Housing: Affordable Housing
Lord Shipley
To ask Her Majesty’s Government what assessment they have made of the affordability of homes under their proposed extension to the right-to-buy scheme and their starter homes proposals.
Lord Shipley (LD)
My Lords, I am grateful for this opportunity to speak to this Question for Short Debate. I should at the outset declare my vice-presidency of the Local Government Association. This QSD was tabled three months ago, and it is fortuitous that it has come up for debate at this point because the Housing and Planning Bill is in Committee.
This QSD asks what assessment the Government have made of the affordability of homes under their proposed extension to the right-to-buy scheme and their starter homes proposals. By affordability, I mean what dictionaries tell us affordability means: people having the resources to pay for a product or service.
Of all the factors that enable people to enjoy a fulfilling life, a decent and secure home is central. Too many people do not have that and too many cannot even aspire to it. I have come to the conclusion that the Government do not actually understand that. If they did, they would be building more homes for rent. Clause 143 of the Housing and Planning Bill defines affordable housing as,
“a new dwelling in England … to be made available for people whose needs are not adequately served by the commercial housing market or … a starter home”,
within the meaning of the Bill. However, so much of the evidence we have tells us that the Government’s proposals in the Housing and Planning Bill will not help us to solve the problems of affordability or access to decent rented housing for the many people who do not earn enough to buy their own home. That is because house prices are so high and not enough new homes are going to be built over the next few years. The Government have admitted on several occasions that their plan to build 200,000 homes a year to 2021 will meet only the projected increase in the number of households over that period. In other words, the current housing crisis will remain unaddressed.
Average house prices are now £288,000 outside London and £540,000 in London, which is several times average incomes. This is not just a London problem; it is a problem right across the country and impacts on all parts of England where for so many home ownership remains a dream. House prices are predicted to rise by up to 20% in the next few years, so in no sense can these houses be deemed affordable even at the lower end of the market for the vast majority of people who are currently renting or who are living in a family home. The consequence of this policy is that there are 1.6 million people on housing waiting lists in the UK, with 9 million people living in private rented accommodation, including 1.3 million families with children.
The lack of social housing for rent and affordable houses for purchase has driven more people into the private rented sector. There are now more people living in the private rented sector than in social housing for the first time. Thirty per cent of private rented households contain children, and people in this sector pay higher rents and have much less security than other tenures.
The truth is that we are building too few homes and, with the Government depending too much on owner-occupation to the detriment of expanding the social rented sector, the aim of giving every family the stability and dignity of a decent home cannot be achieved. To stand a chance of doing so would require 300,000 extra homes to be built annually rather than the 200,000 which the Government plan. What is worse is that the Government, in producing a target figure of 1 million new homes by 2021, have not published any longer-term projections about how many houses they plan to ensure are built, nor do they tell us the net figure of new homes taking into account demolitions.
Housing is too important to rely on short-term planning. We need 300,000 new homes a year, and I wonder whether the Government have grasped that. Might they look again at creating a housing investment bank to provide long-term capital for projects? Might they look again at creating more garden cities in areas where there is local support?
Current government policy is driven by two new policies: starter homes and the right to buy housing association properties, with funding being made available by the sale of higher-value council homes. The housing announcements in the 2015 spending review included a doubling of the housing budget, which is welcome. It is not enough, but the sense of direction is right in terms of spending. The review also established that there would be 400,000 new affordable homes to buy by 2020—half would be starter homes and 135,000 Help to Buy shared ownership. I welcome that support for Help to Buy shared ownership schemes. However, the trouble is that this simply does not represent enough new homes, and there is no sign of any understanding of the need to build new homes in England for rent. In fact, we will see a reduction in the number of new homes for rent, as starter homes to buy will be built instead of them. First, councils will be required first to sell off their higher-value properties to help to fund the right to buy of housing association properties and, secondly, councils will lose rights under Section 106 agreements and the community infrastructure levy to build more homes for rent.
As we know, starter homes are new properties for first-time buyers under the age of 40, who are entitled to a 20% discount off the market price. The Government have set a target of 200,000 starter homes during this Parliament, which is expected to deliver most of their affordable housing goal. Shelter has calculated that on average in England a deposit of £40,000 and a salary of £50,000 will be necessary to afford a starter home. In London, buyers would need a deposit of £98,000 and a salary of £77,000. These are very large sums of money. Shelter has also suggested that, based on the purchase price caps of £450,000 in Greater London and £250,000 outside Greater London, starter homes will be unaffordable in 58% of local authorities to households on average income and in 98% of local authorities to households on the national living wage. What assessment have the Government done of this compelling evidence provided by Shelter?
I have concluded that, in practice, starter homes are for renters who are higher earners or who have access to private capital and that those starter homes will replace homes with affordable rent levels for those who are less well off. For those who buy a starter home, there could well be a substantial profit if, as forecast, house prices continue to rise. That is because they will be able to sell it at market value just five years after buying it. There is a very strong case for starter homes to maintain a 20% sub-market rate for much longer than five years, so the benefit of a cheaper home can be passed on to others. There is a very serious risk that starter homes will be built at the expense of traditional affordable housing for sub-market rent and shared ownership. This would worsen the availability of low-cost housing, particularly in rural areas. Starter homes should be delivered in addition to affordable housing, not in place of it.
This brings me to the right to buy for housing association tenants, which will reduce the number of affordable homes for rent, given the way in which the Government are effecting the sale. It will then make things more difficult for those on the social housing waiting list and those for whom home ownership is not within reach. The Government have made no commitment to exempt housing association properties in rural communities, but they should. As I have said, the Government’s plan would require this right to buy to be funded by councils via an annual tax, which the Government expect them to finance by selling off high-value council homes. The current right-to-buy discounts are £104,000 in London and £78,000 outside London. I understand that the National Housing Federation has calculated that the extension could cost £11.6 billion. I wonder what the Government’s assessment of that figure is as well.
The forced sale of high-value council homes will reduce the number of low-rent social homes in the places they are needed most and will make things worse for the 1.6 million people on social housing waiting lists. It will also jeopardise new housebuilding because it will reduce councils’ capacity to borrow. It will also put any new council homes that are built at immediate risk of being forcibly sold if they are deemed to be high value. Crucially, there will be even fewer homes available for larger families.
In conclusion, all of this could see homelessness return to 1980s levels. It is already increasing and the Government’s failure to build for rent and to support adequately that category of housing is likely to see homelessness rise. I wonder what assessment the Government have done of the likely increase in the number of homeless people.
Everyone deserves a decent, affordable home to live in. I regret that many people are going to be priced out of the communities in which they grew up, due to rising house prices and rents. I am deeply concerned by the present Government’s housing reforms, which will lead to fewer new affordable homes for rent and a potential breakdown in community resilience by the selling off of affordable homes with no guarantee of replacement in the same place.
Lord Beecham (Lab)
My Lords, the noble Lord deserves our thanks for securing this curtain-raiser to Committee stage of the Bill, when we will be considering the Government’s proposals. This debate provides a welcome opportunity for an initial exploration of the Government’s proposals in relation to right to buy and starter homes, which will of course be subject to much more detailed scrutiny as the Bill progresses.
Ministers trumpet their policies as making more affordable homes available for purchase for both council tenants and social housing tenants under right to buy, although for the time being housing associations will not be compelled to sell. If this Government remain in office, I believe that they will ultimately extend compulsion to that sector, as they have in the municipal sector. In addition, there is the starter homes scheme, with its attendant 20% discount, to be funded, effectively, by the sale of existing high-value council housing.
The claim is that affordable homes will therefore become available for purchase. But, as the noble Lord has implied, affordability is an elastic concept. The coalition Government drove up council rents, deeming an affordable rent to be 80% of private sector rents. But given the chronic housing shortage and the boom in buy to let, which dramatically drove up prices and rents in the private sector, the definition of affordability is fundamentally flawed. Affordability must surely relate to what the would-be owner-occupier or tenant can reasonably be expected to pay, having regard to his or her income, not an artificial comparison with the market rate.
At Second Reading the Minister told us, in true Candide fashion, that all was for the best in the best of all possible housing worlds, because the average price of starter homes for first-time buyers was £226,000—or, after the discount, £169,000. The London figure after the discount was £291,000. But of course these were 2014 figures. Already they will have increased, I suggest, by around 5%. The noble Lord, Lord Shipley, has pointed to likely future increases. Under Help to Buy, the average price was £186,000.
I pointed out at Second Reading that in Newcastle the 5,900 applicants on the council’s housing list have average earnings of £20,000 a year, which would be enough to support a mortgage of only £70,000, leaving an effectively unbridgeable gap between that and the discounted purchase price which would apply outside London. Even the national average income of £26,000 would fall short of the amount required to obtain and sustain the required mortgage—and that is at the present historically very low levels of mortgage interest rates.
Ironically, in passing, we should note that a household income of £30,000 outside London, which could be a couple on the national minimum wage, would invoke the “pay to stay” provision for council housing. So what is the Government’s definition of affordability for both house purchase and rent relative to income? The LGA quotes a report by Savills that starter homes would be out of reach for all the people in need of affordable housing in 220 council areas.
What, furthermore, will we be getting in terms of space and energy efficiency in the 200,000 starter homes, given the contrast between what has been built here in recent years and what has been built on the continent? It is a question not just of numbers but also of quality.
In all of their claimed ambitions for more new homes the Government make no mention of council housing. Is it not the Government’s intention to phase out such provision completely through the right to buy, while at the same time forcing councils to cut rents, with dire consequences for the maintenance and improvement of the stock? In Newcastle's case that amounts to a loss over time of £593 million which could have been devoted to improving the stock. What are the Government’s intentions in relation to new council housing, and what is their assessment of the impact of the proposed alteration to the planning system, including permission in principle and the emphasis on starter and so-called affordable homes?
The implications, which are dire for councils, are also dire for housing associations. Inside Housing magazine’s survey of 135 English associations found that 53% think it likely that they will seek to renegotiate existing agreements to build homes for affordable— sub-market, as they would define it—rents. Already a small scheme in my own ward has fallen through, and another has been preserved only by changing the type of housing and reducing the size of the property.
There will also be an impact on what councils can achieve under Section 106 agreements. The Government’s own figures suggest that for every 100 starter homes built, between 56 and 71 affordable council and social rented homes will not be built. This represents, over the four years of the starter homes scheme, a reduction of around 50% compared to the previous four years.
Reference was made at Second Reading to the position of supported housing and specialist housing, where the LGA—I declare my interest as a vice-president, along with my other local authority interest—is calling for Government, councils and housing associations to identify categories of properties to be exempted from the right to buy. What is the Government's response on this issue? Will the Government require housing associations to consult local councils on the exercise of right to buy in their sector, given that, for the time being, this is voluntary—not compulsory—and given the need in many areas to ensure that replacements are provided in the locality?
Last Friday the Select Committee on National Policy for the Built Environment published a report with the apt title of Building better places. It affirms that:
“We do not believe the Government can deliver the stepchange required for housing supply without taking measures to allow local authorities and housing associations each to play their full part in delivering new homes”.
The committee calls on the Government to ensure that councils are able to fulfil their potential as direct builders of new mixed-tenure housing and to review the restrictions on borrowing and the effect of social housing rent increases. It also calls for a revision of the proposal to require starter homes on every developable site, and argues that councils should have the right to prioritise long-term affordable housing over starter homes where appropriate. Will we have the Government's response to this important publication before we reach Report on the Bill? Perhaps the Minister could also tell us when we might expect to see the draft regulations through which it intends to implement so many of the provisions of this highly controversial measure.
Baroness Thornhill (LD)
My Lords, I declare my interest as a deputy chair of the Local Government Association.
I will be very brief and say that I agree with noble Lords and with much of what was said at Second Reading. There will be much more to come. I shall assume that the generic arguments have already been made—not least by the two noble Lords ahead of me—and shall confine my remarks to my main concern, which is that building starter homes instead of, not as well as, social housing will lead to a reduction in homes that are genuinely affordable. Over time—and for me this is the real crunch of the Bill, as I genuinely believe it to be short-sighted and short-term—it will undermine the precious balance of communities that is essential for cohesion and sustainability. Redefining the problem does not solve it.
Will the Government take notice of the Savills research while the Bill goes through Committee? It has already been quoted. It is fairly conclusive in saying that starter homes will be out of the reach of people in 67% of council areas.
I draw the Minister’s attention to a specific issue regarding the price cap of £250,000 outside London. In my borough of Watford, £250,000 will not buy very much. You may be lucky to get a studio flat with a “bed space”—a new concept that I had not come across until I started looking—but there are not many of them. In my home town of Preston, that would buy a decent family home. That is what worries me about the Bill: the housing market is so diverse that one size does not fit all, yet everything in the Bill appears to be centralising and standardising. Councils must be able to retain some flexibility over what is built in their areas, whereas the Bill appears to be undermining that.
That is the case not least in planning provisions in the Bill, which we have not spoken about much. It promotes significant measures reserved to the Secretary of State. This is in sharp contrast to the rhetoric we had during the coalition, with the notion of local determination and acceptance of development by local people through the neighbourhood planning process. This is a real reversal of previous rhetoric used when the current national planning framework was introduced.
We know that London is a hot spot for costs, but there are those on the outer ring of London who are also suffering high prices. Will the Government consider an outer-ring cap? There are many areas just outside London with housing shortages and high prices. Somewhere between the £250,000 and £450,000 prices might help.
There is a mixed picture on affordability, but there is little argument that those whom this policy will help—if it were stated upfront as a political aspiration, that would at least be honest—are the reasonably well-off with parents who can afford the required deposit, which in my area will be £25,000 if it is a 10% deposit. Those same people are currently renting and lament that they cannot rent at current levels and save for a deposit. Indeed, if they have that deposit and then have the mortgage for the rest, they will need a combined income of £60,000 to take on the mortgage on a 3.5 multiplier. That is considerably more than the £30,000 deemed to be, in the words of the Minister, a high salary for those who fall foul of the “pay to stay” policy. That is a huge inconsistency and discrepancy.
At this point, enter mum and dad, or even grandparents, which is positive news for those fortunate folk, but not for the many for whom this is not remotely feasible. It has been cynically said by many that this is a cash windfall to middle-class families, but in truth when people on an average wage struggle to afford the cost of a home even after a large government subsidy, the scale of the issue is truly laid bare. The starter homes programme therefore makes only some homes 20% less expensive, rather than delivering homes that are genuinely affordable and in a quantity to make the difference after decades of underfunding.
Setting affordability aside—I am sure that there will be many arguments about that—I am deeply concerned that starter homes will be the only game in town when it comes to providing the not-so-affordable homes, while the need for real affordable homes remains unabated. We should also look at the language we use around “affordable” and “social”. We need to clarify that.
The change during the Thatcher years for developers to provide social housing by what we now call Section 106 contributions has meant a year-on-year decline in the number of homes available at social rent levels. Coupled with the right to buy—whatever your political views on that policy—that change has contributed to that decline. We know that only one in 10 right-to-buy properties has been replaced by a similar home.
Much more recently, developers were given an opportunity to opt out of providing social housing by claiming to local councils that the financial viability of their scheme was at risk if they had to provide it. This has happened in many councils all over the country. They could challenge the local authority, and have been doing so. In Watford, we have had to employ specialist housing advice and support to argue those cases and fight for much-needed social housing in my area—at considerable cost, money which I would have preferred to use for housing.
If starter homes count as affordable homes, there will be no provision of social housing for rent under Section 106. The key thing is flexibility for councils to determine where, what and when, rather than starter homes being the only priority.
I will learn to time my speeches better; my apologies, colleagues.
Baroness Grender (LD)
My Lords, I thank my noble friend Lord Shipley for introducing this timely debate, and other noble Lords for indulging me by allowing me to speak in what I believe is called the gap. I shall speak very briefly about those on the sharpest end of the affordability issue, who are of course homeless people and, in particular, the single homeless. They are the ones at the end of the chain who suffer and whom we need to bear in mind as we discuss the housing Bill.
I reference Homeless Link, which undertook an extensive survey and is the umbrella body for all homelessness organisations. It found that 25% of people in some accommodation projects were ready to move on. These will typically be people aged between 18 and 25—49% of them are—and three in 10 are women. They are ready to move on, but there is no move-on accommodation available for them. Of this group, 27% have been waiting for six months or longer. Forty-eight per cent of projects overseen and surveyed by Homeless Link reported that the main barrier was a lack of suitable accommodation to move to, and 14% of those projects typically cite a lack of affordable housing as the main barrier to their clients’ moving.
Any of us who have studied housing systems elsewhere in the world—for instance, in the US—would hate to find ourselves going down the route of not having multiple tenures in a community so that communities can work together. That means that single homeless people can move into areas where there is affordable rent and some kind of move-on accommodation available to them.
I simply ask that, as we continue to discuss the Bill, we continue to bear those people in mind.
Lord Kennedy of Southwark (Lab)
My Lords, first, I congratulate the noble Lord, Lord Shipley, on securing this Question for Short Debate and declare an interest as a local councillor in the London Borough of Lewisham. Everyone here supports the concept of being able to buy your own home if that is what you want to do, but that must be part of a wider policy of providing homes of different tenures to meet people’s needs, underpinned by homes of good quality.
We are in the midst of a housing crisis in the UK and are considering the Housing and Planning Bill, which is a generally dreadful piece of legislation and a politically motivated attack on social housing that will do little of what the hype says it will deliver. I very much agree with the points the noble Lord, Lord Shipley, made in that respect.
The Question before the Grand Committee today is about the affordability of homes under the extension of the right-to-buy scheme and the starter home proposals. The first challenge for the Government is to make sure that their sums add up. Measures to help people own their own homes are to be welcomed, but the starter homes programme has hit a number of problems and appears to be a one-off gimmick rather than a thought-through policy that will remain in place for many years, as my noble friend Lord Beecham said. I would have hoped that the starter homes programme, a flagship policy of the Government, would enable people on modest or low incomes to own their own homes, but it plainly does not do that in its present form.
Research from Shelter, to which the noble Lord, Lord Shipley, referred, has shown that the programme will not help the majority of people on the new national living wage, which is another flagship policy of the Government. Starter homes for families earning average wages will be unaffordable in more than half of local authority areas across the country in 2020. Families on the new national living wage will be able to afford a starter home in only 2% of local authority areas. Single people on low or average wages will struggle to afford a starter home in 2020 in the majority of local authority areas. Even those on a higher than average salary will be restricted from being able to afford to buy in three-quarters of local authority areas. London, the south-east and the east have the lowest number of areas where affordable starter homes could be built under the scheme, despite being among the highest areas for demand.
There is a conflict in the scheme. Behind the hype, the reality is that it is a complete failure in helping people on modest incomes to buy their own home. Can the noble Baroness explain to the Grand Committee how this policy helps people earning the Government’s flagship living wage to own their own home? Can she further confirm for the record how the scheme is to be funded? Is it by diverting funding from other forms of affordable housing funding, such as shared ownership or social rent, with no additional funds being made available? Can she also explain why the discount is not for a much longer period or in perpetuity, to have a long-term effect in delivering the Government’s objectives?
Looking at the term “affordability” in a wider context, when sites are being considered in the green belt or on brownfield sites, what thought has been given to the provision of services such as roads, buses, shops and schools and to other infrastructure? Who will pay for all those essential requirements? Can the noble Baroness also set out her views on the desirability of having mixed tenure rather than developments all of one type of housing?
Moving on to the extension of the right to buy to housing association tenants, again, I support people being able to own their own homes, but the funding method here makes this programme of very questionable affordability for the wider community, as well as for individuals, due to rising prices. As a matter of policy, this should be funded by the Government directly, not by a smash and grab raid on so-called high-value local authority housing. There must be a duty on housing authorities carefully to consider the local housing need and make decisions accordingly. Forcing councils to sell homes and requiring them to make regular payments to fund another flagship government scheme does not seem very fair. It certainly does not seem very localist but, like the big society, localism is rarely mentioned by Ministers these days.
We must also not forget that a significant proportion of properties sold under the statutory right to buy have found their way into the private sector. In August 2015, Inside Housing published an analysis based on FOI requests, which found that 40% of ex-council homes were now in the private rented sector. That is not exactly a great achievement in terms of getting people to own their own home. It also has a detrimental effect on the housing benefit bill, which is paid for by the taxpayer.
I suggest that selling public sector housing only for it to become more expensive in the private rented sector—and of lower quality, with more people living there and with upkeep and maintenance issues—runs contrary to everything that the Government say about the dream of owning your own home. The dream of owning your own home is being thwarted by the nightmare of ever-increasing rents in the booming private rented sector, thanks to government policy which is preventing people from living in a more affordable home and saving for a deposit to own their own home, something to which the noble Baroness, Lady Thornhill, referred.
The scheme is another central government policy that should be funded from central government resources. Why do the Government think it is acceptable to fund these housing policies in the way they propose? How is reducing social rented sector housing, with its fairer rent levels, and increasing the private rented sector, with its soaring rents, helping individuals to own their own home? How is it helping the wider community to thrive when people are forced out of certain communities as they become unaffordable to live in for people on low or modest incomes? How does it help London, for example, to remain one of the greatest cities in the world if we create a London of two halves?
It would also be helpful if the noble Baroness could confirm who thinks up these policies and schemes— I would like to meet them. We all want to increase home ownership, and colleagues on these Benches want to help people on low and modest incomes achieve that dream. It is regrettable that nothing in the Government’s proposals suggest that they want to do the same.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, I thank all noble Lords who have taken part in this debate, particularly the noble Lord, Lord Shipley, for securing it at what appears to be a very timely moment. I am sure waiting for three months has been worth it.
This Government have a good record on affordable housing delivery. Between 2011 and 2015, 193,000 affordable homes have been delivered in England, which exceeded our target by 23,000. The spending review announced that we will invest £8 billion to deliver a further 400,000 affordable housing starts. Councils will continue to support delivery of a range of affordable housing. A number of noble Lords brought this point up—it is not just about starter homes but about a range of different types of affordable housing. Councils are in the best position to bring forward more land for affordable housing.
I think it was the noble Lord, Lord Beecham, who brought up council housing and asked what our aspirations were for it. More council housing has been built since 2010 than in the previous 13 years, and 2014 saw the highest number of council housing starts for 23 years. However, we are clear on prioritising support for low-cost home ownership. We want current and future generations to experience the benefits of owning their own homes, and I believe our reforms are the best way to achieve this.
The right to buy has already helped 2 million families to realise their dream of owning a home. We reinvigorated it in 2012, and as a result sales have jumped from 2,600 in 2011-12 to 12,300 in 2014-15. This shows that these realistic discounts have enabled significantly more people to realise their home ownership dreams—I see my noble friend Lord Young to my right, who asked a Question earlier about housing. A question was asked in Committee about the decline in home ownership. Last week saw a report that said that, for the first time, decline had halted. Hopefully, we are on an upward trajectory.
Lord Beecham
Could the Minister tell us how many of the houses that were sold were replaced?
Baroness Williams of Trafford
I will come to the figure on replacements during my speech, if the noble Lord would bear with me.
Until now, the discounts available under right to buy have been available only to tenants in local authority properties and some former council properties. Extending these discounts to housing association tenants in England will end that unfairness and mean that up to 1.3 million more families will get a realistic chance to own their own home. Working with the National Housing Federation, we have secured a voluntary agreement with housing associations to give their tenants the opportunity to buy their own homes with an equivalent discount to the right to buy.
As set out in the voluntary agreement with the National Housing Federation, tenants of housing associations will be eligible for the equivalent discounts that are available under the right to buy of up to £77,900, or £103,900 within London. The extended right to buy will make home ownership affordable for the first time for many more housing association tenants. The Government have been clear that the sale of high-value vacant council housing—I stress vacant—will pay for the cost of compensating housing associations for the discount.
Starter homes will provide an affordable step into home ownership by offering young first-time buyers a minimum 20% discount on a new home. This model gives purchasers the benefit of immediate ownership and, importantly, will help them achieve the step up to their second home in due course. A number of noble Lords made the point about securing that discount in perpetuity. We do not want people five years down the line—or however long it is before they sell their house—to suddenly be at a disadvantage and find there is another cliff for them to overcome. We have decided not to insist on that in perpetuity discount to allow people to step up on the housing market.
We expect starter homes to be valued at below the average first-time buyer price for the local area. Developers must build them for sale to young first-time buyers and will ensure that they price them for this market. With a 20% discount, average market prices for homes bought by first-time buyers in the third quarter of 2015 could be reduced to £145,000 across England, excluding London, enabling more first-time buyers to buy their own home. We have examined affordability of starter homes to those who are currently in the private rented sector. If they were to buy in the lower quartile of the first-time buyer market, outside of London, up to 60% of households, currently renting privately, would be able to secure a mortgage on a starter home, compared with 45% who could buy a similar property at full market value.
There are a number of different points to make about the market, including saving for a deposit through a Help to Buy ISA. We are also looking at the possibility of allowing a Help to Buy equity loan to be offered on a starter home to ensure that a first-time buyer needs only a 5% deposit.
Starter homes are just one part of our package of affordable housing options. They will help to address a real problem of access to home ownership for the under-40s, the one demographic excluded from this market.
The noble Lord, Lord Shipley, asked about affordable rent. As we have discussed already under the housing Bill, £1.6 billion has been put aside for houses for affordable rent. That will be grant funded, so they are absolutely guaranteed to come on to the market. These are minimum positions for this sector, because local authorities may well do a deal with developers to produce more—and, of course, there is the £4.1 billion that we have put aside for 135,000 shared ownership houses, which will require a deposit of something like £1,400. That may be unaffordable for some people, but I think for most people it will be within the scope of what they can afford.
The noble Lord also made a point about garden cities. The Government are certainly not closed to suggestions about proposals for garden cities; they are a very good way to build a lot of houses and, in fact, to build sustainable communities within certain areas. I know of a number of areas where people are very keen to bring such proposals forward.
A number of noble Lords made the point about the £450,000 cap in London and £250,000 cap outside of London. A cap is precisely what it is—it is not an average house price. Many properties will fall well below that cap, and the Government will keep an eye out to make sure that housebuilders do not abuse that provision for first-time buyers for starter homes.
The noble Lord, Lord Shipley, made the point about the forced sale of high-value assets. The high-value assets sales will not be for occupied properties but for vacant properties at the very top of the market, and details of that will come out in due course. He also made the point about homelessness going to 1980s levels. Homelessness is at less than half of the 2004 peak, and the Government are maintaining spending centrally and locally on homelessness prevention. The noble Baroness, Lady Grender, talked about continuing to discuss this issue and bear it in mind as we go through the housing Bill. I think that the last time we had a debate on this matter, I mentioned the rough sleeping social impact bond, which we intend to bring forward. We have brought forward a homelessness SIB, which was the first in the world.
The noble Lord, Lord Shipley, also talked about replacement of property in the local area. This is what we fully expect: that a housing association will want to build in the local area.
The noble Lord, Lord Beecham, talked about 53% of housing associations renegotiating right-to-buy agreements. If that happens he will, I am sure, reiterate his words to me; we have, however, no evidence that it will. This agreement was made in good faith and the first five pilot housing associations are already starting on it. He also asked how the exemptions on the right to buy would work. We are very keen that these exemptions are negotiated and agreed locally in a form that is best for the local area.
The noble Baroness, Lady Thornhill, talked about starter homes being the only game in town. They are a priority for the Government because of the demographic group that has fallen out of home ownership, but they are not the only game in town. Affordable homes for rent, shared ownership, custom build—these will all be promoted in the housing Bill. She mentioned flexibility for councils, and I totally agree—other than the duty in relation to starter homes, councils will have flexibility on what is best for their areas.
I am conscious of the time, but I had better answer the questions of the noble Lord, Lord Kennedy, before I get told off again. He asked about the quality of housing. That is a very good point. Design quality will be a focus of my noble friend Lord Heseltine in estates regeneration. We are not trying to gentrify estates; we are trying to give people on regenerated estates the quality of life that they deserve.
The noble Lord also asked whether starter homes are a gimmick. They are not a gimmick. We recognise that the under-40s are being increasingly precluded from the housing market and we want to reverse that position. He rightly made the point that historically, London and the south-east have been the hardest areas for people to own their own homes. That is why we are focusing so much on providing not just one-for-one replacement, but two-for-one replacement, for people accessing their own homes in London.
Finally, the noble Lord, Lord Kennedy, talked about infrastructure funding in connection with some starter home projects. Infrastructure funding can be accessed through Section 106. He is right that CIL is not applicable here, although local authorities can negotiate Section 106 infrastructure funding if it is viable—we do not want to push developments out of viability. Finally—because I have gone well over time—he talked about social rented sector rents versus private sector rents. In fact, the percentage increase in the social rented sector has got far out of kilter with the private rented sector, and we have tried to address this through the Welfare Reform Bill, although some noble Lords will not agree with that approach at all.
Lord Kennedy of Southwark
Would the Minister come back to me, perhaps in writing, with regard to people on the new national living wage, a big policy of the Government? They have no way of affording a starter home—a number of organisations have said so. How will the Government address that? The Minister also referred to the fact that, in addition to starter homes, other forms of housing would be supported. Will the Minister write to me about the sums involved?
Baroness Williams of Trafford
I will certainly write to the noble Lord about the sums of money involved. I agree that not everybody will be able to afford a starter home, which is why we have so many products we intend to bring forward. For shared ownership, which I mentioned earlier, it could be that one needs a deposit of £1,400, which would suddenly make the prospect of home ownership—even if it is part ownership —far more of a possibility. I appreciate, however, that certainly in London the housing market is very expensive.
With that I will finish because I have gone three minutes over time. I did not want to neglect the noble Lord, Lord Kennedy, because I did before, but I have a load of questions I have not answered, so perhaps I could write to noble Lords.
Lord Shipley
Before the Minister sits down, can I thank her for her reply? I hope that two things will be explained in writing. The first relates to the figures quoted from the National Housing Federation, the noble Lord, Lord Beecham, Savills and Shelter. I believe those figures to be true. If the Government have had discussions with any of those organisations, or feel that other figures are correct, it would really help the Committee to know exactly the Government’s view of them. At the moment, I think all those figures are correct. If they have had discussions, could we know about them?
Secondly, will the Minister respond specifically on the issue of high-value council properties? I understand that there will be, either through regulation or perhaps in the Bill, some clarification about what “high value” actually means. I draw it to her attention that, by their very nature, larger homes tend to have a higher value and that larger homes are appropriate for larger families. Of course we understand that they will be sold only when not occupied, but if we end up with four-bedroom —or even more—properties being sold, it will help nobody.
Baroness Williams of Trafford
The noble Lord makes a good point. We would not want to get rid of all the four and five-bedroom high-value assets in an authority—meaning there would be no houses of that kind—so we have definitely thought about that. As for our discussions with Savills and others, I am certainly happy to write to all noble Lords who have taken part in the debate and place a copy of the letter in the Library.