it happens to be owned by—and to bring that land directly forward for development. Some 50%, say, of the proceeds would go, with no restrictions, to the previous landowner—the NHS, Network Rail or TfL—and the other 50% would be ploughed back into housing. There would therefore be an incentive for such organisations to co-operate with the process, whereas if the money just disappears somewhere else, they may not be very co-operative. I urge the Minister to give serious consideration to granting the commission the powers I have described.
The seventh point is to make the adoption of a local plan by local authorities—both inside and outside London—mandatory. At the moment, a number of authorities do not have local plans, which makes it difficult to bring forward housing. If authorities do not bring forward a local plan by a particular point—for example, by 2017—the planning inspector or DCLG should simply develop one on their behalf. Authorities have had plenty of notice, but a number have not developed a plan.
My final point is that community infrastructure payments should be used for infrastructure that is relevant to the local community. When local authorities take community infrastructure levy money, it can disappear into a black hole, and there is a temptation to replace capital spending elsewhere, which causes resentment among local residents. In the case of the project close to my house, there is a £7 million CIL payment, but the money could disappear to the other end of Croydon, which would mean that any pressures on schools, hospitals and local roads were not necessarily alleviated. I think the local public will be more accepting of large-scale development if they can see that it is directly linked to infrastructure improvements in their locality, and that will ease the passage of development.
I have tried to make eight constructive suggestions to help to alleviate the house building issues that London faces. I hope Members on both sides will agree with my diagnosis of the problem and with some of the solutions I have mentioned. I hope colleagues will come forward with other ideas in the next hour and 10 minutes and that the Minister will be able to respond to them.
Our city faces problems on housing. Progress has been made, but there is more to do. I therefore hope that we can work together, as London MPs, with the Mayor of London, the boroughs and the Department to alleviate the pressures our city faces.
Albert Owen (in the Chair)
Order. Before I call the next speaker, Helen Hayes, I remind Members that I will call the first of the three Front-Bench speakers at 10.30 am, so Members have about five minutes each. If everybody keeps to that, there will be no need for a time limit.
Helen Hayes (Dulwich and West Norwood) (Lab)
I thank the hon. Member for Croydon South (Chris Philp) for calling the debate. The housing crisis is, indeed, the biggest issue facing London. More people than ever are on the waiting list for a council home, huge numbers of people are in expensive, insecure private tenancies, and there is a whole generation of people for whom owning their own home is an unattainable aspiration.
People with housing issues fill my surgery every week. The impact of those issues is wide-ranging, stretching from health problems, to educational disadvantage as a result of a lack of space to do homework, to young people being unable to put down roots in their communities because they are constantly subject to eviction following the end of private tenancies.
Within London’s housing crisis as a whole, however, there is a sub-crisis—the availability of affordable housing. In that context, the Government are seeking to introduce policies that will make delivering affordable housing much harder unless additional mitigating measures are put in place.
I wrote to the Minister for Housing and Planning on 21 July about the proposal to reduce social rents by 1%, and I am disappointed that I have yet to receive a response. I therefore want to bring to the debate the issues raised in that letter and to press the Government on them.
The London borough of Southwark, of which I represent part, is one of the largest social landlords in the country, responsible for 39,000 council homes and 15,000 leasehold properties. It also has the single biggest commitment to council house building of any local authority in the country, with a 30-year plan to build 11,000 new council homes. The plan was developed following an independent housing commission, which explored in detail housing needs and housing stock in the borough and the ways in which the council could best address the condition of current council homes and the need for current and future housing.
In 2014, as part of the 2014 spending review, the Chancellor set rents for the next 10 years at consumer prices index plus 1%. That clear financial position formed the basis for Southwark’s long-term planning for current and future council homes. The announcement in the emergency Budget that social rents will now be reduced annually by 1% for four years will have significant consequences for Southwark Council’s housing revenue account if the Government take no steps to mitigate the proposal’s impact. The announcement was made without consultation with, or prior notice to, the housing sector, giving councils and housing associations no opportunity to evaluate its effects or to make representations to the Government.
The proposal represents a fundamental shift in Government policy and is the most profound of a number of changes that, cumulatively, undermine the principles of self-financing and the ability of councils and housing associations to meet their long-term investment needs and contribute to addressing the housing crisis. It removes previous resource certainty, which is a key factor for any organisation seeking to make investment plans, because rental stream is critical to the viability of social housing providers’ business plans. It removes all local discretion and introduces de facto rent control for social housing, at a time when the Government are not looking at any measures to curb rents in the private sector.
The proposal’s stated purpose is to curb the housing benefit bill, but impeding social housing providers’ ability to build new social homes will significantly increase it, not reduce it. The emergency Budget contains no equivalent measures on the level of private sector rent or the definition of affordable rent—up to 80% of market rent in London—which have played by far and away the most significant role in increasing the housing benefit bill.
The proposal’s compound effect over four years on Southwark Council alone will be an annual cut of more than £65 million from 2015-16 levels. In the long term, the loss of resources, which will be compounded over the business plan’s 30-year life, will be of the order of £1.1 billion. That will have a staggeringly large impact on council homes in Southwark.
During the last Parliament, the Government provided financial support to enable councils to freeze council tax. In a similar vein, I seek confirmation that they will provide additional funding to compensate for the impact that the proposal to reduce council rents by 1% will have on housing revenue accounts, to ensure the council can continue to deliver new council homes and invest in its current homes.
Taken together, the Government’s proposal on council rents and the proposal to extend the right to buy to housing associations—funded by the forced sale of high-value council properties—will mean a dramatic worsening of the housing crisis in London over the next five years, with no improvement whatever.
I am absolutely dismayed by the Government’s proposals, which fundamentally belie the suggestion that they have any understanding at all of housing finance or of the practical ways in which the housing sector delivers new homes and contributes to solving the housing crisis. I therefore hope I will get a response today to the points that I raised on 21 July.
Mark Field (Cities of London and Westminster) (Con)
I congratulate my hon. Friend the Member for Croydon South (Chris Philp). I did not wish to be unkind to him earlier; the point I was trying to make was that housing in London is a toxic, complicated issue. In many ways, it is one issue on which all of us, as London Members of Parliament, need to try to work together, although there will, of course, be party political differences from time to time.
I hope colleagues will forgive me for focusing my comments not on social housing, which is close to my heart—it is an issue even in my constituency—but on foreign ownership. Property ownership in Britain is a key component of the social capital that enables a free enterprise system to have popular legitimacy and to function effectively.
Foreign investment in London property is so desirable because property here is widely considered to be relatively low risk, while offering high returns. There are a great many reasons for that, mainly stemming from the inclusive and welcoming society created by this nation—our forefathers—over many generations. All this so-called social capital cannot simply be bought; it has evolved over many centuries.
As the international enclave expands in central London boroughs, prices have also been driven up in the outer suburbs. It is getting tough for even the highest paid professionals to buy homes, as population growth exacerbates supply issues. High rent gobbles up funds for deposits, and prices get a boost from artificially low interest rates. There is something very wrong, here in the capital, when hard-working residents, our own constituents, who play by the rules, are completely priced out of their own housing market. These are the sort of people who will maintain and build London’s social capital and pass it on to the next generation. Property developers benefit from that social capital and it is only right that they play their part in preserving it.
Lest we forget, the fundamental purpose of residential property is to house people. It is a precious resource and should not routinely be locked away as part of an investment portfolio. Housing is a key component of every city’s eco-system and it may now be time to consider having residential developments that are open for purchase by only UK citizens and permanent residents. That would to some extent prevent non-resident overseas investors from bringing about what is, despite the honeyed words of Knight Frank and Savills, massive distortion of London’s property market.
Nations such as Switzerland and Singapore have strict restrictions on the foreign ownership of property. Yet they are global players that still operate successfully as financial centres. In Switzerland, only Swiss citizens and permanent residents can own property. The property market is a free market that operates within those rules. In Singapore most Singaporeans live in Housing Development Board properties, which only Singaporeans can own, some of which are by any standards luxurious. Singapore also has unrestricted ownership of non HBD properties—mainly high-cost luxury properties, which are open to foreign ownership. However, high stamp duty and penal capital gains taxes are levied on speculative purchases, if the property is sold within four years of securing ownership. I fully appreciate that for London to remain a dynamic, global city we must continue to welcome people from abroad to live, work, study and build businesses here. They will make an important contribution to our city’s culture. However, that is different from welcoming speculative capital that forces British citizens and other permanent residents who live and work here out of our city.
Another key aspect to examine is the reported reluctance of banks to lend money for residential property developments, so that developers look for off-plan purchasers, frequently in Asia, to deposit 20% of the value of their purchase to allow building to commence. That is an extremely complex issue and I fully acknowledge that, for example, Battersea power station would have remained derelict had it not been for the substantial boost afforded by some of that foreign investment.
Mr Lammy
Does the right hon. Gentleman agree that another element of that foreign ownership is dirty money being trafficked through London from Russia and other places, with 3.7 square miles of London owned by offshore companies—we do not know whom—and that we need serious regulation?
Mark Field
There are two issues. There is clearly some dirty money; it would be naive to suggest there is none. That said, there is also significant investment from Russia and the middle east that is not dirty money at all. As for offshore companies, we should not necessarily assume that there is a direct connection there. There is a range of reasons for using offshore financial vehicles in an entirely legitimate way. The important thing is to have a registration process—although it need not necessarily be open, because that would lead to all sorts of other difficulties—so that the authorities in the Channel Islands or Cayman Islands, for example, are well aware of what is going on.
I appreciate that others want to speak but want briefly, if I may, to suggest some qualifications that we might have in mind as criteria for purchasing into the London market. An individual should be either a British citizen or permanent resident, and the purchase should not be for a buy-to-let investment, but a home to live in. It should be possible to let the property out only after period of residency, and then only for a specified time before it would need to be sold. If the property were immediately sold, a penal capital gain would be levied, and it would have to be sold to people who qualified under the same criteria. Additional levies on speculative ownership and buy-to-leave-empty purchases might also need to be considered alongside a potential system for a higher non-resident council tax, which I have also discussed in the past.
I am trying here to provoke some thoughtful debate, and I recognise that some of my proposals will not necessarily prove entirely practicable. However, we should not lose sight of the foundations on which the high property prices in London are built. They have much to do with the huge amounts of social capital created by our constituents over many centuries. We are custodians of that social capital, and our duty is to grow it, improve it and bequeath it properly to future generations.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I congratulate the hon. Member for Croydon South (Chris Philp), one of my near neighbours, on getting the debate. London MPs have a serious job to do on behalf of our constituents. I want to make some suggestions about people’s ability to own their home in London.
A survey in July by the Evening Standard suggested that 82% of Londoners who currently do not own their home believe that it will always be outside their price range. A significant number of those people have good jobs by any estimation and want to buy, but cannot. I think the reason for that is that we have lost the connection—in a moral, civic and party sense—between owning a home and using housing as an investment. That is why, while I fully support the Government in their Budget plan to reduce the tax breaks on buy-to-let mortgages, I do not believe that they go far enough.
The flawed principle that landlords can claim tax relief on mortgage interest will remain. Landlords will get a slightly lower tax relief. The Government’s own documents on that cut suggest that they will save just £665 million a year by 2020. That is just one tenth of the £6 billion in mortgage interest claimed back in tax by landlords in 2012-13. A major contribution to tackling the root causes of the housing crisis seriously would be to get an even playing field between those attempting to get mortgages to buy, and those attempting to get them to let.
To touch on the issue of international investment in property, on which I would not want to compete with the knowledge of the right hon. Member for Cities of London and Westminster (Mark Field), it cannot be right that in a major new development in Thameside only a fifth of the properties were purchased by domestic buyers. In July a new £140 million development in Canary Wharf sold out in hours, and half the flats were bought by overseas investors not resident in the UK. A 2013 report by Knight Frank, taking a different tack, found that 28% of central London property buyers were non-UK residents. I challenge the suggestion made by the hon. Member for Croydon South that that is something that happens only in central London.
I represent a suburban London constituency that is cheap by London standards; 18 months ago I had an email from a constituent who said, “Siobhain, you need to know what is going on. My daughter and her boyfriend want to buy their first one-bedroom flat”—in a part of Mitcham that no one would regard as palatial. When they turned up to try to put in an offer, there were 32 people in that one-bedroom flat. The person next to my constituent’s daughter and her boyfriend was a representative of a Chinese bank, which was interested in investing in it. How can that couple ever compete in that environment?
We need to find some solutions. I am sure there are many sophisticated suggestions. One that I want to suggest is a levy on property sold to non-UK residents. It would raise billions in tax revenue and that could be invested in affordable housing. Reducing demand from buy-to-let landlords and foreign property investors would also cut the spiralling housing benefit bill. Housing benefit paid to private landlords has now reached £9.3 billion, or 38% of the total bill. With fewer people able to buy homes, there is more demand in the private rental sector, which again puts up rents. If we removed mortgage tax interest from buy-to-let mortgages, we would release £6 billion. That is roughly the equivalent of grants to housing associations to build 100,000 new social homes—a real contribution to helping those who are having difficulties. We would also help the economy, because as we all know, for every £1 spent on housing construction, an additional £2.09 of economic output is generated.
I urge the Government to be more assertive in their efforts to encourage home ownership through the tax system, and to discourage the damaging crowding of the market by buy-to-let landlords and non-UK residents. We must enable people to fulfil that most basic of human desires—to own their own home—and so we must encourage and incentivise buying to live, and not buying to let.
We are all agents for change in our constituencies. I suggest that Members on both sides of the House look at the YMCA’s Y:Cube, which is about going back to the prefabs. They can be built on bad, difficult, and small sites, and they can be constructed for only 25% of normal construction costs. They can be built within five months of receiving planning permission, and the money is paid back in around 10 years, so it is a great investment. If anybody wants to know more about Y:Cube, I have a pack here, but I am sure that the YMCA would love to talk to them. We need to be broadminded about the solutions and consider things that we may never have thought of in the past, because it is a huge problem.
Mr Nick Hurd (Ruislip, Northwood and Pinner) (Con)
May I be opportunistic and place on record my appreciation of the Queen’s public service to this country, Mr Owen?
My hon. Friend the Member for Croydon South (Chris Philp) is not so far down the road of public service, but he has done us a great service today by securing this debate on what one Member rightly described as the No. 1 political issue in the capital. It goes to the heart of the debate about what kind of London we want to live in and have our kids grow up in. I feel passionately that London, if it is to continue being the vibrant, brilliant place it is, must be somewhere that people of all ages and incomes can afford to live in decent homes, in neighbourhoods that are not segregated by wealth, class or nationality. In particular, it must be a place where young people feel that they really have a decent chance of buying or renting their own space and have the chance to get on.
I think most of us are here because we fear we are heading in the wrong direction, and that the pressures in this context are enormous. For me, it is an issue of social justice and intergenerational equity. It matters enormously, and I have detected, as I am sure that other MPs have, enormous change in sentiment in the area I represent, which is a relatively affluent suburb on the edge of London. Now, people cannot buy a one-bedroom flat for less than a quarter of a million pounds there, nor can they rent one for less than £1,000 a month. This issue is really concerning for people. The debate has changed from 2005, when I stood on platforms trying to get elected. The question then was, “How do we stop the development?”, whereas it is now, “Where are my grandchildren going to live?”, and “How do we build what we need to build without spoiling the area?”
There is no easy answer to those questions, but this is a fundamental challenge for our generation of politicians, because as others have said, the problem is likely to get worse, given the demand pressures, not least due to population increase. This is one of the biggest challenges for our generation of politicians. The past is less interesting than the future, but we have to recognise that Governments of both colours have failed the capital in the past, in terms of building the number of homes required. As hon. Members would expect me to say, the coalition Government deserve a great deal of credit for stopping the rot. I will leave it to the Minister to give the roll call of achievements; I think it is substantial.
The Mayor of London is not here today, but I think he also deserves great credit for changing the tempo and ambition, and for some really interesting innovation, particularly in helping working families on low incomes and giving them the support that they need. There have been a lot of very interesting initiatives and very good projects that I hope his successor—with respect to other candidates, I sincerely hope it will be my hon. Friend the Member for Richmond Park (Zac Goldsmith)—will turbo-charge.
However, I guard against looking simply at incremental reform. I think we need to be more radical. The absolute priority is increasing the supply of affordable homes. This cannot just be about increasing the volume of building, because that will take too long. It is largely about what gets built. The starting point—if it takes a Conservative to point this out, so be it—is recognising that the market will not deliver, because, certainly in my area, it delivers what the market can afford, and not necessarily what the community needs. I believe that the state has to be more radical in terms of intervention. Local authorities have to get back into the business of building. We have to do big Conservative things to open up this market, which is too opaque. The power is concentrated in too few hands. We need more competition, more transparency and more innovation in how stuff gets designed, built and financed, and we need to bring in the public in a much bigger way, so that they feel a bigger sense of buy-in.
The debate is normally framed around power, land and money. I simply add a concern about skills. It was put to me by the director of a major development company that we can have the best policies in the world, but we do not have the people or skills to build what we want to build, and we need to address that.
In terms of power, I am a strong believer in decentralisation. I would like to see the next Mayor have more power, and we should be open to the idea of a new delivery agency. We need to question why Transport for London and the NHS think that they should be in the redevelopment business. I support the London Land Commission, but we need more clarity around the presumption and policy priority relating to public land. Is the priority to maximise the value to the taxpayer or to maximise value to the community? We are seeing that with the potential development of Northwood and Pinner cottage hospital in my constituency. The situation is too vague, and it is frustrating.
I am not at all sure that extending the right to buy is the right policy priority for London at the moment. I am open to persuasion. I want to be assured that it is compatible with a big increase in supply, and I certainly support the Mayor in his call for all proceeds of the policy to stay inside London.
Last but not least, I want to see much more innovation in design and financing. The hon. Member for Mitcham and Morden (Siobhain McDonagh) is entirely right. Organisations such as Create Streets show what can be done to redesign failing estates. We can build in different, modern ways. Laing O’Rourke is leading the way in the UK with important thinking on modular design that transforms the cost and timing of building. We should be doing more than dipping our toe into the waters of giving people the freedom to build their own home. We should be giving local authorities more freedom to explore new vehicles that give them more flexibility to deliver the homes that they see are needed. Enfield, Sutton and Ealing are leading the way with that.
We need much more creativity in giving opportunities for new sources of finance to come in that are not rapacious, but want to support and invest in infrastructure. Sir Merrick Cockell gave a fascinating speech in which he talked about the potential for London local authority pension funds to collaborate. They want to invest in infrastructure and they need new opportunities. He talked about the potential of municipal bonds and retail bonds to get communities involved in the opportunity to invest in their area. I was proud to lead our work in Government on developing social investment as an asset class. We lead the world in that, and there are pioneers in that area, such as the Cheyne Social Property Impact Fund, the Real Lettings Property Fund, and the Golden Lane Housing bond. Those organisations are looking for opportunities to invest for social benefit in this area, and what they are missing is opportunity. The problem is not supply of capital, but supply of opportunity, so I think there is a huge opportunity for local authorities, MPs and the Mayor to work together and reach out to designers, architects, developers, investors and pioneering local authorities who want to do things in different ways. That is what we need if we are to get serious about tackling the No. 1 issue in the capital that we love.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
In the four minutes or so I have available, I want to acknowledge the comments made by my hon. Friend the Member for Southwark—[Interruption.] Sorry, my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes), who represents the borough of Southwark, because she painted exactly the picture in my constituency. She laid out very comprehensively the financial challenges of building homes for social housing providers. I find myself, perhaps not for the first time actually, in total agreement with the right hon. Member for Cities of London and Westminster (Mark Field), because there is a real issue in my constituency too about overseas developers, and I will touch on that.
I want to cut to the issues that I want to raise with the Minister, but I need to add that my surgeries, too, are full of people in great distress. When I started out in politics about 20 years ago, housing was a huge issue. It was a case of having to visit people in bed and breakfasts; there were all those sorts of problems. Things got a bit better, but they are now worse, I think, than they have ever been. People are so distressed. They are living in overcrowded conditions, and there is no way out. They are put in temporary accommodation a long way from home and have to remove their children from school. They are unable to get a foot on the housing ladder, find it a struggle to pay the rent and have no security of tenure in the private sector.
I should just alert Members to my entry in the Register of Members’ Financial Interests, Mr Owen. I let a property, so I understand the technical side for landlords. There is a lot of bleating, frankly, from some of the landlords’ associations about the challenges of keeping rents at a rent escalator level, so that when someone goes into a tenancy, they know how long they will be there and what the rent will be. I do not think that there is a problem for any landlord, big or small, in managing a business model along those lines.
Let me cut to the issues that I would like the Minister to address. I agree with the right hon. Member for Cities of London and Westminster that we need to tax the overseas investors. I am not an expert in how that should happen, although the Select Committee that I chair may well end up pursuing that issue. It is a real issue. I commend to the Minister the map that Private Eye did. It simply looked at properties that were sold and whom they were sold to. The situation is shocking. Let me just mention my area. There are flats down the road from me. As my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) said, small properties that should be going to local first-time buyers are being bought by overseas companies. They are somehow getting a tax break for doing that. That is not the sort of investment that we need. I recognise that huge sites, such as Battersea power station, may need to attract overseas investment, but this is taking away from local people, so the Minister and the Government need to look at that.
The Government need to go back to the drawing board on the right to buy. As I said in my intervention, taking family-sized properties away from Hackney council to backfill for the sale of housing association properties is double-hitting the affordable housing stock in my area, where it is increasingly unaffordable for someone on the minimum wage even to rent a property, certainly without housing benefit. I recently heard of a nurse moving into a new housing association development who was reliant on housing benefit from day one. That is my other point: the Government must grasp the nettle of housing benefit. Subsequent Governments of differing hues have not done that. When Sir George Young, who was formerly in this place, was a Housing Minister more than 20 years ago, he said, “Let housing benefit take the strain.” Housing benefit is now taking the strain to a ridiculous extent. If that money were better invested, we would make a dent in the problem.
This is something the Minister could easily do. Certainly my party had discussions with the Council of Mortgage Lenders before the last election about allowing longer tenancies in the private sector. It is the mortgage lenders that, ridiculously, suggest that a year’s contract is more secure. Frankly, a tenanted property in London often represents a more secure income for the mortgage lender than that from someone in a precarious job. That is something the Minister could quickly act on, and I urge him to do so.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
We are hearing a list of questions for the Minister, and I just want to throw in a few of my own, because although I am new here, even I am getting a sense of déjà vu. I led a similar debate almost exactly two months ago, and we did not have any answers then, so I just want to throw in three questions from then.
Albert Owen (in the Chair)
Order. I will do my best to fit the hon. Lady in at the end, but she must follow procedures. Make an intervention by all means, but do not ask a list of questions.
Meg Hillier
In the 30 seconds remaining to me, I will rattle through my points. Shared ownership needs to be reviewed. Recently on the market in my constituency was a £1 million shared ownership property. One would need to earn £77,000 a year to get a quarter share in that property. That is not computing; it is not working, and it needs to be reconsidered in London.
The Government could and should consider co-operative ownership. The garden suburbs were on that model. As my hon. Friend the Member for Mitcham and Morden said, there is an opportunity to think more broadly and innovatively. Perhaps there could be a competition for housing solutions, and that could be one of them.
We need to give London much more autonomy. We need to devolve more property tax, so that the London Mayor, whatever party they are from, has the control to be able to grapple with this issue in the London market. We need to have a much better strategy for public land. Hon. Members have already talked about this in the debate. Her Majesty’s Treasury is demanding the highest pound return for the taxpayer. That sounds admirable, but the better dividend locally for communities would be to have affordable housing for local purchasers and local renters on the sites. It is common sense to look at the way land is dealt with, so the London Land Commission is a step in the right direction.
The Minister, I hope, will recognise that housing is a huge problem for our constituents. That has to be grappled with now or it will remain a problem for the next 20 years. It is going to take a long time to solve as it is, and if he does not tackle it now, it will become worse. We will see London hollowed out, with key workers and people on low incomes unable to live in the areas in which they work and which they serve. That will be devastating for the social capital of London.
Zac Goldsmith (Richmond Park) (Con)
It is a pleasure to speak under your chairmanship, Mr Owen. I congratulate my hon. Friend the Member for Croydon South (Chris Philp) on having initiated one of the most important debates that we can have in London. I want to echo a point made by my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), who talked about the changing dynamic in his constituency. I have no doubt that that is echoed all the way around London. When I was selected in 2008 to be the Conservative candidate for Richmond Park and north Kingston, the main emphasis in the hustings, in the open primary, that decided it in the end was who was going to fight off the inappropriate development best—who was going to take it to the developers. And the very same people, just a couple of months ago in the run-up to the most recent general election, were asking in the hustings, “How on earth are our children going to get on the housing ladder? There is no prospect of it at all.” There has been a sea change in public attitudes, and I do not think there is any doubt that housing is the No. 1 concern in London. The population is soaring and will continue to soar. We expect the population to hit 10 million over the next 15 years and we are not building anything like enough to match that demand, so volume does matter.
The average price for the first-time buyer in London is, as has been said, more than £400,000. That requires a deposit in some cases of about £100,000 and an income of about £75,000 or £76,000 to manage the mortgage. Rent is more than double the national average. Even in the least expensive postcodes in London, renters on the London living wage can expect to spend more than 40% of their income on rent, which means that they have no chance of saving for a deposit in order to get, eventually, on to the housing ladder. Therefore, Londoners are already being priced out of their own city. That is hurting families, but also our competiveness as a city.
There is no single answer, but a lot can be done. In the two or three minutes that I have left, I will not be able to talk about some of the really meaty, interesting issues such as devolution of property taxes, which was touched on in the last speech, or another issue that I do not think has come up, which is putting empty homes back on the market. There are about 80,000 empty homes in London that should not be empty. The current Mayor has done more than, I think, any other British politician in living memory to bring empty homes on to the market, but we have a long way to go and we can be more robust.
However, the bottom line is, whether we like it or not, that we need to build more—45,000 to 50,000 homes every year just to avoid a crisis. The question then is how we do that. There is the problem of land banking, which has been raised. There are more consents to build than developments actually happening, but it is not just the private developers that are land banking. As has been mentioned, there is an enormous amount of publicly owned brownfield land—it is owned by the public sector. TfL alone owns the equivalent of 16 Hyde parks. The NHS owns an enormous amount of land that it is not using. A typical local authority can own up to one third of the land in its borough. We can deliver the homes that we need in London without even touching the green belt—without encroaching on our green spaces at all. I strongly welcome the initiative by the Mayor and the Government. The London Land Commission will provide the inventory that we need. We do not have the information at the moment, but we will shortly.
However, to get building we also need to address a problem in the development sector, which is that it has increasingly become an oligopoly. A very small number of mega-developers account for the vast majority of the building that we see in London and, in turn, demand unrealistic levels of return based on often spurious “viability tests”. There is a need to open up the viability test and to help local authorities with the expertise they need to deal with the developers and with that process.
To build new homes, we need three things—I am aware that I have only two minutes left, so I am going to rush. We need land, which we have. We need planning, which, between the local authorities and the Mayor, we have. It is possible to de-risk development with the powers that the Mayor and the local authorities have between them. And we need finance. It is not difficult to get that finance, for precisely the reason that we have heard from a number of hon. Members. There is an overwhelming appetite among people around the world to invest in London. At the moment, that is causing serious resentment, because buildings are being built and then bought by people who have no intention of living in those buildings. “Safety deposit boxes in the sky” is how they are often described.
That appetite is there, but it does not have to be a negative; it could be a positive. If we channelled that investment in order to deliver the homes that Londoners need—affordable homes for purchase and for rent on publicly owned, publicly available brownfield land—we could turn that negative into an overwhelming positive. We could create a pan-London investment vehicle designed to attract that investment. There are people who, because of the volatility and dangers in the world around us, want to put their money somewhere safe—that is, in London property. We could create that investment opportunity for them and for the pension funds, which want nothing more than long-term investments—low risk and medium return. This is ideal for London property. We need to find a way of creating that vehicle to attract and then channel that funding in such a way that it does good.
I note the comments made by my right hon. Friend the Member for Cities of London and Westminster (Mark Field). I very much agree with the thesis that he put forward. We need to look carefully at the ideas that he suggested, some of which I think absolutely do need to be implemented.
In my remaining minute, let me say that one huge opportunity we have is to redevelop some of the poorly designed estates that were put up in the ’50s and ’60s. My hon. Friend the Member for Ruislip, Northwood and Pinner mentioned Create Streets, an organisation that has been looking closely at this. It takes the view that if we were to redevelop about half of London’s 1950s and 1960s estates, we could increase density even while lowering the height of these buildings, which would improve their attractiveness and quality. By doing so, we could potentially provide the affordable homes that we need for the next 10 to 15 years. There is an enormous amount of work to do there, and it is a massive opportunity.
Let me end by saying that whichever route we take, it is essential that we build well; that we work with, not against, communities; and that we build homes that enhance communities. We know how big the challenge is, and if we build badly—if we dump hideous buildings and disproportionate developments on communities—we will exhaust Londoners’ appetite for the level of development that we will need if we are to have any chance of delivering the required number of homes.
Albert Owen (in the Chair)
Order. This debate has been oversubscribed, and just to be fair, the Minister has agreed to give two minutes at the end to the mover of the debate.
Albert Owen (in the Chair)
It will be down to one minute. The Minister has offered two minutes, and we are using up time arguing over a minute or two. The hon. Member for Ealing Central and Acton (Dr Huq) and the right hon. Member for Tottenham (Mr Lammy) will each make a two-minute contribution. If the Front-Bench spokespeople keep their contributions to eight minutes each, we will get everybody in. David Lammy—two minutes, and you will be cut off.
Mr David Lammy (Tottenham) (Lab)
For the last time, the hon. Member for Richmond Park (Zac Goldsmith) is cutting my time short. He demonstrates well why he should remain in this House.
I want to emphasise solutions. It is important to recognise that there has been a collapse in London for those who require social homes. If the average income is £32,000 in London, many Londoners will never be able to own a home of their own. If the Government continue to extend right to buy to housing associations, more social homes will come off the market. If they do nothing about those who exercise the right to buy, which for many is effectively a discount of hundreds of thousands of pounds from the taxpayer on social homes, there will continue to be a collapse in social homes. It is of concern to me that despite quite a lot of cross-party consensus, little is said by the current Government on social homes and where we will see them.
We need new solutions. What we heard from my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) was absolutely right—prefab, discount homes for young people at prices that they can afford. That is why, in my bid to be London Mayor, I have suggested that we issue bonds and enable people to build at a discount on public land. We cannot build in such a way on public land if we continue to sell it at best value to the highest bidder. TFL land and Scotland Yard have been sold off to the highest bidder. Local authorities are selling off land to the highest bidder. That is public money and public land, so it should absolutely be used to build discount homes that people can properly afford. We need a bond issue. Finally, we need to revisit green-belt designation.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
I want to raise some questions that remained unanswered when we debated the subject in July, and I wonder whether we will have better luck with this Minister than we did with the previous one. I congratulate the hon. Member for Croydon South (Chris Philp) on securing this vital debate.
The average age of an unaided first-time buyer in London is now 37, and at the debate in July I asked what the Minister predicted that would be by the end of this Government’s term in office. I also raised the question of affordability. The hon. Member for Croydon South talked about Old Oak Common, where 24,000 dwellings are coming on stream. The Mayor of London’s definition of affordable is 80% of market rent, but is that realistic or desirable? Can we change it? I had no reply to that question.
The right hon. Member for Cities of London and Westminster (Mark Field) made some interesting comments about overseas matters. I remember asking in the previous debate whether we would soon be “turning Japanese”. In that country, people bequeath a mortgage from generation to generation. Do we foresee that happening? Regarding overseas investors, I asked the Minister who responded to the debate in July whether he would consider including a provision in his next housing Bill banning overseas and off-plan investors from buying future new builds, so that local London first-time buyers would at least have a chance. That was the No. 1 thing for me as a candidate, and it is the No. 1 thing in my postbag and inbox as an MP.
Recently, I posted a picture when I was door-knocking in Stephenson Street, NW10—a cobbled road of terraced housing that is often used in period dramas, and that was in the video for “Our House” by Madness. I posted it to say what a fantastic cultural heritage we have in East Acton ward, and somebody posted underneath asking, “Have you looked at what these are going for? The last one sold went for half a million.” Those houses were not meant to be for rich people. I fear that London will experience a brain drain, and that in time it will be only for the oligarchs and the super-rich.
Corri Wilson (Ayr, Carrick and Cumnock) (SNP)
It is a pleasure to serve under your chairmanship, Mr Owen. I thank the hon. Member for Croydon South (Chris Philp) for securing the debate and bringing the matter to the House for discussion.
As a new MP looking for a flat in London, I encountered some of the problems that have been talked about today. The number of people living in London has increased by a fifth, while the number of homes available has not increased at the same rate.
As the third-party representative summing up the debate, I would like to share some points from north of the border, if I may. The right to buy will end for all council and housing association tenants in Scotland on 1 August 2016. In 2013, 185,000 people were on the waiting list, while only 54,000 council houses were available to let. Although the right to buy has driven up home ownership in Scotland, it has contributed to an acute shortage of social housing. The abolition of the right to buy will keep 15,500 homes in the social sector for the next decade.
Albert Owen (in the Chair)
Order. I remind the hon. Lady that the topic under discussion is affordable homes in London. I would appreciate it if she addressed that. I understand that she wants to make comparisons, but that is the subject that we are discussing.
Corri Wilson
Absolutely. In Scotland, we have shown that investment in affordable housing can keep costs down, create jobs and, importantly, help people to live better lives. As has been mentioned, it is not only about buying. We have actually taken over abandoned properties, repaired them, brought them up to housing standard and let them out. The SNP MPs in Westminster will push for a funding boost for affordable housing from the UK Government to help build more homes in Scotland and across the UK. Specifically, we will call for the UK Government to put in place a new target to build 100,000 affordable homes each and every year.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
It is a pleasure to serve under your chairmanship again, Mr Owen. I start by paying tribute to Her Majesty the Queen on becoming the longest-reigning UK monarch. I congratulate the hon. Member for Croydon South (Chris Philp) on securing the debate. We know that this is an important and serious issue, not least because this is the second time that we have debated it in this Chamber in recent months.
The hon. Member for Croydon South carried out a forensic analysis of the lack of availability and affordability of housing in London. When he went through his eight points, I thought that he had lifted about five of them directly from the Lyons commission report that we produced before the last election, which was widely acknowledged as being a sensible blueprint for how we should go about increasing supply of, and access to, housing. I urge him to read the report again and to talk to people about it, because that would be very helpful.
I take issue with the hon. Gentleman on one point, which is the effectiveness of planning departments. Planning departments in this country are extremely effective, by and large. Figures from the Department show that 80% to 90% of applications are assessed on time. We need to acknowledge that planning departments are going through a really difficult time in many areas of the country, because resources are being taken away from them under austerity measures, but they are receiving more applications. How will the Minister ensure that planning departments are adequately resourced to carry out the tasks before them?
There is consensus on both sides of the Chamber on the problems facing Londoners in accessing not only housing but affordable housing, and it is good that that is the subject of this debate. There is also a strong degree of consensus on the solutions. I hope the Minister is listening and will take on board the suggestions from Members on both sides of the Chamber, but I will focus on the interesting comments made by the right hon. Member for Cities of London and Westminster (Mark Field), my hon. Friends the Members for Mitcham and Morden (Siobhain McDonagh), for Hackney South and Shoreditch (Meg Hillier) and for Ealing Central and Acton (Dr Huq), and my right hon. Friend the Member for Tottenham (Mr Lammy), on how to address international investors. They have suggested what can be done to reduce the number of homes sold to international investors, and I look forward to the Minister’s response.
Affordable housing is a serious issue that we have often debated in this House. There is a significant problem with the supply of houses in London. The solution is not only about supply, but supply is important. Estimates of the need for additional house building in London fall within a range of 50,000 to 80,000 a year, yet there were only 21,900 net completions in 2012-13. That is obviously far below the required target, but the goal set by the Mayor’s office leaves a lot to be desired. The Mayor’s housing strategy contains an ambition to build 42,000 new homes a year for 20 years, which does not reach even the lowest estimated requirements. A consequence of that lack of supply and lack of building is that the cost of housing in London is rising.
London’s population has increased by 14% since 2002, and the number of jobs has increased by 15%, but the housing stock has increased by only 9%. As many hon. Members have demonstrated, that 9% does not go to local people. A number of colleagues have demonstrated that people either cannot find affordable social housing or are unable to buy a home due to rocketing costs, yet the Government seem to be doing very little to stem the tide and, in some respects, are exacerbating the problem. Shelter and other organisations have for some time been highlighting how a whole generation of young people in London are being priced out of the housing market.
There is no way that supply will be able to meet demand if building affordable homes—I stress that we are talking about affordable homes—is not one of the Government’s top housing priorities. Local authorities in many areas of London are doing amazing work in trying to build new homes for social rent, and I cite Islington as an example, but they are very concerned that, under the Government’s new proposals, those homes will be sold off before they even house a social tenant, which cannot be a sensible policy. The number of homes being built for social rent has fallen to a 20-year low, against a rising population in London who require such homes.
For every 11 council houses sold last year, just one was built to replace them, which, as a number of my hon. Friends have said, raises questions about what will happen when the right to buy is extended to housing association properties. That is a real issue for the Minister to address today. What will the Government do to ensure that houses sold under the right to buy are not only replaced, but replaced in the areas where those houses have been sold? Otherwise, the replacements will not help local people to access social-rented housing.
The Chancellor’s “pay to stay” scheme is also exacerbating the issue. By making households in London that earn more than £40,000 a year pay market rents, he is undermining the very concept of social housing. He is essentially pricing people out of a system that was designed to help them. The £40,000 London threshold could be met by two adults earning £20,000 a year, which is way below the average wage. If that is a family with children living in a two-bedroom home, they would be paying a weekly rent, at average market rates, of £322, which would probably be rising daily. They would be paying some £1,300 a month, which is essentially the entirety of one parent’s monthly pay packet. That is without including council tax, utility bills and household expenses.
London’s economy depends on workers in lower-paid jobs, and we cannot expect people to be willing to stay to work in a city where all their wages are spent on rent. That point has been forcefully made by the Chartered Institute of Housing, which says that pay to stay would create
“devastating costs for social housing providers”
and put them in a
“precarious position ethically and in relation to their charitable status”.
The Chartered Institute of Housing is saying that the scheme is unworkable. That charge is being made not by the Opposition, although we support what the Chartered Institute of Housing is saying, but by a respected housing organisation. What will the Minister do to address those points? The Government keep telling us that they want to get the housing benefit bill under control, but they seem to be doing very little to address the issue other than reducing rents, which, as my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) said, is creating ongoing problems for housing associations, possibly affecting their future building programmes.
What is happening to housing in London is fundamentally changing the city as people are pushed out of the central boroughs into outer London, even now, because of the pressure. And people are finding it increasingly difficult to afford housing in those outer boroughs, as my hon. Friends have demonstrated. How will people in London access affordable housing? What we need from the Minister are not one-off initiatives that do not add up to much, and often exacerbate the situation, but a long-term plan to create more affordable housing in London.
The Minister for Communities and Resilience (Mr Mark Francois)
It is a pleasure to serve under your chairmanship, Mr Owen. It is a privilege to be speaking in Parliament on the day that Her Majesty Queen Elizabeth II becomes our longest-reigning monarch, which is a truly remarkable achievement. We all wish her well for the future.
A great number of points have been raised in this debate, and I will do my best in the limited time available to cover as many as possible. I recognise that the demand for affordable housing in London is challenging, and the Mayor clearly has a significant task ahead to meet the needs of the growing population in such an important world city. That is why the Government remain committed to working with him to address the issue, which is important to people across the capital. My remarks will focus in particular on affordable housing and our plans to help to increase supply in the capital over the years ahead.
I am pleased to say that we have an encouraging track record over the past five years in delivering affordable homes, with more than 260,000 delivered in England since 2010, including more than 67,000 in London, of which more than 3,000 were delivered in the Croydon borough of my hon. Friend the Member for Croydon South (Chris Philp).
Mr Francois
I have a lot to cover. If the hon. Lady is patient for a moment, I might be able to give way later.
We exceeded our 2011-15 affordable homes target by 16,000 homes, delivering nearly 186,000 affordable homes during the period. In fact, more council housing has been built since 2010 than in the previous 13 years. To give one example in my hon. Friend’s constituency, the Cane Hill development, which he mentioned, will include up to 675 homes, including 25% affordable homes and 80% family-sized homes. It will also bring back into use three local listed buildings, which are currently derelict, and provide new open public space. It is a very good example of the kind of mixed use development that can take place in London and that can help boost affordable housing along the way.
Several hon. Members mentioned foreign ownership of properties. My right hon. Friend the Member for Cities of London and Westminster (Mark Field) made a number of suggestions on that point; I am not sure that I agree with all of them. I think that he was provoking debate and I suspect that he succeeded. He referred to capital gains tax at one point. On that specific point with regard to overseas purchasers, he will know that the autumn statement 2013 announced that from April 2015, the Government will introduce capital gains tax on future gains made by non-residents who sell residential property in the UK. That change addresses a significant unfairness in our capital gains tax and property tax regime. That is perhaps one point of comfort that I can offer him, and of course, given the timings, that change is in effect now.
My hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd) mentioned, among several points, the so-called skills gap in construction. It is worth mentioning that the Construction Industry Training Board has reported a rise in apprenticeships. In a 40% increase on 2013, 15,010 new apprenticeships started in 2014, so in fairness the CITB is playing its part to bring people, including young people, into the construction industry to provide the skills that we need for the future.
I talked about initial steps for affordable housing, but we need to go further. We have a big ambition to deliver 275,000 new affordable homes over the course of the Parliament. It will be the fastest rate of affordable housing building in the past 20 years. Delivery in London will be a vital element of that programme, and our officials are working with the Mayor, the GLA and London Councils on increasing capacity to make that ambition a reality to benefit the people of London.
Nearly every Member who spoke talked about the need to increase the rate of affordable house building in the capital, so I will come to that point specifically. The Mayor aims to build at least 42,000 homes a year. The 2015-18 programme is already under way. The initial programme was announced last summer, including the Mayor’s housing covenant 2015-18, and the GLA are inviting further bids. Last year, the Mayor exceeded the target for the number of affordable homes to be built in London, building 17,914 affordable new homes. That was the highest number of affordable homes delivered since current records began in 1991. The Government have invested £3 billion through the GLA from 2011-12 to 2014-15 in housing, Olympic legacy and economic development. An additional £1.45 billion will be invested in housing delivery for the period 2015-18.
In addition, to boost the supply of affordable housing, the Mayor has announced 18 out of a promised 20 housing zones in London, bringing the total number of homes to be built as part of that specific initiative to more than 50,000, of which nearly one third will be affordable to buy or rent. The Mayor expects to confirm two further zones—to complete the 20—later this year.
As several Members mentioned, we have launched a new London Land Commission, which first met in July, with a mandate to identify and release all surplus brownfield land owned by the public sector in London. Led jointly by the Government and the Mayor, the commission will take a central role in driving the delivery of new homes. For example, with the amount of property held by Transport for London, there is a possibility of developing housing, including affordable housing, around some of the stations across the capital.
Mr Francois
I will take an intervention from the hon. Lady first and then one from my hon. Friend. I must be quick.
Ruth Cadbury
I thank the Minister for giving way. The Minister for Housing and Planning wrote to me last month to confirm that the Government believes that
“the best way to encourage affordability”
—his term—is by “increasing supply”. I thank the Minister for his description of the supply he is bringing. If that is the sole policy driver, I would like to know what formula the Government are using to deliver that market-based policy. To put it another way, by what level will private rents in London come down with the delivery of that 42,000?
Mr Francois
On the formula, to help with the increasing supply of affordable homes, we are making debt cheaper for housing associations to deliver more affordable housing through the affordable housing guarantee scheme. It aims to deliver up to 30,000 homes through guaranteeing up to £3.5 billion of debt.
A number of hon. Members mentioned the matter of buying property in London.
Stephen Hammond
The Minister is a absolutely right that the London Land Commission has the ability to be transformational. I urge him to use the good offices of Government to ensure that the whole of the public sector complies. Parts of the public sector have a history of dragging their feet in bringing the land forward. The Government can play that inspirational and effective role.
Mr Francois
My hon. Friend knows a lot about the subject and his point is well made.
The Mayor’s London housing strategy includes a commitment to double the number of First Steps homes —the single brand for shared ownership products in London—delivered in the capital by 2020, and to double it again by 2025, helping 250,000 Londoners into home ownership.
Several hon. Members mentioned planning. The Localism Act 2011 gave the Mayor strategic housing and regeneration powers and enabled the establishment of mayoral development corporations to support the regeneration the Queen Elizabeth Olympic park—it is very fitting to mention that today—and Old Oak Common and Park Royal. Since then, the Government have invested more than £3 billion and housing delivery has increased. In 2014, 52,000 homes were granted planning permission in London, up from 45,000 in 2013. Those figures include both minor and major schemes and are consistent with the national total of 253,000 for 2014.
The Government have helped to unlock major regeneration sites in London to deliver new housing. Those include the Greenwich peninsular, with 10,000 new homes, including approximately 3,270 affordable homes for rent or part-rent, 600 student beds, and 3.5 million square feet of commercial floor space. Of the 10,600 new homes at Barking riverside, 31% will have three or more bedrooms and more than 40% will be affordable. Of the 10,000 new households at the Queen Elizabeth Olympic park, around one third will be affordable housing, with many built for long-term rent, as well as to buy. Five new neighbourhoods provide play areas, schools, nurseries, community spaces, health centres and shops, with places to relax, play and exercise all within easy walking distance.
Some hon. Members mentioned changes in rents and the pressure on housing associations. It is important to bear in mind that housing associations generated a surplus of about £2.4 billion in 2014. The sector is financially robust and will be able to deliver the efficiency savings that the change in rental costs implies. To help them further, the regulator will be on hand to help housing associations consider how they can deliver greater efficiency and value for money.
In the few minutes that I have had, I hope that I have managed to outline the number of initiatives under way to increase the supply of affordable housing in London. The Mayor has an extremely proactive programme of attempting to do that. There is a step change in the number of affordable houses being aimed for in London. He is rolling that programme out and making progress. It is incumbent on us all in this debate, which has been conducted in a relatively non-partisan manner, to encourage the Mayor and his successor—whoever they may be—to continue the programme of providing affordable housing in London and giving the people who live in our great capital city a good place to live. On that point, I will keep my word and give just over one minute to my hon. Friend the Member for Croydon South to conclude the debate.
Chris Philp
I thank hon. Members on both sides for coming today and contributing to a very important debate. We heard how challenging the affordability climate is and how hard it is for our constituents, particularly young constituents, to get on to the housing ladder from the hon. Member for Dulwich and West Norwood (Helen Hayes) and my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd). It is in the interests of our country and our city to address those issues, principally by bringing forward more supply. We heard a lot about bringing forward brownfield projects and public land projects, to which the right hon. Member for Tottenham (Mr Lammy) referred. I was struck by the comments about overseas buyers from the hon. Member for Mitcham and Morden (Siobhain McDonagh) and my right hon. Friend the Member for Cities of London and Westminster (Mark Field); that would be an interesting area for further research, at least to know the facts, which are not completely clear. Doing more work to confirm the exact figures would be productive.
The debate has been very productive. I thank the Minister and hon. Members for joining us this morning.
Question put and agreed to.
Resolved,
That this House has considered affordable housing in London.