Housing: Young People

Baroness Donaghy Excerpts

Thursday 14th March 2024 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, I thank the noble Lord, Lord Young of Cookham, for initiating this debate and for his comprehensive presentation. I am afraid this is going to go from the sublime to the gorblimey now.

This debate is one to which my noble friend the late Lord McKenzie of Luton would have probably been first to sign up. His knowledge of all aspects of housing need and his understanding that dealing with it was an integral part of tackling poverty were second to none. He was gentle and forensic in his questions to Ministers, seemingly diffident, but a towering force in his campaigning for more social housing and safeguarding jobs in the construction industry.

I had been in the House for only two or three weeks when, on 8 July 2010, there was a debate on social housing, in which the noble Lord, Lord Gardiner of Kimble, made his maiden speech, on rural housing, and my noble friend Lord Touhig made his maiden speech, on housing in Wales. The noble Lord, Lord Best, participated in that debate, and I am so pleased that he is here for today’s proceedings. Lord McKenzie gave the usual comprehensive speech that you would have expected. He was proud of the fact that the Labour Government had launched the largest council house building programme for almost two decades. He regretted the fact that the coalition Government were about to sweep away proposals for a national register of landlords—does that sound familiar?—the regulation of letting and managing agents and the requirement for compulsory written tenancy agreements.

Today, in a debate on housing initiated by the noble Lord, Lord Young, with the noble Lord, Lord Best, and my noble friend Lady Taylor of Stevenage, all genuine experts, putting my name down feels a bit bold. Plenty has been written in Lords reports on intergenerational fairness and the impact of student loans and consequent debt, so I will not be concentrating on those aspects.

I do not think that there was any golden age for housing for young people. I was 38 when I bought my house in London, after 13 years in four bed-sits, only one of which was en suite, as we call it nowadays—we would not have known what that meant in those days. The difference now is that someone on my then equivalent salary would not be able to buy a house without financial assistance from the bank of mum and dad or some government wheeze. The other difference, in the 1960s and 1970s, was that there would not have been so many banks of mum and dad available, and we were used to a lower standard of housing—at least, some of us were.

London is a different world from the rest of the UK when it comes to housing. For instance, there has always been a tendency for young professionals to move out of London when they start raising a family. It used to be when the children were approaching secondary school. Now, they move out when the children reach primary school age. This may explain why so many primary schools are closing in London. Most public sector workers in London with childcare expenses to pay would not be able to buy a house in London. This impacts on the ability to recruit and retain the best staff in London, particularly in Westminster and Whitehall.

The Home Builders Federation has stated:

“The UK is a very unaffordable place to buy or rent a home, and increasingly so”.


It echoed what has already been said:

“House prices in the UK have been growing faster than incomes and this disparity is greater than when compared to the EU benchmark”.


Belgium and France have seen house prices fall slightly as a proportion of income, and Finland has ensured that both rental and buying are more affordable.

In the UK, owner-occupiers aged 25 to 34 have dropped by 12% in 20 years. The average age of first-time buyers is increasing—last year, it was 33.5 years —while 58% of first-time buyers were among the highest earners. Research from the Resolution Foundation found that lower home ownership rates among young people mean that

“millennials spend longer in the private rented sector … a typical private renter spent over a third … of their net income on housing costs, more than three times the proportion of net income that a typical mortgagor devoted to their mortgage interest payments”.

I spoke to some of my neighbours when they moved in—young professional women sharing a rented house. Their rent was such that they would never be able to save for a mortgage. It is not a house in multiple occupation; a common feature, particularly in London, is that landlords sidestep HMO requirements and let the house to one name only, so they do not have the safety requirements. That is all too common, and there are not the resources in local government to ensure that it is stopped. If councils were properly funded, they would have an important role to provide accommodation for young people; the GLC, for instance, had a scheme for hard-to-let dwellings.

However, since 2010, councils have had a 60% cut in spending by central government. Government Ministers, as the noble Lord, Lord Young, has said, encourage councils to be more entrepreneurial and raise their own funds. In 2015, the Government abolished the Audit Commission, which kept a check on local government spending; this was an appalling act of irresponsibility.

This week’s New Statesman contains an article about the dire financial state of local government. It gave the example of Hastings in East Sussex as

“a borough full of Airbnbs and Londoners moving in and pushing up house prices”.

Hastings is spending nearly half its annual budget on temporary accommodation. The council leader has called for a Ukrainian refugee-style scheme to house local people in spare rooms.

The director of the Institute for Fiscal Studies has indicated that house price rises since rates were last set mean that the average property in the Westminster council area is taxed at 0.06% of its value, while a far cheaper property in Hartlepool is taxed at 1.3%. We all know that it would be a brave Government that did something about rateable values.

What difference do the various government schemes make? The Home Builders Federation has indicated that the closure of the Help to Buy equity loan scheme has exacerbated the challenge facing aspiring home owners. It states that the scheme supported a third of a million first-time buyer households to purchase a new-build home with an equity loan. It claims that it produced “a doubling in housing supply” and generated an estimated £65 billion in economic activity. What it does not say was that Help to Buy benefited those who could probably have afforded a house anyway, and the resulting inflation of house prices made it impossible for the lower-paid to put a foot on the housing ladder. This was taxpayers’ money, which would have been better spent on social housing.

My only question to the Minister is about the First Homes scheme, which was launched in 2021. Is there any information she can give us about how the scheme is going, and is there any consideration of expanding it?

Finally, I mentioned to the noble Lord, Lord Young, the other day that I am a fan of “Homes Under the Hammer” on television, and I like to think I can guess the price of a house anywhere in the UK. Key factors are whether it is in the north or south, whether it has transport links, the presence or absence of higher education institutions and the increasing numbers of younger entrepreneurs in the south who are buying houses in the north to refurbish and rent or sell off —or “flip it” in the jargon. Skills shortages and the steep cost of raw materials are slowing things down. Solving the issue of housing for young people is not a one-dimensional issue, therefore, and the Government’s record on local government, infrastructure skills, support for refurbishment schemes and controlling the cost of living is pretty woeful. This debate is an important opportunity to air these matters.