Creditworthiness Assessment Bill [HL]

Debate between Lord Davies of Oldham and Lord Best

Committee: 1st sitting (Hansard): House of Lords
Friday 11th May 2018 Lords Chamber

[Lord Best (CB)]

My Lords, from the Cross Benches, I support the noble Lord, Lord Bird, and oppose the amendment. I know that the motivations of the noble Lord concern mostly poorer people who need credit to buy white goods and the rest—we have known for many years that the slogan, “The poor pay more”, has been more than true—but I want to refer to those members of Generation Rent who have a chance, albeit a sometimes slim one, of being homeowners and need every help in getting their creditworthiness to the highest-possible status to move from being a tenant to a homeowner, and who are held back by the way in which credit agencies operate. It may be said that the people in Generation Rent do not wish to be homeowners —that they live an “Uber lifestyle” in which you do not own a car; you call Uber. That can apply to many aspects of life. However, surveys continue to show that people wish to be homeowners and for very good reason: home ownership brings with it security, which you do not get in the private rented sector. Even if your tenancy is for a full year, a lot of people find that it is hardly enough to enable you to settle down and, certainly, to bring up a family—we are now seeing ever more families in the rented market.

Home ownership remains an aspiration. Although you might be paying more for a mortgage on day one—if the mortgage company can provide a loan for you—rents will rise roughly at the level of earnings, which is RPI or CPI plus 1% or so, year after year and, in 25 or 30 years, those rents will be enormous. When you come to retire as a tenant, a lifetime of tenancy means having to move home on retirement because your income will drop but your rent will keep rising. Home ownership gives you not just the security of tenure but the financial security of knowing that, although it may take 25 or 35 years, eventually you will be free of debt. Anything that inhibits people from breaking into home ownership, which is what people aspire to, is extremely important.

People say, “Nowadays in London and the south-east, what is the point of talking about home ownership? Prices are so far beyond the reach of those on ordinary incomes this will never happen”. We now have planning consents across London for an enormous number of new apartment blocks. We are seeing come out of the ground 520 apartment blocks of more than 20 storeys for residential use. A massive housebuilding programme is coming down the line. Those who have built those apartment blocks, some of them overseas investors, believe that the starting price will be about £500,000 for the majority of the flats. Someone who is on £50,000 a year—there are not that many people on such a salary—will be able to get a mortgage of £250,000 and not £500,000. The trouble is that we are running out of Russians; we are running out of overseas buyers who are prepared to pay £500,000. I predict that home ownership, which has been in sharp decline, will come back into fashion. The opportunities will recur; prices will have to come down to meet the incomes of those who aspire to own. We should ensure that the credit lines for them are as clear as possible, which is what the noble Lord, Lord Bird, would do.

[Lord Davies of Oldham (Lab)]

My Lords, I indicated at Second Reading that Her Majesty’s Opposition were very much in favour of this Bill. In a debate in Westminster Hall, the shadow Finance Minister made it clear that he too was in favour of it.

I appreciated the way in which the noble Lord, Lord Blencathra, introduced the amendments—it was more probing than assertive. He will have recognised that representatives of almost every part of the Chamber have been against the amendments and said that the Bill should stay as it is in this crucial provision. The noble Lord, Lord Bird, is more qualified than me to respond to all these points and I shall therefore defer to him, but he must have been encouraged by the enormous support across the Chamber for his Bill as it stands.

Energy Bill [HL]

Debate between Lord Davies of Oldham and Lord Best

Monday 24th January 2011 Grand Committee

[Lord Best]

I shall just add another statistical piece of information. Some 40 per cent of tenants move within a year of the occupation of their home. In principle, the idea of consulting with the residents of a place before you start doing anything to it is entirely right, but we have a big transient population in the private rented sector. My other point is that, although you could consult the first occupier, the debt is taken on and lasts 25 years. In almost no cases will the same person be there for all that period, and you are not able to consult people further down the line about a decision taken by an earlier tenant. Although I sympathise with the sentiment that one should consult with the tenants, this is possibly impractical.

[Lord Davies of Oldham]

My Lords, we are getting to the complexities and challenges of the Green Deal. We had early indications this afternoon of the problems in the private rented sector; they are not solely in that sector, but they mushroom in significant ways so far as it is concerned. The important statistic that the noble Lord, Lord Best, brought in identifies the challenges before us. As the noble Lord, Lord Deben, argued on the previous amendment, it is no doubt important that we get as much information across as we can both to landlords and to tenants. This is a major public information task, and we should make sure that this legislation enhances and creates the opportunities for the spread of as much information as possible. Of course, as my noble friend Lord O’Neill identified, there will be groups who are difficult to reach and for whom the relevance will be limited; that is where a significant challenge is represented by this legislation. We want the Minister’s assurance that he appreciates how important it is that the legislation be as enhancing as it can be on the need to distribute information so far as possible, and that we succeed in bringing the nation on board with regard to the objectives, benefits and significance for society. We have a whole range of private interests that are massively diverse, so we should recognise the challenge that the Government face.