Lord Kennedy of Southwark
To ask Her Majesty’s Government what action they are taking to help people on the living wage in London to own their own homes.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, this Government are working closely with the mayor and the GLA on measures to increase supply and boost home ownership for all Londoners. These include London Help to Buy, which provides equity loans of up to 40% of a property’s price to homebuyers in the capital, and London shared ownership, which could see Londoners in a borough such as Lewisham buying a home with a deposit of as little as £3,500.
Lord Kennedy of Southwark (Lab)
My Lords, first I declare an interest as a councillor of the London Borough of Lewisham. The Minister recently confirmed to me in a Moses Room debate:
“I agree that not everybody will be able to afford a starter home”.—[Official Report, 22/2/16; col. GC 40.]
There lies the problem. Funds are being diverted into the starter home scheme, for homes which are unaffordable to most people on modest incomes, from other housing schemes. Why does the Minister think it is acceptable that the Government are reducing the options for people on modest incomes and the living wage, who are often at the poorer end of the private rented sector, which will mean that often their dream of owning their own home will remain only a dream?
Baroness Williams of Trafford
My Lords, there are a number of products on offer to first-time buyers, including shared ownership, which might require a deposit of as little as £1,400. There is Rent to Buy and a number of other products should people want home ownership.
Lord Harris of Haringey (Lab)
My Lords, three weeks ago today the Minister answered a Question about the £140 million that the Prime Minister had announced for estate renewal. We now understand that that £140 million was payable as a loan—it is seed corn that you have to give back. Was the Minister aware at that time that it was a loan? If she was, why did she not tell the House? If she was not, what is going wrong at the Department for Communities?
Baroness Williams of Trafford
My Lords, the day that I answered the Question on estates regeneration was the day that the panel met for the first time. I was not aware of the actual structure of the fund, but perhaps that is understandable given that the panel had yet to meet when I answered the Question.
Lord Hylton (CB)
My Lords, will the Government consider restricting the 20% discount for first-time buyers to present occupants of social housing? That would immediately release a dwelling for rent.
Baroness Williams of Trafford
My Lords, the 20% discount for the starter home is to address a specific need in a specific demographic: first-time buyers under the age of 40, whose ability to purchase a home has declined dramatically over the past few decades. This priority is an attempt to address that.
Lord Tope (LD)
My Lords, on 26 October I reminded the Minister that according to Shelter research an annual income of at least £77,000 would be needed to purchase just an average starter home in London, and I asked her what the Government’s estimate was of the number of people who were likely to access starter homes in London. She was unable to answer the question then. Would she like to have another go now?
Baroness Williams of Trafford
My Lords, it is very difficult to tell these things until the policy is under way. But the average starter home in London is estimated to be about £318,000; in England, excluding London, it is £145,000. So a joint income of significantly less than that outside London would make a starter home much more affordable. But of course there are things such as the Help to Buy ISA, which will help people save up for their deposit. I am sure that as this policy develops and we get the figures in, I will be able to inform the noble Lord.
Lord McFall of Alcluith (Lab)
My Lords, as of December 2015 the Mortgage Advice Bureau stated that the average down payment for a London home is £179,248. How can any young couple, never mind those on the lower living wage, afford such a price?
Baroness Williams of Trafford
My Lords, products such as the Help to Buy ISA and the equity loan that the Government are proposing to raise from 20% to 40% in London should help first-time buyers. But I appreciate that house prices in London are not cheap.
The Lord Bishop of St Albans
My Lords, there is much concern that the focus on starter homes could threaten the provision of alternative housing schemes that are more suitable for those on low incomes, such as shared ownership. Will the Minister assure the House that Her Majesty’s Government’s emphasis on these starter homes will be in addition to other affordable schemes such as shared ownership rather than replacing them?
Baroness Williams of Trafford
I can certainly assure the right reverend Prelate that the £4.1 billion that the Government are putting into shared-ownership homes, to achieve 175,000, demonstrates their commitment to things other than starter homes.
Baroness Taylor of Bolton (Lab)
Is the Minister aware that a Conservative MP has moved back in with his parents because he cannot afford to buy a home anywhere near here? What signal does that give that we should have confidence in the measures that she is talking about?
Baroness Williams of Trafford
My Lords, funnily enough that Conservative MP was at my house on Saturday night, and we were talking about this—
Noble Lords
Baroness Williams of Trafford
I assure noble Lords that he is not living with me. When he was standing for election, he did move back in with his parents. I think that he is something like 26 years of age, and we are absolutely committed to providing starter homes for people in that age group.
Lord Campbell-Savours (Lab)
My Lords, has the Minister been following the progress of the project being promoted by an organisation called London Citizens, which is developing a site on Mile End Road in London—the former St Clement’s mental hospital? It can sell flats at a fraction of the normal price that properties are being sold for in London because of the way that it handles the land value. Might Ministers have a look at that project and see whether any lessons can be learned, particularly while the Housing and Planning Bill is going through the House of Lords?
Baroness Williams of Trafford
I am afraid to tell the noble Lord that I have not heard of the scheme but I would be very interested to hear about it. If he could write to me, I certainly would be interested to have a look at it.