Housing: Private Rented Sector

Lord Best Excerpts

Thursday 14th June 2018 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, if I may slightly correct the noble Lord, I said that there was great growth in the private rented sector generally. I think it is fair to say that there has been a slowdown in the buy-to-let sector. Some of that is in response to tax changes, but I think it has stabilised now.

[Lord Best (CB)]

My Lords, 99% of the growth of private renting has not been about private landlords building new homes but private landlords buying existing homes, hence the corresponding decline in owner-occupation. May I ask the Minister about the concerns of Generation Rent, which are really about affordability and security—what you pay and how long you can stay in the property? Is there any progress with the important proposition from Sajid Javid—then Secretary of State for housing—that tenancies be for four years or so in the future in normal circumstances, rather than six months to one year, which can be so unsettling for tenants, particularly those with families and children?

[Lord Bourne of Aberystwyth]

My Lords, first, the noble Lord may not appreciate that the latest figures indicate an increase, although a modest one, in the rate of owner-occupation. On Generation Rent and the issue of longer tenancies, he is right that most of the private rented sector is not new builds, although we have 97,000 in the pipeline for the Build to Rent sector. However, in relation to longer tenancies, the noble Lord is absolutely right that the previous Secretary of State was in favour of this, as is the present one—very much so. We are pursuing that with the British Property Federation, which is the main player here and is committed to offering three-year tenancies and longer.

Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018

Lord Best Excerpts

Wednesday 13th June 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I will refer to these regulations as the approval regulations and the requirements regulations respectively.

The private rented sector is an important part of our housing market. It has doubled in size over the last decade and letting agents now hold approximately £2.7 billion in client funds. The client money held by agents includes rent money and money provided by landlords for the purpose of making property repairs. However, there is no legal requirement for these agents to obtain client money protection. Tenant and landlord money is therefore at risk if an agent goes bankrupt or if client funds are misappropriated.

The main letting agent representatives, ARLA Propertymark and National Approved Letting Scheme, support making this protection mandatory. It is estimated that around 60% of agents already hold such protection. Making client money protection mandatory will ensure that every tenant and landlord has the financial protection they need. It will bring the property agent sector into line with others where client money is held, such as the legal profession and travel operators.

Before I go on to set out the detail of the regulations before the House today, I want to establish the legislative context. The Housing and Planning Act 2016 provided powers for the introduction of client money protection requirements. Following the passage of this Act, the Government invited the noble Baroness, Lady Hayter, and the noble Lord, Lord Palmer of Childs Hill, to chair a client money protection working group. They are not in their places today, although I know they are both supportive and regret that other pressing engagements mean they cannot be here with us today.

The working group reported in March 2017 and its recommendation to make client money protection mandatory was accepted by the Government. I thank both the noble Baroness and the noble Lord very much for their work and the report. The Government consulted on implementing mandatory client money protection in November 2017 and there was broad support for our proposals.

I shall now introduce the two sets of regulations. The first set—the approval regulations—establishes the procedure for the Government to approve privately run client money protection schemes. The second set—the requirements regulations—then requires agents in the private rented sector to belong to one of these approved schemes if they handle client money. These two sets of regulations, which together provide the framework for client money protection, are the subject matter for debate before the House today.

I turn first to the approval regulations. These require any client money protection scheme to be approved by the Secretary of State in order to operate. This will ensure that all schemes meet minimum standards and offer sufficient financial protection. The Government do not intend to create their own scheme at this time; that would be unnecessary given the number of schemes operating in the market already. However, the regulations do allow the Government to do so in future so that protection can be maintained in the unlikely event that the market ceases to offer provision. This is a prudent step.

In order to obtain approval, client money protection schemes must meet certain conditions, including those designed to ensure that landlords and tenants can easily obtain compensation. The scheme administrator must ensure that it has procedures in place so that valid claims are paid as soon as reasonably practicable. They cannot make deductions from these payments. The scheme administrator must also hold a level of insurance cover that is appropriate, given the amount of client money held by its members. Schemes must put in place arrangements so that in the event of a scheme closing, their members would be notified and transferred to an alternative scheme.

The approval regulations also establish minimum standards that must be set in scheme rules. This includes that members must hold money in a separate client account; have written transparent procedures for handling client money; and maintain adequate records. Scheme rules must also require members to hold an appropriate level of professional indemnity insurance cover. This is to ensure that client money protection schemes are not overwhelmed with claims. Rather, the first port of call for a consumer making a claim should be their agent and their agent’s insurers. Lastly, schemes must provide key information to the department on a quarterly basis to enable us to monitor their performance. If a scheme’s standards are not maintained, its approval can be withdrawn.

I now turn to the requirements regulations. These regulations will require all property agents in the private rented sector to obtain membership of a government-approved client money protection scheme by 1 April 2019. These agents will need to meet increased transparency requirements; they will have to publish details of scheme membership and inform clients when they lose cover. The Government recognise that robust and effective enforcement is essential to the successful implementation of mandatory client money protection. Agents who fail to get client money protection may be subject to a financial penalty of up £30,000, and those who do not meet transparency requirements could face a penalty of up to £5,000.

These regulations level the playing field by ensuring that all agents offer protection. For those agents who do not yet have client money protection, we anticipate that obtaining it will not be disproportionately burdensome. Indeed, the average annual fee for cover is £300 to £500. It is important to highlight that these requirements apply only when landlord and tenant money is held by a property agent and so is at risk. Agents can instead choose to eliminate this risk by, for example, allowing tenants to pay rent to their landlords directly. The new requirements should not, therefore, deter new entrants to the market.

Noble Lords may be aware that we have committed to introducing a new regulatory framework for letting and managing agents and prohibiting letting agents from charging fees directly to tenants. That legislation is progressing in the other place. Mandatory client money protection will be an important part of this regulatory framework that will give landlords and tenants assurance when using an agent. I commend these regulations to the House.

[Lord Best (CB)]

My Lords, I declare my relevant interests as in the register. I commend the Government’s two sets of regulations, which will make it compulsory for anyone who wants to operate a lettings agency to have client money protection insurance that is effective and not just a sham.

I felt unable to speak on this subject in this Chamber when the noble Baroness, Lady Hayter, pursued it so successfully, as I was then the remunerated chair of the Property Ombudsman, which was involved in this debate. However, I retired from that role last year and can now say what I think without any conflicts of interest.

Compulsory insurance sounds a dull technical matter of little interest, except to the landlords whose money is held by agents—mostly the rental payments due to the landlord later—who should now be better protected. However, the benefits of these measures go much deeper than simply covering a loss to a landlord if their agent disappears or goes out of business. These regulations will remove altogether from the lettings industry all those often small-time and sometimes pretty dubious property agents from whom not just landlords but tenants need to be protected.

In the absence of regulation, anyone can set up as a property agent. At present, no qualifications or training or financial resources are needed. The requirement to belong to a compulsory client money protection scheme will weed out all those firms, often comprising a single individual, that insurance companies assess as too risky to insure. Those are the men or persons of straw, who have no expertise and may even have a criminal record. Removing the less desirable elements from the still somewhat fledgling lettings industry is a necessary precursor to the forthcoming agents’ fees ban—the planned ban on the phenomenon of agents charging fees to tenants as well as landlords. This important ban is the next item on the list of measures to clean up the world of private lettings. It will often be the least reputable agents who have been making their money by persuading landlords to use their services by undercutting the fees that they ask of landlords and, instead, squeezing the tenant, who has no choice in the matter. The CMP regulations will make the fees ban more successful by removing in advance all those agents who are unable to get the obligatory CMP insurance.

My question to the Minister is about enforcement. We know that the problem with all aspects of regulation for the private rented sector is that trading standards officers and, in other contexts, environmental health officers, are not geared up to enforcing further regulations. Budgets for the work of these officers have been massively reduced as part of the wider cuts to local government spending. What steps is the Ministry of Housing, Communities and Local Government taking to ensure the additional enforcement that these regulations—and others covering property agents already enacted or yet to come—will require? Is it expected that the opportunity to retain the money from civil penalties will provide enough finance to cover the extra enforcement costs? While I wholly support the CMP regulations before us, it would be helpful to have reassurance that their effectiveness will not be undermined or blunted by an absence of resources for their all-important enforcement.

[Lord Shipley (LD)]

My Lords, I should declare my vice-presidency of the Local Government Association. I agree entirely with what the noble Lord, Lord Best, said, and in particular that we need to clean up the world of private lettings. As he rightly pointed out, this is one measure among a number that the Government are introducing and they are entirely welcome.

I welcome this draft statutory instrument. It has been a while in its gestation and of course it will be a further nine months, understandably so, before it finally comes into force. It is a very welcome addition to the measures to protect private tenants and landlords that the Government have been introducing. Client money protection schemes are an essential element of consumer protection, be the consumers tenants or landlords. We have to remember that some 4.7 million households are in the private rented sector, and the protection given to tenants and landlords alike means that all parties can have confidence that their money is secure. It is important to remember the scale of the sums of money involved: letting agents currently hold around £2.7 billion in client funds. Today, some 60% of lettings agents are members of a scheme when it is not mandatory to be so, which suggests that the behaviour of many lettings agents need not be a cause for concern. It is with the other 40% that there is a potential for problems, and this scheme will certainly help to extend the required consumer protection.

Like the Minister, I recognise the excellent work undertaken by the noble Baroness, Lady Hayter, and my noble friend Lord Palmer of Childs Hill, who co-chaired a working group to assess how a scheme might work. This statutory instrument is much the better for their work. Their conclusion that a mandatory scheme is needed if money is to be handled is the right one.

This takes me to the same issue that the noble Lord, Lord Best, has addressed of local authority enforcement. Local authorities will be responsible for enforcement, as they are for the enforcement of many similar reforms being or shortly to be introduced by the Government. Might the Government examine ways of improving publicity around this statutory instrument? Non-compliance can bring a civil penalty of up to £30,000, which can be retained by a local authority. Therefore, there should be no financial or resource reason for local authorities failing to undertake proper enforcement —except that there is, I think, an impediment to enforcement relating to a lack of understanding of the powers under the law by council officers. I am trying to be very specific about this issue: enforcement will work only if the officers undertaking that enforcement understand what their powers are and have the confidence to undertake them. I wonder whether the Government, perhaps in conjunction with the Local Government Association, might consider ways in which knowledge of the law can be spread further. In the end, Parliament may pass legislation that then fails to be implemented as it might be but, given the extent of the private rented sector these days, it is clearly important that government legislation is implemented. The test of the success of this statutory instrument will be on local authorities taking up the powers that they have, which could well be self-financing.

Housing and Planning Act 2016 (Database of Rogue Landlords and Property Agents) Regulations 2018

Lord Best Excerpts

Tuesday 17th April 2018 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, from these Benches I support the Motion and see it as an extension of the legislation on client money protection agreed by this House, which I and others worked on with the noble Lord, Lord Bourne, to get it through by means of an enabling amendment. The noble Lord, Lord Thurlow, talked about someone just putting on a suit and opening a shop on the high street, but the client money protection regulations, which are just being published, mean that they cannot hold a client’s money. So things have moved on and improved. We in this House managed to improve the situation around client money protection: why can we not do that for the issue before the House now?

The argument is straightforward: how are tenants’ rights to be protected if they do not know whether an agent or landlord is dodgy? How will they be protected? The word that has not been used in the debate so far is “enforcement”. Enforcement by local authorities is very weak. If every local authority was proactive on enforcement, and if they were allowed to be so by the law, perhaps this might not be such a big issue today. But in the real world, local authorities—strapped for cash, as mentioned by other noble Lords—have and will continue to have enforcement very low in their priorities. It is interesting to note that this could be done very easily. I do not know how many properties it has nowadays, but the GLA, which has already been mentioned, has started an open list that anyone can access.

Other noble Lords have talked about separate lists in different local authorities. Because they are separate, there will be many loopholes for the rogues. The good guys will be fine, but the rogues know how to get around this. When you leave it to local authorities, without the support of national legislation, they will be nervous about taking action against a rogue landlord because, as has been mentioned: what is a “rogue landlord”? As the noble Lord, Lord Beecham, said, there are many ways of describing a rogue landlord.

People worry about what will happen to the companies and individuals that end up on the list due to a mistake made by themselves or by staff. If they are on the list, they will have to demonstrate that they have addressed the issue and then they can come off the list.

The ability of a tenant to carry out an online search of a register to see whether their prospective landlord or agent is on the list is a must before they part with a month’s rent and a deposit, only to be scammed. The query is that only some local authorities will participate unless we make this national legislation, and therefore rogues will go under the radar. My question to the Minister is this. We managed to do this by co-operation for client money protection—I must admit I co-chaired a committee that lasted for six months—and the regulations have now been published. Why can we not do this now for this simple measure to protect tenants?

[Lord Best (CB)]

My Lords, I declare my interests as listed on the register. I am full of regret about this statutory instrument but I want to preface my remarks by giving some credit where it is due. We have seen the exponential growth of private renting: the PRS has gone from 9% at the beginning of the 1990s to about 20% of the stock of this country now. As mentioned by the noble Baroness, Lady Grender, the report published today by the Resolution Foundation shows that an awful lot of people will rent all their lives, even those on relatively decent incomes.

Private renting has become very important and government has woken up to this fact. We have had a plethora of measures coming down the pipeline, and I welcome each of them. Enumerating them all would take some time, but they include the letting fees ban, which has already been mentioned, and compulsory client money protection, which will make a big difference to the world of letting and managing agents. We have also had the banning orders themselves, which are very important, never mind the publicity around them. There is the promise of a tenants’ ombudsman handling complaints from tenants about their landlords. That is coming down the pipeline. Physical things such as smoke alarms are becoming compulsory on every floor and some carbon monoxide alarms are becoming compulsory. This Government have introduced a lot of important new legislative measures. When it comes to licensing, which is absolutely where we should be, local authorities should be empowered to license the landlords in their areas and collect some funds to pay for the enforcement that needs to follow.

I went on a dawn raid with Newham Council to see the things that such raids reveal—horrendous conditions. However, a licensing system could find out which properties were let in appalling conditions and who was not paying any council tax or anything to HMRC, whose representatives came on the dawn raids as well and whose teeth are sharper than anyone else’s. We now have measures in place. The Government have allowed Newham to renew its licence for almost the whole of the borough and the Government are on the right track, so I preface any remarks by saying that the Government are bringing forward a whole number of measures. We may have reached the point where a consolidating Bill to bring all these things together would be rather a good idea.

However, we depend on the local authorities enforcing all these measures. I speak as the guilty person who piloted through your Lordships’ House the Homelessness Reduction Bill, now an Act, and I know that that brings tremendous new burdens on local authorities in relation to the private rented sector. Local authorities have a lot on their plates, and adding more to that needs to be accompanied by the resources to really make things happen. Local authorities can rightly complain if the Government do not come up with the money to follow each of these new measures.

We have the banning orders, which are great, but we are unable to get a register of those who are banned publicised far and wide. I do not like to mention the Housing and Planning Act because it brings back some horrendous memories, but three questions are answered at the back of the guidance for local authorities, Banning Order Offences:

“Should local housing authorities make public banning orders for individual landlords? We would encourage local housing authorities to make successful banning orders for individual landlords public”.


The guidance continues:

“Can a local authority make public a banning order for a business? Yes. Any business (managing or lettings agency) which has been subject to a banning order can be named publicly … Should local housing authorities make information on banned landlords available on request by a tenant? Yes. We would encourage local housing authorities to make information on banned landlords available on request by a tenant”.


That all sounds good but then we get this feeble statutory instrument, which seems to negate that and make it rather difficult for local authorities, which get legal advice to be cautious about publicising these banning orders that are so important. I think the culprit, which I have dug out today, is Publicising Sentencing Outcomes from the criminal justice system, which is guidance for public authorities on publicising information about individual sentencing outcomes. I suspect that the Minister is as frustrated as the rest of us that more cannot be done to achieve the publicity that this demands. I hope he will join the rest of us in voting in favour of this Motion of Regret.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I thank the noble Lord, Lord Kennedy of Southwark, for tabling a Motion on this important topic. I am genuinely very grateful to him for doing so because it has given us an opportunity to revisit this area and give some publicity, I hope, to where we are. I am grateful for the contributions that have been made by noble Lords. I will first try to set out our current position and then take up some of the points made by noble Lords and answer where we hope to go. I share some of the frustration that it sometimes appears that we are moving very slowly. I understand what the noble Baroness, Lady Grender, means, and I pay tribute to what she has done on letting agents. It is frustrating for Ministers too, on occasion, but of course there is a process to follow.

The Government value the private rented sector. It is an increasingly important part of our housing market, as was said by many noble Lords, most recently by the noble Lord, Lord Best. As the noble Lord, Lord Kennedy, said in setting out the case, the sector has doubled in size over the past decade and now provides a home for 20% of the population in England, which is approximately 4.7 million households. It is significant.

As has been acknowledged, the overwhelming majority of landlords in the private rented sector provide decent and well-maintained homes. Standards have improved rapidly with the proportion of tenants living in non-decent housing falling from 47% in 2006 to 27% in 2015. In addition, 82% of private renters are satisfied with their accommodation and stay in their homes for an average of just over four years. The Government want to support good landlords. That point has been widely acknowledged.

However, a number of rogue landlords knowingly rent out accommodation which is unsafe and substandard. Overcrowded and poor-quality housing has a wider impact on the local community as it can result in excess noise, increased demand on local services such as waste collection, and anti-social behaviour generally, as well as the dreadful impact that it has on the individuals who live in those premises. These landlords and property agents often do not respond to legitimate complaints made by tenants. Some would even prefer to be prosecuted rather than maintain their properties to a decent standard. These practices damage the reputation of the sector and have no place in modern Britain. We are determined to force rogue landlords out of the rental market. This Government have a strong track record in cracking down on rogues and driving up standards in the sector.

I thank the noble Lord, Lord Palmer of Childs Hill, for the cross-party working that we have had across the Floor with all noble Lords in this House and in the other place. I am happy to commit to continue that. In the plethora of measures referred to by the noble Lord, Lord Best, we have had considerable support from around the House and joint action to get us into a better position. We have introduced a package of measures to tackle rogue landlords. This includes civil penalties of up to £30,000, rent repayment orders under which a landlord can be required to repay up to 12 months’ rent, banning orders for the most serious and prolific offenders and a database of rogue landlords and property agents.

The noble Lord, Lord Beecham, asked about the definition of a rogue landlord. I will pick that up more specifically in correspondence, but I assure him that banning order offences include many of the things that he referred to. For example, the Rentokil situation would be covered by an improvement notice. If he would like to give me details of that case, I will gladly have a look at it. It also includes criminal damage and eviction. In short, I think that the definition he quoted does not cover quite a few situations that are banning order offences. I will cover that more generally in a letter to noble Lords, if I may.

Evidence on the effectiveness of these new powers is anecdotal, but we know that many local authorities have used the new powers that came in last year very effectively. Torbay Council, for example, used revenue from civil penalties to fund additional enforcement staff, which is a sensible move. We provided £12 million between 2011 and 2016 to over 60 local authorities to help them tackle acute and complex problems with rogue landlords. I have seen some of those issues myself as I have gone around the country. I know that they exist and I know that enforcement action does happen. It has been taken against over 5,000 landlords between 2011 and 2016. That represents a significant proportion of rogue landlords active in those areas.

We have also introduced protection for tenants against retaliatory eviction in the Deregulation Act 2015, and required landlords to install smoke alarms on every floor in the Energy Act 2013, as was noted by the noble Lord, Lord Best. The tough measures that we introduced through the Housing and Planning Act 2016 enable local authorities to crack down on these rogue landlords and drive up standards in the sector.

Since April 2017, local authorities have been able to impose a civil penalty of up to £30,000 as an alternative to prosecution where a landlord has failed to comply with an improvement notice in relation to the licensing of houses in multiple occupation, contravened an overcrowding notice or failed to comply with management regulations in respect of houses in multiple occupation. Crucially, local authorities have been given the ability to step up their enforcement action by allowing them to impose the civil penalties I have mentioned.

Housing: Right-to-Buy Sales

Lord Best Excerpts

Tuesday 27th March 2018 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, I am very interested to hear that. I was not aware of it. I think the most important thing is that we address what is definitely a massive issue for people. Clearly, people need to have an appropriate home and we are seeking to do that. From the latest figures, I think we have built more in the past year than in any year for the past 20 years. However, there is, as noble Lords are aware—and as I have said more than once, even today—a considerable issue in addressing the shortfall in housing in our country.

[Lord Best (CB)]

My Lords, does the Minister agree that the impact of selling existing council housing at very substantial discounts varies considerably from place to place? Obviously, losing affordable housing is a huge problem in London. It is also a huge problem in many villages where we have lost, in some cases, all the council housing. Has not the time come for local authorities to have discretion as to the sales that they make and the discounts that they use?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord—who knows a considerable amount about this area—is right that its impact varies. He will know, of course, of the rural exemptions that apply in relation to right to buy and also the total exemption in relation to right to acquire in rural areas. We are looking at that. Of course, there is also the forthcoming social housing Green Paper that I referred to, which will look at this issue in the round.

Housebuilders

Lord Best Excerpts

Thursday 11th January 2018 Lords Chamber

Moved by

[Lord Best]

That this House takes note of the performance of the United Kingdom’s major housebuilders.

[Lord Best (CB)]

My Lords, I am delighted to introduce this debate on the performance of the UK’s major housebuilders and, in advance, I thank all noble Lords who are joining in. For some excellent briefings and reports, I also thank our Library, the property analyst Alastair Stewart, Shelter, the Town and Country Planning Association and the Local Government Association. I declare my interest as vice-president of the last two of these. My contribution to this debate is to note that the UK’s major housebuilders are not going to achieve either the quantity or the quality of the new homes the nation needs. I will then suggest ways in which the current situation might be improved.

For well over 50 years, the private sector housebuilders have built something in the region of 150,000 homes a year. That was less than half the total in times past, but with the demise of council housebuilding this contribution has become 80% today with, thankfully, housing associations providing most of the rest. There is no reason to expect this sector dramatically to increase its output. Indeed, it is not in the interests of the industry to end the scarcity of homes that has driven up house prices. Over the five years to 2013, for example, while housebuilding nosedived to a post-war low, the stock market valuation of Britain’s largest housebuilders rose by 342%.

Moreover, the shape of the housebuilding industry has changed dramatically in recent years: there are just half as many small and medium-sized builders as there were 10 years ago. The SME builders have seen their share of the market drop from about two-thirds of new homes in the 1980s to around 37% 10 years ago, and to just 12% today. Meanwhile, fewer than a dozen major housebuilders are responsible for 70% of the nation’s new housing, with just eight companies accounting for well over half the total. It is crystal clear not only that private sector housebuilders will never get us anywhere near the 300,000 homes we need but that relying on this sector now means dependency on a very small number of huge firms. This brings with it the dangers of the market being controlled by a small, powerful oligopoly.

The business model for the major volume housebuilders has let us down. With some notable exceptions, too often these companies appear to do whatever it takes to secure the land, concentrating on pristine greenfield sites. They then promise plenty of affordable housing and developer contributions, but once planning consent is granted, they tell councils that viability means they must renege on agreements made, in particular by reducing drastically the number of affordable homes previously pledged. If the local authority has the temerity to object, the housebuilder may threaten to go to expensive appeal, deploying well-paid consultants who can easily outgun grossly underresourced local authority planners.

The volume housebuilders are also accused of using bog-standard national pattern-book designs, unsympathetic to local circumstances, and of shoddy workmanship and poor customer care. As a member of the 2016 inquiry of the APPG for Excellence in the Built Environment, I was appalled by the tales we heard of defective construction—water cascading through roofs, mould inside and out, inoperative drains et cetera—and the difficulties encountered in getting these problems fixed. We noted that 93% of buyers had had problems with their builders and that customer dissatisfaction had grown from 10% of buyers in 2013 to 14% in 2015, leaving some 15,500 dissatisfied homebuyers that year. Then there is the scam—which I am thankful the Government are keen to address—of the big housebuilders selling houses on a leasehold basis with fiercely escalating ground rents.

Productivity in the industry remains very low, with a chronic lack of investment in modern technology or new materials. All work is subcontracted, very often with bills not paid until as late as possible. There is a disgraceful disregard for the need to replace the ageing indigenous workforce and train a new generation, the industry instead relying heavily on imported labour, mostly from eastern Europe, which may well be a more scarce resource post Brexit.

The response to this dependency on a handful of major housebuilders must be to support alternative providers, and the Government are indeed bringing forward a range of measures to this end. I commend the diversification policies set out by the Secretary of State, Sajid Javid, and my criticism is rather that each of them does not go far enough. They involve, first, backing those councils who are up for it as direct housing providers. After all, councils were building almost 200,000 homes a year when I started in housing. We need to go further than the Chancellor’s latest move to allow an increase in the borrowing limit for certain authorities in as yet undefined places. All councils should be able to borrow freely, as in Scotland, within the existing prudential borrowing rules which protect against any risky borrowing, and to add a further boost councils should be able to keep 100% of their receipts from further council house sales to plough back into building replacement affordable homes.

Secondly, we must boost further the all-important output of housing associations, which could certainly double their current programme of 30,000 to 40,000 homes a year. It was good to hear the Prime Minister announce in October extra money for so-called social rented homes, in contrast to recent policies that have driven housing associations to charge rents too high in many areas for those in severe need, but the level of the essential government grant for this programme is relatively modest, and more of the same is badly needed.

Thirdly, we should be giving life to the more specialist providers like community land trusts, custom housebuilding projects and an exciting new generation of garden town development corporations.

Fourthly, we should be bolstering the smaller, local housebuilders who are well suited to handling small sites and more specialist schemes. Many are run by people living and working locally who are keen to train their own workforce and see their efforts enhancing their own communities, not blighting them. The Government’s announcement that local plans should include 20% of future homes on small sites could be a game changer in favouring small firms, alongside their enlarged guarantee scheme which can overcome the reluctance of banks to extend credit to these firms. They deserve more of the same.

What about the extra costs of government support for all these alternatives to the volume housebuilders? I recommend that funding should come from the Government rapidly phasing out their multi-billion-pound Help to Buy subsidies. That scheme was justified in the wake of the financial crash, but its value is much more questionable now volume housebuilders are operating very profitably. Economists maintain that Help to Buy, by increasing demand more than supply, inflates house prices and boosts housebuilders’ profits. Certainly, when the Government announced their £10 billion extension of the scheme, it put nearly £1 billion instantly on to the share prices of the big builders, reflecting a view in the City that these subsidies help builders more than buyers.

Even more important than money is land. Control of land use is, at least in theory, in the hands of the local planning authority. There is an urgent need to reassert the authority and creativity of the local planning system, restoring its status and latent value. A grossly underresourced planning department means delays that are intensely frustrating for everyone. Even so, although housebuilders blame planning delays for holding up development, it is also true that nearly all planning applications do eventually get approval, and there are thousands of consented sites where nothing much is happening—we await the report on this from Oliver Letwin MP.

Meanwhile, the Government are on the case in recognising the need to rebuild the capacity of planners. Recent support in allowing a 20% uplift in planning fees and providing some grant aid is more than welcome, but there is a very long way to go. Local leadership will be all important, not least through the new metro mayors and in the new combined authorities. Enforcement of good Building for Life design, often respecting local design codes, allocating sites for specific purposes, insisting upon adequate standards for lifetime homes and using proper master planning is also necessary: a confident, determined local planning authority could do so much, if properly resourced.

At the same time, central government needs to be supportive of decision-making by local councils. The Secretary of State should use the current review of the National Planning Policy Framework to overhaul completely the specious “viability” test that is the subject of widespread abuse in evasion of requirements to provide affordable homes. The Greater London Authority is setting a fine example in offering a fast track through the planning process if there are no quibbles over providing the required quota of affordable homes.

Also on the land question, the Government’s public sector land programme is pressing government departments and local authorities to dispose of unused sites for new homes. But I would go further, not simply flogging off these precious assets to the highest bidder—even when the housebuilder promises to include some affordable housing—but instead always giving first option to those providers who can add social value, for example in building tailor-made homes for older downsizers which will save NHS and social care funds and release family homes. For sites not owned by public bodies, a revival by local authorities and Homes England of—hopefully streamlined—compulsory purchase powers is needed, too, where blockages hold up much-needed new development.

Finally, to improve the performance of the major housebuilders—because, at least for the moment, we remain heavily reliant on their output—I am hopeful the Government will progress their interest in creating a new homes ombudsman. Along with a call for improved building control and better on-site supervision, a new homes ombudsman to handle the catalogue of complaints from consumers was the key recommendation from the APPG for Excellence in the Built Environment. But this ombudsman, if it is to stand up to the mighty housebuilders, will need sharp teeth and proper resources.

In conclusion, I appreciate that my various recommendations could mean lower profits for the plc housebuilders, unless they negotiate better prices when acquiring sites and/or step up profit productivity in the industry, but shareholders in these companies have been doing very well indeed over recent years. Share prices for the top eight housebuilders have increased by 127% over the past four years, compared to just 31% for the FT all-share index—four times better than the average. My sympathy for the housebuilders themselves is moderated by the knowledge that current profits have made the bosses of these companies extraordinarily rich. Note that the chief executive of Persimmon, a company selling about half its homes using Help to Buy subsidies, is receiving bonuses this year worth more than £100 million—one individual employee with bonuses of more than £100 million.

On other occasions, I have pointed to the abysmal consequences of the so-called welfare reforms, which have made it tougher for those on the lowest incomes to afford a decent home. While welcoming recent universal credit improvements, I am still fearful that without further changes of DWP policy, the tragic problem of homelessness will get worse. However, in relation to what I am delighted now to be able to call the Ministry of Housing, Communities and Local Government, the Government are espousing some excellent policies. The problem is that they are as yet underpowered and somewhat tentative. What is needed is for these to be backed wholeheartedly by HM Treasury and translated into a powerful package of intervention through financial, land-use and consumer protection actions that could make a really significant impact on the quantity and quality of new homes. I hope that the Minister agrees. I beg to move.

--- Later in debate ---

[Lord Best]

My Lords, I know that we must conclude at 2.08 pm, so I have only a few minutes in which to express my appreciation to everybody who has joined in this very good debate. A few extra points were made that I had not picked up sufficiently—for example, my two noble friends mentioned apprenticeships and sustainability. I do not think we have done enough on that. However, nearly all the points were the subject of agreement rather than disagreement, with the possible exception of Help to Buy subsidies. But apart from that I think that broadly we are all agreed on the direction of travel. The list of ways in which government is now pointing in absolutely the right direction was impressive. I think that it was Paul Getty who said: “A billion here, a billion there, pretty soon, you’re talking real money”. Some resources are coming down the track, we just need delivery and a foot on the accelerator to make things happen, not to castigate the big builders but help them perform better in the future. I thank all noble Lords for joining in the debate.

Motion agreed.

Homelessness

Lord Best Excerpts

Tuesday 9th January 2018 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord’s figure is correct. This is from a high of 130,000 in 2006, when the homelessness level was at its highest. It is too high—there is no doubt about that—as has been clearly stated from all sides of the House. What are we doing? We are certainly committing £1 billion to tackle homelessness up to 2020, and that includes rough sleeping. As the noble Lord will have seen, we have made this a top priority. Although cosmetic in a sense, the change in the name of the department, which now features housing as clearly the most important thing that we are seeking to tackle as a Government, is important because it indicates the priority that we give to homelessness, and the £1 billion will help to bring those figures down.

[Lord Best (CB)]

My Lords, this House gave its very full support to the Homelessness Reduction Act, as it became. I pay tribute to Marcus Jones MP; he was reshuffled this morning but did a fantastic job getting that legislation through the House of Commons. The one matter on which we were all very anxious was whether there would be the resources to go with this important preventive legislation. Can the Minister reassure us that the money has been found so that when this starts in spring this year, local authorities will be able to do what we hope they will do—prevent homelessness as much as possible?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord is absolutely right about the Homelessness Reduction Act being at the centre of our action—in this regard, a preventive measure. I echo what he said about Marcus Jones’s role in that; it was considerable, as indeed was that of the noble Lord in seeking to ensure the Bill went through this House with government support, and I pay tribute to him as well. I can confirm that the money that was committed under the new burdens doctrine—from memory, some £71 million—is being made available to help with the implementation of the Act. It is, as I said, very much at the centre of the action in this area.

Social Housing

Lord Best Excerpts

Tuesday 21st November 2017 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Baroness for restating once more that noble aim. First, I would point out to her that we have delivered more affordable housing in the last seven years than was delivered in the last seven years of the previous Labour Government. However, I accept what she says about the interrelated nature of these problems and agree that tackling housing also helps with education, well-being and health.

[Lord Best (CB)]

My Lords, does the Minister agree that the big mistake in housing policy over the last 20 years has been our reliance on a handful of major-volume housebuilders which have let us down at every turn? They have let us down on quantity, by hoarding their land; on quality, in relation to the standards of design and production; and on the affordable homes that they said they would build but which they have reneged on along the way. Can we take it from the Government that the corner is now being turned and there will be a greater reliance on the other suppliers of housing in this country—the housing associations, the local authorities and the smaller housebuilders, which have so much to offer?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord comes with unparalleled experience in this area. I take the point about the need for diversity of supply, particularly looking to smaller suppliers, self-build and modern methods of construction, which we looked at yesterday. I also accept a point implicit in his question, which was also raised yesterday by my noble friend Lord Forsyth—the fact that there is land banking. We need to take account of that, and we committed to do so in the housing White Paper.

Regulation of Social Housing (Influence of Local Authorities) (England) Regulations 2017

Lord Best Excerpts

Tuesday 7th November 2017 Lords Chamber

The housing position generally, as mentioned by other noble Lords who spoke in response to the original Motion, is dire. We have a desperate need for more housing, as everyone would concede. Different approaches through direct building by local authorities, housing associations and the like are obviously all part of the mix. But it is important that, whichever route is taken to increase the housing stock, there is full involvement on behalf of the whole community—and that is best reflected by local authorities. In Newcastle we have an ALMO, as many other authorities do. That works perfectly well, as far as one can judge. It seems odd that the Government should go out of their way to make the change here for, if anything, an obscure technical reason which, as the noble Lord, Lord Shipley, pointed out, has very little validity.

[Lord Best (CB)]

My Lords, without disagreeing with anything that has been said by noble Lords so far, I support the essence of the Motion itself, which is specific. It enables local authorities still to be represented on the boards of housing associations as long as they are not more than a quarter. There is a limit that is clear—not more than a quarter. Local authority councillors can still be on boards—several of them. They can take the chair and be appointed in addition to the quarter if they have been chosen on the basis of the skills that they bring rather than simply because they are councillors. That seems a modest enough change to get us over the line to ensure that housing associations are regarded as independent bodies and not public bodies, with the convoluted arrangements that apply to public expenditure.

We need this change. Every time a housing association takes £1 in grant from the Government, at the moment, it can borrow £6 to add to that £1. That is off balance sheet and outside the scope of being on the national debt. That must continue in the future, so on the very specific aspect of the Motion, I add my support.

[Lord Bourne of Aberystwyth]

My Lords, I thank all noble Lords who have participated in the debate on these very narrow draft regulations on social housing. That is my answer to some of the points made by noble Lords who have complained that they do not deal with various matters. It is because the regulations are very focused and targeted on a particular issue. Noble Lords, particularly the noble Lord, Lord Kennedy, complained about the slow progress, but they focus on an important issue, as the noble Lord, Lord Best, just indicated. That is why the Government are acting with this laser-like focus. I will try to deal with the various matters that have been raised. Privately, the noble Lord, Lord Kennedy, is very much a Tigger and very enthusiastic. But publicly, on occasion he is very much an Eeyore, with no brick unhurled. Let me pick up some of these points.

Last week, in answer to a Question on client money protection from the noble Baroness, Lady Hayter of Kentish Town, I said that we would publish the consultation last week; she welcomed it. We did publish it last week, on 1 November, so it is disappointing that the noble Lord has taken a different stance on that. He also raised the issue of letting agent fees. I am sure he is aware that we published—again, to a wide welcome—a draft Bill last week, on 1 November. I am sure he must be genuinely pleased about those two things. He also raised an issue about planning fees. We have, as he quite fairly said, indicated an increase there—I think the House widely welcomed it—and are looking at ways of having a further increase. Those things should be welcomed.

The noble Lord said that this action does not improve accountability. In a sense it does, because it will place more tenants on boards. Perhaps I could try to set it out a bit more clearly than I did previously: in removing some local authority members and restricting their representation on the board to 24%, the number of vacated seats would fall to independent members and tenants, generally in equal proportions. The noble Lord, Lord Beecham, asked about the 24%, suggesting it was a strange figure. It is not at all; it is normally the case in company general meetings and, sometimes, board membership meetings—here we are talking about boards—that 25% representation can restrict the passage of a special resolution or particular type of activity through so-called negative control. By restricting it to 24% of the voting rights, we take that right away. It is important that we do so in terms of the reclassification, so that there is no longer negative control. That is why it is fixed at 24%. It is not a figure plucked from the air.

The noble Lord, Lord Beecham, also raised the issue of attendance of local authority members above the 24% figure. I think the noble Lord, Lord Best, answered that very effectively by saying, as I said in the introduction —perhaps not so effectively—that additional members can be appointed who are local authority members, but they would not be there as local authority representatives. I would anticipate, as is the normal way in board meetings and general meetings elsewhere, that if the board or general meeting wants to invite somebody along as an outsider to speak, that is entirely up to them. However, that person would not be a board member or have voting rights. That is the essence of the regulation.

The broader issue of the mechanics of the classification of whether this is public debt goes well beyond the range of the regulations. As I indicated, the Office for National Statistics has decided that these private registered providers are on the balance sheet. That is why we are taking this action. Certainly, Eurostat, from the European Union, recognises this as independent advice; we are acting in relation to that. The essence of the issue, which I do not think has been fully grasped by your Lordships, is that this makes a massive difference in terms of government borrowing. If something is on the public balance sheet, then of course it contributes to national debt; if it is off it, then that gives us broader scope on borrowing. It is not on it, and £70 billion is not a small amount of money. That is why we are focusing just on this—it makes a difference.

Noble Lords also referred to the Green Paper. The noble Lord, Lord Shipley, is absolutely right that the Housing Minister is going to a series of meetings around England to discuss this with organisations and tenants. That process will not be complete by the end of the year. I anticipate that we will deal with it in 2018; I do not have a particular date, but it will not be before this Christmas. We regard this as important; it is the first activity on this front for a generation. That is significant and we want to get it right, some time in 2018. I cannot give more detail than that because it depends on the progress of my honourable friend the Housing Minister in going round the country. Noble Lords will understand that he has been, and remains, incredibly busy as the Minister responsible for policy on Grenfell, meaning that progress has been slower than it otherwise would have been.

I am looking to see whether there are other unaddressed points. I think I have now dealt with the date. I take the point on consultation, although it is not as though we have not spoken to people. We have spoken to organisations and local authorities. There was not a formal consultation, but at the same time many noble Lords have said they do not want these things slowed down. Consultation, if done formally, has quite rightly to be done according to a set structure.

These regulations are important. They give us more freedom for manoeuvre. The noble Lord asked about what else remained; this is the last piece of the jigsaw. With that, I commend these regulations to the House.

Housing: Letting and Managing Agents

Lord Best Excerpts

Tuesday 28th March 2017 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, it certainly does need to be fair to all parties. The evidence from the consultation was that about 85%, if I am not mistaken, backed the need for enforcement in this area, so that obviously was a key factor. I agree with my noble friend that the consultation will need to ensure that it is fair and equitable across a wide variety of people.

[Lord Best (CB)]

My Lords, I declare my interest as the chair of the council of the Property Ombudsman, which deals with complaints about managing and letting agents. I congratulate the noble Baroness, Lady Hayter, on her persistence in pursuing this matter and congratulate the Government on yielding to that persistence. Would the Minister agree that the value of this is not just about protecting landlords if agents go off with the money but about weeding out the more dubious and dodgy managing and letting agents because they will not be able to get the insurance that will now be mandatory?

[Lord Bourne of Aberystwyth]

My Lords, I agree with the noble Lord. First, yielding to persuasive argument always seems to be the best and most sensible course to pursue, but I also agree with him about the importance of taking account of all those views and ensuring in the consultation that we act equitably and fairly across the piece.

Neighbourhood Planning Bill

Lord Best Excerpts

3rd reading (Hansard): House of Lords
Wednesday 15th March 2017 Lords Chamber

[Lord Taylor of Goss Moor (LD)]

My Lords, this amendment is tabled in my name and that of the noble Lords, Lord Best and Lord Lucas, who have given great support on this issue during the passage of the Bill, as have noble Lords on all sides of the House. On Report, there was a very welcome commitment from the Minister to return to this issue.

I should draw attention to my interests. I advise many projects, including new settlement projects. I am a visiting professor of planning at Plymouth University, and over the years I have worked with government bringing forward policy changes.

This amendment is aimed at empowering local government communities to bring forward settlements of the highest quality, ensuring that the value that comes from development taking place is captured to create great places and deliver wonderful facilities for those places and is not captured in excessive profits for landowners or developers, and ensuring that the Government’s objectives in bringing forward the garden villages, garden towns and garden cities programme are met in terms of the delivery of what comes forward, with opportunities for small builders, self-builders and contract builders to grow and deliver in new ways better quality, more affordable homes and all the facilities in these places to create sustainable and vibrant 21st century communities.

Why have I tabled this amendment? At the start of the passage of the Bill, I made the point that in the Neighbourhood Planning Bill the Government accepted proposals that I and other noble Lords brought to the House to simplify the process of using the New Towns Act. The New Towns Act is essentially from a period when central government was much more involved in local delivery and when that was accepted. We are now in an era of localism, yet the New Towns Act gives all the power to the Secretary of State who has no capacity to hand over the role of the corporations that will be set up to deliver these new settlements to the local councils that would bring them forward. In the modern world, it is not right that in seeking to deliver a new settlement through a new town corporation to ensure that it is delivered at quality and pace to meet local needs a local council would surrender all the powers to the Secretary of State.

I do not think that the Secretary of State would want to have power over every penny of expenditure, the power of planning, because these bodies would get planning powers, and the power of controlling the assets and, potentially, of future disposals of those assets. It is far more likely that local authorities and communities will be comfortable with this process if they have not simply identified the site and taken the decision that it should be brought forward. When it comes here and the necessary process is gone through in Parliament to approve it, they should be confident that those powers will be exercised locally and that in the long run the assets will be controlled locally for the benefit of the people who live there and the wider community.

When we first debated this, the Minister understandably said that the Government needed to think about this and work it through, but the White Paper made it clear that the Government agree with this process. I have been delighted that the Government have taken forward this policy, which I was very much involved in developing. On the back of the White Paper, we came back. I have to thank the Minister for his positive response on Report and for allowing me to talk to officials in working through something that might now work positively for the Government and that could be incorporated into this Bill.

I shall briefly speak to some of the detail. The principle of the amendment is to give the Secretary of State the power to appoint one or more local authorities in the designated area of the new town to oversee the delivery of the new town and the new development corporation. This is a localising measure. It hands really strong power to communities to ensure that new towns are delivered at quality.

The functions that would be transferred to local authorities for this purpose would be set out in secondary regulations subject to the affirmative procedure, so fully respecting parliamentary process. Since new towns may straddle the boundary of more than one authority, more than one authority could be appointed. This will make it much simpler in those circumstances to bring forward and deliver proposals. The Secretary of State would be able to set out how those powers would be transferred to those local authorities, for joint exercise or divided between them. Changes to the New Towns Act may be needed to allow this to work on subjects such as asset control. The purpose of the power to modify the Act would be to make the principle of local accountability work.

Therefore, this fits with the agenda that Members across the House have outlined, to bring many more homes forward to meet local needs and to capture the value of land in order to create supplements. In that way, we would not look to the taxpayer to fund the school, build the surgery, provide for shops or build a real community. The value of the land would be put into the process of making this work.

At the moment, where projects are approved, the risk is that they are sold on through the chain of speculators, developers and housebuilders. Then, by the time that they are delivered, on grounds of viability because of the price that has been paid for the land or because of the model of the housebuilder, none of the promises made at the start to the local community is delivered. The use of the development corporation as proposed would guarantee that what had been promised to people at the start would be delivered to people at the end.

This approach would open the opportunity to use compulsory purchase powers under the New Towns Act. These could be used where necessary, but normally purchase would be done by treaty in consultation with landowners. The point would be to reach a price that allows the delivery of the quality of place that has been promised. That promised quality would then be locked in through the development corporation process, rather than being at risk of never being delivered. I am afraid that I can take noble Lords to many places where much was promised and far too little of those promises was delivered. There are places where it has been done well, but only where there has been a landowner genuinely committed to it.

That partnership would, therefore, be available. Generally, I imagine that it would be done through joint venture and partnership and agreement but none the less locking in that quality. Where that did not happen, powers would be there to achieve the quality of place that is needed.

Above all, this is about three things. One is keeping it honest and delivering what is promised. That is essential if there is to be any credibility around the delivery, not just of housing but of communities and neighbourhoods, that this approach of garden villages and towns promises.

Secondly, it is critical if we are to move from a supply of new homes inadequate to meet people’s needs that results in ever-accelerating prices beyond what is affordable. If we are to create the 250,000 to 300,000 homes each year that we need, rather than 150,000, those extra homes need to be delivered to a higher quality in places that they do not ruin. Rather than encircling existing historic towns and villages with endless bland housing estates, we need to deliver something better in places where people can accept them and where the public will support the programme. If we try to raise the numbers but deliver inadequate quality, as too often happens currently, there will simply be a public revolt and we will not get the houses delivered.

Finally, it is also critical that we understand that the big housebuilder model does not allow big housebuilders greatly to increase the numbers being delivered. They will not do so even if they wish to because of the way in which they are financed and the way in which publicly assisted companies are priced. The only way to deliver the increased numbers—and the increased quality—is to build up new entrants, whether housing associations, growing SMEs, self-builders or overseas developers of the highest quality. They all need places to build without the current tortuous process of land options and land banking.

These are the mechanisms to deliver it. But it will happen only if we have a very clear understanding that this means delivering great places to go with the plots to build them on, not just handing this over to the people who build houses and expecting them somehow to create great places. We know they deliver housing estates, but they do not deliver the quality of places demanded by people, which is what will give public acceptability to the programme.

This amendment will be the critical factor in creating local empowerment to deliver what will be a genuine game-changer. I am very grateful for the support there has been on all sides of the House for this and to the Government for the positive way in which they have responded to the case. I beg to move.

[Lord Best (CB)]

My Lords, I will speak briefly to the amendment, to which I have attached my name. I commend the noble Lord, Lord Taylor of Goss Moor, for following through on our earlier amendment and indeed for all his good work in promoting new garden villages and garden towns. This amendment is not as definitive as the one we discussed on Report, but it should achieve the same outcome, namely of placing local authorities centre stage in the creation and oversight of the new corporations that will be responsible for these major new settlements. This will greatly improve the prospects of these much-needed new communities getting off the ground.

I was delighted to hear today that the Local Government Association—I declare my interest as an LGA vice-president—is fully supportive of the amendment. If accepted, the amendment will mean it will be much more likely that a number of successful, well-designed, mixed-income new settlements will be developed over the years ahead. That would be of enormous benefit to many thousands of households, which will have great new places to bring up their families and live their lives, as well as to the nation as a whole in reducing acute housing shortages. I have every confidence that the Minister will find the amendment entirely acceptable, and if so, I congratulate the Government. Following the housing White Paper, and a number of the helpful measures in this Bill, I greatly welcome this further step in the Government’s creation of a much-improved set of national housing policies. I strongly support the amendment.

[Lord Beecham]

My Lords, I join the noble Lord in complimenting the noble Lord, Lord Taylor, for his very thoughtful and constructive contributions to the Bill and on this amendment. However, I have one question to put to him about it. Proposed new subsection (8) defines a local authority as,

“a district council … a county council, or … a London borough council”.

Where do the new mayoral combined authorities sit within this framework? Perhaps the noble Lord could assist me with that, or perhaps the Minister could indicate what role is envisaged for a combined authority, which will presumably by its very nature include land for development which crosses what would previously have been boundaries but are now within the new framework. I suspect the noble Lord, Lord Taylor, would wish that combined authority to exercise a role, but perhaps the Minister could indicate what the Government’s attitude would be and whether any further step needs to be taken to ensure that that outcome is fulfilled.