Housing and Planning Bill

Baroness Hollis of Heigham Excerpts

Tuesday 8th March 2016 Lords Chamber

[Lord Porter of Spalding (Con)]

I shall respond briefly to the noble Baroness. The point I made was that if I was living in that property paying rent for the next 74 years, or if I bought it and released the equity in it so that the landlord could invest the money in a replacement, it cannot be said that there would not be additional units because clearly there would be. The equity that was tied up in that unit was freed. It makes no odds to the country whether I was living in it for 74 years paying rent or whether I was paying Mr Bradford and Mr Bingley a mortgage on it. We got the money out and we could reinvest it in new properties. If the noble Baroness thinks that her record of selling 400 and replacing with six was a marker that we should all aspire to, I am a little confused. Surely she should have been looking at why they replaced the sale of 400, to free up the equity, with only six.

The arguments today should be about the size of the discount, not the principle of right-to-buy sales. There is a strong argument to make that the discount needs to be sufficient to stimulate demand and not excessive, but that is not a debate that I have seen any noble Lord choose to make. The noble Baroness has missed the mark with where she is playing the amendment. If I was on the Benches opposite, I would have come at this with a completely different pack. It is really important that we give everybody equality of tenure. If some social tenants have access to right to buy, they should all get it.

[Baroness Hollis of Heigham (Lab)]

My Lords, I have a lot of sympathy for what the noble Lord, Lord Porter, said, but what we have been trying to say repeats to some extent what he said. The argument is about not just right to buy, although we can have different views on that, but who funds the discount. I agree that the proportionality of the discount matters and we want it to be only enough to help people realistically into home ownership, but to screw local authorities for it seems to me an issue about which many of us would worry. I include the noble Lord in this, but he can disagree if he wishes.

[Lord Porter of Spalding]

I largely agree with the noble Baroness: it is not right that local authorities are funding inefficient RSLs to make the discount up. The money should come first and foremost from the RSLs, but again, nobody on the other Benches is making that case. The case should be made that RSLs should be forced to sweat their assets properly. They are sitting on more than £2.5 billion on their balance sheets in cash, plus the unsecured money that they have that they could take out against those properties. That is where we should be coming from. If we do not stick to taking just them on, then we could come back to the Government and say, “Actually, the state’s sitting on a lot of land that is redundant and not used for the purpose that it was originally bought for. It is sitting there undervalued”. We should then purchase it or give it to local authorities to increase its value and then use that money. Again, nobody is making that point. Noble Lords are challenging the right to buy itself; that is not where the fire should be. The country voted to extend right to buy. We should be challenging the Government to find a way to fund it that is more appropriate and sustainable.

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[Baroness Williams of Trafford]

I do not know by borough where those starts are but will, if I can, provide the noble Lord with the figures. It would be interesting to see exactly where they are.

[Baroness Hollis of Heigham]

The Minister emphasised, perfectly sensibly I think, that housing associations should have some discretion in how they meet local needs and what types of housing they provide. I also take the point about shared ownership. Will she extend that same freedom so that housing associations can replace housing with social housing at social rents rather than at affordable rents, given that affordable rents are nearly double social rents? At the moment, they are not allowed to by the Government. Given this new localist agenda for housing associations, will she restore their freedom to them?

[Baroness Williams of Trafford]

My Lords, affordable rent for low-cost houses is certainly a lot cheaper than market rents, but I will take that particular point away and perhaps we can return to it on Report. I will need to think about it.

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[Baroness Williams of Trafford]

I would expect councils to work with the Government, housing associations and through the planning system to identify where needs are emerging. The noble Lord is absolutely right: there will be people in crisis need who the council will deal with through the various payments that they receive, such as discretionary housing payments. I would expect all those providers to be involved in meeting the needs of those in their area.

We should not be trying to constrain the freedom of housing associations to make sound business decisions about how to deliver their part of the agreement, or judgments about what is needed in various communities. Neither should we require them to identify replacement before a property is sold, because that would slow up the process for the tenant and in many cases would be impractical at the point of sale.

The noble Baroness, Lady Pinnock, made a point about right to buy at the expense of other tenures. I have made the point that we remain committed to build more affordable housing over this Parliament than from many years, including shared ownership and other forms of affordable housing. It is really important that hard-working people can buy affordable houses and get on the housing ladder. She also made a good point about the quality of the private rented sector. As we discussed under the rogue landlords clauses, the vast majority of landlords in the private rented sector are decent, law-abiding people who want to provide decent-quality accommodation for their tenants. I have a statistic here: 84% of private renters are satisfied with their accommodation. I appreciate that that means that 16% may not be but, generally, the private rented sector provides good-quality accommodation.

[Baroness Hollis of Heigham]

I do not know how the Minister can say that when more than 30% of private rented sector accommodation is below the decency standard.

[Baroness Williams of Trafford]

I just made the point that 84% of tenants are satisfied with their accommodation. I do not know where the noble Baroness gets her figure from.

[Baroness Hollis of Heigham]

It is probably 31% rather than 30%. I think it is from the house condition survey.

[Baroness Williams of Trafford]

I thank the noble Baroness for that statistic. One of the points that we made back in the group of amendments on rogue landlords was that the vast majority of landlords are decent landlords.

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[Lord Shipley (LD)]

My Lords, I am grateful to the noble Lord, Lord Beecham, for clarifying the position that explains the difficulty that we might have had with the amendment. In summing up, though, could he explain the period of 10 years? There is a view that it could be a longer period. It would be helpful to know how that figure was decided upon when it could be on some other timescale.

[Baroness Hollis of Heigham]

My Lords, I am sympathetic to the intent of my noble friend’s amendment although, like him, I have reservations about the way it is drafted. I want to put the question back to the Minister. I do not think that anyone would wish to undermine the capacity of people, particularly young people, to become homeowners, and that is not what we are debating today. The problem is that, given that the scheme is being baited—I use that word deliberately —with huge discounts in some cases, with some people who have spent five or 10 years in housing association property getting a return of 300% or 400% on the rent that they have already paid coming back to them in the form of a discount, how is the Minister, who must share our concerns about this, going to inhibit the rapid recycling of that property into the private rented sector?

The Chancellor has accepted that this has been abused in various forms and has sought to put some financial controls over the tax reliefs and so on that private landlords may receive. No one doubts that there are many good landlords trying to do a decent job by their tenants and charging them a reasonable rent, but this is such high-profit territory that I know that there are scores of wide boys out there just waiting to take advantage of housing association tenants in order to produce sales back into the private rented sector at inflated prices—and then who pays the bill?

Those people may or may not have gone on to buy another home, but the process turns the house into a private rented house. We have seen what has happened with our own eyes when that has happened on council estates: it has sent some streets skidding downwards, to the resentment not only of council tenants who did not buy but of council tenants who did. They see their estates contaminated by the spread of precarious, insecure and low-paid but high-rent-paying tenants on the one hand and students on the other, with no leverage over their landlords to get them to maintain the property or keep it up to a decent standard, for fear of eviction.

How is the Minister going to ensure that the purpose of all of this, which is, after all, to give housing association tenants the same rights as local authority tenants to buy their own homes in which they have lived, is not exploited and abused for a quick buck to increase numbers in a tenancy that will, ultimately, be of poorer quality and infinitely more expensive for the rest of us? On the first round, the local authorities will be financing the discounts; on the second round, the taxpayers will be funding the increased housing benefit bill as those properties get cycled into the private rented sector. How does the Minister expect to control that abuse—and it is an abuse, because that is not what this is all about—if she cannot come forward with some scheme, not necessarily the same as what my noble friend has identified, but some form of control?

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[Baroness Bakewell of Hardington Mandeville]

The issue is that the taxpayer has paid a 20% discount for that to happen.

[Baroness Hollis of Heigham]

On top of that, the taxpayer will then go on, in appropriate circumstances, to pay the housing benefit on rents that have doubled or tripled.

[Lord Campbell-Savours]

And on top of that, some people object to the fact that people can sell in London a council flat—for which they have perhaps paid a low rent for a number of years—leave London, retire to the countryside and live off the income that was gained simply by selling what was essentially public property. Sometimes—it gets worse—they move abroad. People from abroad, who are not even British citizens, buy this property and then live abroad on the rental income gained from tenants who are overpaying within the United Kingdom. The whole thing is ludicrous.

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[Baroness Williams of Trafford]

I was in a round about way, but I do not think that the noble Lord accepts that. In a round about way I was talking about the whole dampening of the market.

[Baroness Hollis of Heigham]

My Lords, when the Minister has a chance—perhaps over the weekend—to look at the “Dispatches” programme, would she like to reflect on the information given to that programme by experienced housing professionals? It concerns the implications of illegal deferred sales, in which the money does indeed come from the wide boys and is given to an older person to buy, and many of these people will be pensioners. The arrangement then allows the house to be reclaimed five or eight years on when the pensioner dies. It is a malign form of equity release—if you like, a rolled-up mortgage payment. I hope that she will look at that. Socially, the housing professionals—obviously, it was a television programme and I do not know what the other side of the argument might have been—scandalise me, and I think the Minister, as a local authority person, will also be scandalised at what is being reported there.

[Baroness Williams of Trafford]

I certainly look forward to watching that programme, as the noble Baroness suggests.

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[Lord Stunell (LD)]

My Lords, I support the amendment that the noble Lord, Lord Kerslake, put to us and commend to the Minister the devastating critique he made of the Government’s financial options. I invite her to have a good night’s sleep and come back and tell us how she thinks the Government could best respond to it.

I will pick out one particular element of what the noble Lord put to the House: the impact on what he described as richer areas, the probability that high-value homes in the local authority and housing association sectors would be most prevalent in the same place, and that those places would have higher property values in general. As he mentioned, London is the outstanding example, but we need to remember that “high-value areas” is always a relative concept. I come to this House from Stockport, which is one of 10 boroughs in Greater Manchester. As the Minister will be very well aware, it is one which might be described as “well off” among those 10, as would the borough of Trafford.

As a borough, we have a higher proportion of right-to-buy sales because we have more attractive property to sell. We have a waiting list that means that for every remaining council house there is another family waiting to go into it. Anything that reduces that stock and makes a replacement policy more difficult is to be very much regretted and will certainly lead to increasing pressure. If we add on top of that, as the noble Lord outlined, that there is likely to be something not far off forced confiscation of void properties—exceptionally so in Stockport compared with other Greater Manchester boroughs—the impact is increased and multiplied.

As well as the very thorough and detailed rebuttal that the noble Lord, Lord Kerslake, gave of the scheme and the various cul-de-sacs into which the financial planning might take it, there are some real additional problems, in particular for what we might describe as the richer areas, or the areas that have higher housing markets relative to those nearby. If one looks at one other aspect of the Government’s plan that is not yet revealed to us—what they mean by “high value”, whether that is within an authority, across Greater Manchester, across the whole of the north-west or across the whole country, and whether it is an absolute or some kind of relative figure—all these things can compound the problems highlighted in this aspect of the plan.

I hope very much that the Minister can respond in a helpful way to the amendment. If she takes some time to do so, fair enough, but a helpful response is essential.

[Baroness Hollis of Heigham]

My Lords, I also congratulate the noble Lord, Lord Kerslake, because it is possible that he has found a way to square a circle. Whether you support right to buy or have reservations about it in terms of the implications for waiting lists and so on, nobody today has defended the argument that local authorities should not find their stock sold to fund the tenants in another tenure. As the Camden Association of Street Properties said, why should they? They are not their tenants and it is not their property.

The noble Lord, Lord Kerslake, suggested—I understand that this is supported by Boris Johnson, the mayoral candidates and the like—a way to make it attractive, feasible and possible for people in housing association properties to buy and to take advantage of the opportunity to acquire that home, but to do so in a way that is not to the detriment of local authorities, which are expected to sell their stock, first, to fund the discounts, secondly to sort out brownfield sites, and thirdly to replace their own loss of property that has gone in sales.

The figures do not stack up. We know that it will take three years or more for receipts to flow from selling high-value property in authorities such as Cambridge and there will be a queue of would-be buyers knocking at the door to take advantage of the right to buy in housing associations. That means that the levy is going to have to be imposed, not just on local authorities with retained stock, but on local authorities which do not have a single council house left to sell, because they have gone over in stock transfers, so they will have to be levied appropriately.

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[Lord Beecham]

My Lords, I join other noble Lords in congratulating the noble Lord, Lord Kerslake, on his ingenious approach. I am, however, slightly disconcerted by the fact that the Mayor of London is, apparently, very much in support of this. No doubt, by tomorrow he will be claiming that it was his idea in the first place.

[Baroness Hollis of Heigham]

Only if the Government adopt it.

[Lord Beecham]

Well, yes—it might bring it to a rapid end. It does appear to be a very useful way forward. I also endorse my noble friend Lady Hollis’s reference to Help to Buy as another avenue through which it should be possible to assist people into home ownership without making difficulties either for local authorities, or, more importantly, for other people who are in need of rehousing. I hope that the Minister will be sympathetic to the amendment.

However, I am slightly puzzled by the description by the noble Lord, Lord Kerslake, of the difficulties of replacing homes on the basis of the numbers being very hard to achieve. I think he said that something like 5,000 a year would be needed to replace and it was difficult to see how that number could be built. That 5,000 houses would be something like 2.5% of the Government’s annual target of 200,000.

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[Baroness Williams of Trafford]

My Lords, part of the receipt is reinvested.

[Baroness Hollis of Heigham]

The money is not going to stretch that far. We have already established that it is supposed to pay for expensive discounts, brownfield sites, and a replacement for local authority stock. The Minister says that local authority tenants have the right to buy: we did not expect housing associations to pay for their discounts, but we now expect local authorities to pay for the discounts on not only their own property being sold but housing association property being sold as well. I can see no fairness in that at all.

The noble Lord, Lord Kerslake, has produced a pathway forward. Indeed, if the Minister wished, one could add to it to make it more attractive. A right-to-acquire discount, which runs from about £6,000 to £9,000, could be an incentive before adding in equity loans. This can be modelled in different ways to make it attractive and reasonable, but not to clobber poorer local authority tenants to fund the giveaway discounts for people who are better off.

[Baroness Williams of Trafford]

My Lords, as I said earlier, this amendment is about replacing the discount with an equity loan. The mechanism for using high-value assets to fund both the discounts and investment in new properties will be considered in another grouping. Given how late in the evening it is, I hope noble Lords will indulge me and stick very purely to this amendment.

The Government are selling off assets they do not need and we expect councils to do the same—