Housing: Availability and Affordability

Lord Best Excerpts

Thursday 12th October 2017 Lords Chamber

[Lord Best (CB)]

My Lords, I congratulate the noble Lord, Lord Smith, on initiating this excellent debate, which has demonstrated an incredible consensus across the whole House on a number of the key issues. I am only sorry that I can do justice to only one aspect of the housing availability and affordability debate. However, as a preface, I congratulate the Government on much of the policy thinking in their earlier housing White Paper, and now the announcement by the Prime Minister of a £2 billion grant fund for councils as well as housing associations to deliver 25,000 new homes for so-called social rent. This may be a modest part of the 1.5 million homes to be built by 2022, and obviously is only a start, but the Government’s action signifies a recognition of the need to target those who can afford only a modest rent, demonstrating a significant move away from the higher-rent policies that have been leading even the charitable housing associations to turn away the poorest in society.

The issue of affordability also highlights the crying need for the good intentions of Ministers at the Department for Communities and Local Government not to be continually undermined by the Department for Work and Pensions. The DWP has been disastrously cutting, capping and freezing the support it provides to enable poorer people to afford a proper home. This interdepartmental conflict is currently undermining the provision of supported housing for vulnerable and older people, and it undermines the Homelessness Reduction Act that I had the honour of piloting through your Lordships’ House, because the DWP freeze on the local housing allowance, which caps rent for those who rely on benefits, causes homelessness when landlords inevitably turn out or turn away anyone in receipt of benefits.

The issue I want to address is the nation’s abject dependency on the sector which creates by far the majority of new homes: the private housebuilders. Despite making record profits, this industry, dominated by half a dozen volume housebuilders, is failing us badly. The catalogue of failures includes: poor quality in construction and design; bad customer care; miserable space standards; rip-off leases for houses, with escalating ground rents—on which the Government are acting, and I congratulate them; deteriorating satisfaction of buyers; avoidance of housing for older people, where profits are lower; rejection of brownfield sites and a concentration on the easier greenfield opportunities; little concept of creating properly planned places; sitting on land with planning consent until prices go ever upward; and, perhaps worst of all, reneging on Section 106 agreements and wriggling out of obligations to provide affordable homes for local people, on opaque grounds of “viability” and housebuilders’ “right” to make at least 20% profit on the deal. While the major housebuilders’ shares have risen by 127% in the past four years, compared with 21% for the FTSE All-Share Index, and profits in companies such as Persimmon rose by more than 30% last year, I believe the private housebuilding sector has lost the confidence of the whole nation.

What is to be done? After the last war we nationalised the development of land and in theory what is built is determined by the community, in particular the local planning authority. But we are dependent on a planning system that has been starved of resources and now sorely lacks the capability to enforce quality housebuilding and place making. If planners can stand firm, it is the price paid for the land that meets the cost of including affordable homes and achieving quality. We must restore authority and capacity to the planners, who are our front line against the social and environmental costs that we will otherwise suffer at the hands of overpowerful housebuilding interests. I am pleased to note that discussions are afoot, led by the RIBA president, Ben Derbyshire, on the sharing between councils of good practice in design and place making, strengthening the resolve and raising the profile of the planners upon whom we depend.

I confess to being very surprised by the announcement at the Conservative Party conference, to which other noble Lords have referred, that a further £10 billion was to be provided for the Help to Buy scheme, dwarfing the new investment in social housing. Alastair Stewart, analyst at Stockdale Securities, calculates that purchasers are paying 5% to 7% more for a Help to Buy property in order to take advantage of the government-funded equity loan that does not attract any cost for five years. Help to Buy may well turn out to be a very bad deal for purchasers, who have to start paying escalating fees five years down the road and must pay back the whole of the equity loan when they move, but who seem unlikely to get back what they paid for the property. Although the housebuilders are hooked on this subsidy, I am certainly advising my 30-something year-old son to avoid the temptations of Help to Buy. It is unwise for government to feed the housebuilders’ addiction.

Therefore, there have been important steps forward for availability and affordability of housing. But sadly, with housebuilders apparently too big to displease, there has also been a step back. The Minister’s response would be much appreciated.