Housing and Planning Bill

Baroness Bakewell of Hardington Mandeville Excerpts

Tuesday 1st March 2016 Lords Chamber

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, this is the first time I have spoken in Committee today, so I draw your Lordships’ attention to my entry in the register of interests. I support my noble friend Lady Grender, who set out so eloquently our opposition to Clauses 55 to 61. I agree completely with the noble Lord, Lord Kerslake, that this is badly thought-out and not needed.

As has been said, these clauses are designed to solve a problem for which there is already legislation. The Government appear extremely keen to move residents out of housing association and local authority housing into the private sector. This is all well and good if the supply and standard of accommodation on offer is adequate and meets the Government’s standards for what is required. However, as I am sure the Government will readily admit, much of this accommodation is in a very poor state of repair, sometimes not secure against the elements and, in extreme cases, not fit for human habitation.

As has already been said, there is a balance to be struck between ensuring that landlords can run their properties as a viable business and the interests of tenants looking for a secure and comfortable home. In 2015, 115,000 people approached Citizens Advice with problems in private rented homes, 2,053 of which were about illegal evictions by landlords in the private rented sector. This represented an increase in inquiries on this specific issue of 32% compared with 2014. This is part of a general upward trend over more than a year. During 2013-14, 111,960 households in England applied to their councils for homelessness assistance—a rise of 26% on 2009-10. On 30 September, 68,560 households were living in temporary accommodation—13% higher than on the same day in 2014, thus producing considerable pressure on local authority homelessness budgets, as we have already heard, with residents often put in temporary accommodation.

The abandonment proposals in the Bill lower the level of proof that landlords will have to meet to claim that their property has been abandoned. The proposal would also legitimise an illegal practice: evicting a tenant without going through a formal court procedure, even when the tenant has not engaged in any conduct that might clearly show that he has abandoned the property. This suggests that, if introduced, it would lead to higher eviction rates and a similar rise in the number of homelessness applications to local authorities, resulting in higher administrative and temporary accommodation costs. Will the Minister say whether this is the Government’s intention and what action they are prepared to take to prevent this sorry state of affairs coming to pass?

At a time when the number of households with dependent children living in the private rented sector is increasing, the added financial impact on council budgets is likely to be significant, as it is these households who will have a priority need for housing by the local authority if made homeless. Using the DCLG’s findings, Citizens Advice estimates the increased social costs to the public sector of each homelessness application at between £24,000 and £30,000 per year, producing an average of £27,000 per year per family or individual. This is not a good use of taxpayers’ money. I cannot believe that this is the Government’s intention. I look forward to their response.

[Lord Kennedy of Southwark]

I am grateful to the noble Baroness, Lady Grender, for proposing that this whole part should be abandoned. I support that suggestion. I will not go through the points I made in the previous debate, but I may have a few points when the Minister responds. The removal of the oversight of the courts, as referred to by the noble Baroness, is of particular concern, and the provision that the third warning notice should be fixed in a “conspicuous” place is very weak and offers very little protection to the vulnerable tenant. The Government have not made the case for these clauses, or that these changes are needed or necessary. The Government need to think again over the procedure and the risks involved, as other noble Lords said in the debate.

--- Later in debate ---

[Baroness Bakewell of Hardington Mandeville]

My Lords, I agree with most of the points made on this first tranche of amendments in this chapter. Although I welcome the Government’s aim to increase the supply of starter homes for those currently attempting to get on the first rung of the home ownership ladder, like others, I remain concerned that this policy is seen as the only route to provide a home for those who are in need. Home ownership is something that many residents of the country aspire to but, as has been said, by no means all of them.

Limiting the Bill to starter homes rules out other avenues of home ownership. As your Lordships are aware, there are other products in the marketplace, such as shared ownership, which we have already heard about, and the Help to Buy equity loan scheme run by the Homes and Communities Agency. By promoting starter homes to the exclusion of all other options, the Government are raising the expectation of those under the age limit that they will definitely qualify for a starter home with a hefty discount. This will lead many of them not to explore other options which could assist them to get on the housing ladder.

As the Government have already made clear, there will not be a limitless supply of starter homes. Indeed, supply will be restricted by the resources raised through the sale of high-value council homes—a policy to which we will come later in Committee. This rationing of starter homes is not clear to those whose ambitions have been raised. By concentrating wholly on their starter homes programme, the Government are setting many people up to be bitterly disappointed. Realism dictates that the Government should promote other forms of home ownership simultaneously with their starter homes programme.

We now come to the thorny issue of how these new home buyers will finance their purchase. They may have a deposit, but that does not appear to be a requirement in the Bill. They will receive a discount of “at least 20%” on the purchase price. Presumably, this is the cost of the plot plus the building costs—in other words, the market price for which a developer could expect to sell the property on the open market, outside the Government’s starter home programme. The buyer will then need to go out to the market to borrow the remainder of the purchase price of their home, so some of these purchasers will be looking to borrow up to £200,000 outside London and £360,000 in London.

In Clause 2(3), the criteria are very clear as to who these people will be: first-time buyers under the age of 40 who have “other characteristics” to be specified by the Secretary of State—which are not yet decided. The sooner the Secretary of State sets out what these other characteristics may be, the more certainty can be brought to those waiting to buy their first home.

As your Lordships are aware, there are many anecdotal stories about how difficult it is to obtain mortgages from traditional sources, with those who have been in extremely well-paid employment for a long time, looking to move from one property to another, being refused finance on the flimsiest of grounds. We cannot blame the banks or building societies for being reticent to lend when they have had their fingers burnt in recent years. However, if they will not lend to those with a good track record of repaying their mortgages and loans in a timely manner, how on earth will we encourage them to lend to those who have no track record? The very fact that they are first-time buyers means that they will not have had a mortgage in the past. The Government will need to produce an effective scheme which will encourage lenders to participate in a starter homes programme.

I note from the Statement of 19 January that those areas engaged in the pilots will get their administration costs reimbursed only during the six months of the pilot and will be reimbursed for the capital expended once the Bill has received Royal Assent. Given that the consultation is still ongoing on many aspects of this Bill, can the Minister be confident that the Bill will receive Royal Assent in sufficient time to help those housing associations engaged in the pilot to balance their books? Like others, I look forward to these five pilots being concluded.

Even with the discount supplied, research carried out by Savills on behalf of the Local Government Association—and like others I am a vice-president of the LGA—shows that starter homes would be out of reach of all people in need of affordable housing in 220 council areas, as my noble friend Lord Tope, has said, and out of reach of 90% in a further 80 council areas. The definition of people in need of affordable housing are those who have to spend 30% of their household income in rent or buying a home. Many will be spending a great deal more than 30% on housing. With 92% of council areas out of reach for those needing affordable housing, there are going to be some very disappointed and disaffected residents in the country.

Many in this House and outside are concerned that the starter homes will not necessarily be for the benefit of those originally intended. It is essential that these new starter homes should be the only residence of those who buy them. It would be against the spirit of the Bill if these homes were then rented out to others or sold on at a profit after only five years. I urge the Government to put the condition of the home being the only residence of the owner or owners in the Bill to avoid any doubt and to protect those who truly wish to participate in the scheme to acquire their own home.

The Government’s aim is to deliver 100,000 new homes over a five-year period, but that is only scratching the surface of the homes that are needed. A mix of housing is what is needed, including home ownership outside of starter homes. I urge the Minister to accept this amendment in order to achieve the Government’s aim.

[Lord Horam (Con)]

My Lords, I do not want to speak for any length of time because in discussing these amendments and the following amendments, which cover largely the same area, I defer to the greater expertise of many other noble Lords, such as the noble Lords, Lord Best, Lord Kerslake and Lord Tope. However, I am struck by one thing as a relative newcomer to housing debates—that is, the extent to which we are proceeding in the dark. I went to a very interesting meeting, which I was grateful to my noble friend Lady Williams for laying on, to discuss technical aspects of the Bill. A number of noble Lords were there, and it was very interesting to clear up some of the definitions, and so forth, as far as we could. What was apparent was that the Government really had not begun to finalise any sort of modelling of the effect of the legislation—not only the financial effect, which is very germane to our discussion, but the social effect and the effects on supply of housing.

I think that we would all agree that one has to think very clearly about housing as it is a complicated situation and an important topic. It is the Government’s responsibility to think clearly, and I think we all agree that the issue is really shortage of supply rather than tenure. That is the fundamental point with which we are trying to grapple. Therefore, it behoves the Government not to let issues of tenure, whether in social housing, starter homes or wherever, get in the way of the fundamental point about shortage of supply of whatever kind of housing it may be. In trying to get at what the Government could say about the effect on housing supply and other financial matters, they confessed—and I am grateful for this to the civil servants who were there—that they had not got far enough with their modelling, simply because Ministers had not taken decisions yet. I understand that, too, but we are a long way down the road. We have had 17 Committee sittings in the other place and we are now in Committee here. Some important definitions and considerations have not been finalised and do not look as though they will be finalised for some time, which places the House in a quandary in trying to reach a clear conclusion, whatever point of view you may have.

The only bit of information that I have been able to glean by way of the consequences of this particular set of clauses on starter homes was provided by the Local Government Association. I do not know whether it is accurate or not, but the LGA says that in its present form,

“should 100,000 starter homes”—

and that is an ambitious figure—

“be built through the planning system, between 56,000 and 71,000 social and affordable rented homes would not be built”.

In other words, there is a sacrifice, in concentrating on the single issue of starter homes, of social rented homes, which we know are even more needed by even poorer people than those whom we hope will buy these starter homes.

This is the difficulty that we have. Is the figure accurate? Where has it come from? Is it the Government’s own figure? I would be interested to hear the Minister comment on this, although I do not necessarily expect her to comment this evening because I have just produced it out of the blue. But that sort of figure, without any further government explanation about what they expect the consequences of this legislation to be, is very worrying. Therefore, I hope that we can go into this as thoroughly as possible—but I fear that, even at the end of a day’s debate on this subject, around which there is a great deal of concern and interest on the part of Members, we will not be very much further forward.

I agree with the noble Lord, Lord Kerslake. We are tackling this the wrong way round. The right way round would have been to say, “There is a housing shortage. How do we tackle that and maximise housing supply?” We have three different methods of tackling supply. We have the private sector, housing associations and councils. How do we maximise the output of those three? Let us sit down and discuss that and consult expert opinion. It has happened the other way around. Someone has had a bright idea. I am not against bright ideas, I am all in favour of them, but if they do not go through the necessary and rather boring business of being talked through by people who know what they are talking about, we are liable to end up in the sort of situation we have now. Undoubtedly, this may be a very sensible idea, but we do not really know and we do not have the information to hand to decide on it. Yet this is really rather late in the process, and if we get it wrong we may have adverse effects when the Government are trying to make a favourable effect. So I am concerned from that point of view.