Lord Greaves
Main Page: Lord Greaves (Liberal Democrat - Life peer)
Baroness Gardner of Parkes (Con)
My Lords, all sorts of scenarios have been put forward, many of which I agree with, including the point made by the noble Lord, Lord Campbell-Savours, that there will be people who will find ways around the regulations and buy these houses unscrupulously.
I remember when I was a local councillor it was decided that local councils should not be owners of property and we sold off houses near to here on the basis that they were offered to sitting tenants at an incredibly low price. It is hard to believe that you could buy a house near Smith Square for £50,000, but that is what they were. After we sold all of these properties to the sitting tenant, one was left vacant and sold for £150,000. There was a huge difference between the property values; in fact, I think the sitting value was out of touch with values at the time. It annoyed me to discover that one of the people who had bought as a supposed sitting tenant was nothing but a front man for someone who could well have paid anything. So, a lot of the abuses suggested by the noble Lord, Lord Campbell-Savours, will happen—I hope not too many, but someone is always working out a way around things to get a personal advantage.
The noble Lord, Lord Shipley, commented on the issue of whether a person has bought a property as a genuine place to live in and whether, to ensure this, there might be letting restrictions and various conditions applied. This leads me back to the point which has been made again and again, that until we have regulations we honestly do not know how we are going to care about and deal with this. That is the greatest worry of all.
Lord Greaves (LD)
My Lords, I want to speak to government Amendment 45B. I was wondering if I should wait until the Minister had spoken to it but I think it is probably better that I speak now and that she hears what I have to say. If the Committee is happy for me to do that, I will.
The amendment proposes quite an extraordinarily far-reaching Henry VIII power. It simply says:
“Regulations under this section may amend this Chapter”.
That is as far-reaching as is possible. It suggests that the Government are not quite sure—perhaps it is stronger than that—whether they have got it right in this chapter on starter homes, and therefore that they want a provision to be able to change it in any way and at any time, subject to parliamentary approval. Of course, we keep being told that the House of Lords is not allowed to oppose these things, anyway.
In what ways can this chapter be amended, either as we go through this procedure in Committee now or in the future by regulations, to deal with the fundamental problem, which I keep banging on about, that housing markets are different in different places? There are parts of the country—not just in north-east Lancashire but in lots of other areas too—where the housing market is not buoyant but flat and fragile. In these places, the introduction of starter homes into the system could have serious unintended consequences which harm the market rather than boost it.
I want to give noble Lords the prices of three or four houses for sale at the moment. In so doing, I refer to the asking prices in the property supplement of the wonderful newspapers, the Nelson Leader and the Colne Times, published on Friday—so they are up to date. I have to say that in our area houses often go for less than the asking price; the idea of forcing prices up is not known to us.
I was taken by one of the featured properties at the beginning of this supplement because it is in the ward I represent, which is normally not featured. It is one of their top properties and a two-fronted terrace house. It is described as:
“Immaculately presented and substantial in size … dwelling has two reception rooms … three bedrooms”,
et cetera. It is obviously highly modernised. It continues:
“The garden has an area of hardstanding … and views toward Pendle Hill”.
What more does anybody want? An offer—and this is incredibly high for a terraced house in this part of Colne—of £110,000 is being sought by the owners.
Baroness Williams of Trafford
I hope to answer the noble Lord’s points as fully as I can. I know that if I do not, he will intervene again.
Lord Greaves
My Lords, perhaps it is my fault that I have not noticed yet, but while we are on the question of the 40-year age limit, will the Minister tell me whether the cut-off will apply to a person trying to buy a house at the time they make an offer or the time they complete?
Baroness Williams of Trafford
My Lords, it will be at the time they complete. That is when they become the owner of the house.
Lord Greaves
That is an interesting answer and I am grateful for it. May I suggest that we find a way of discussing this and thinking about it further, because if we think about the practicalities of buying houses, the answer that has just been given has all kinds of implications?
Baroness Williams of Trafford
I appreciate that. I keep coming back to the point that this is to address a specific demographic in the market that has been disenfranchised from home ownership.
To return to the point made by the noble Baroness, Lady Hollis, I understand the frustration of the Committee. I understand particularly that when the House is frustrated by not receiving regulations, that then takes time that we should be taking to discuss the Bill. However, I also see the need for the consultation to be meaningful. I would not want to delay Report but I am happy to meet noble Lords once the consultation has been published, which they might find helpful.
Lord Greaves
I am not qualified to take part in these legal technicalities but this is clearly something that needs sorting out. If the Government are going to stop people buying a starter home and letting it during the five-year period, will they also be prevented from keeping it empty? For example, if I bought a starter home worth £250,000, having received a discount of £50,000, and with two years to go I unavoidably had to move somewhere else and could not live in that house, it would be altogether financially more beneficial to me to simply leave it empty for two years and pay the council tax on it rather than to sell it and lose the £50,000. What will the position be in that situation?
Baroness Williams of Trafford
Theoretically a person could, within the five-year period, have to move somewhere else and therefore the house could be left empty for two years. The question is whether they sell that property within the five years. The person that the noble Lord is talking about would not sell the property; he would simply go elsewhere for work or for whatever purpose.
Lord Greaves
My Lords, there are all sorts of theoretical circumstances that we can put ourselves in but people may well move permanently—they may move to another part of the world or to another part of England where there are some jobs, unlike in parts of the north of England. Under those circumstances, they would not come back to the house and it would clearly be in their interests to leave it empty for two years. Therefore, the number of empty properties in that area would increase for purely bureaucratic reasons. All you have to do is leave the house empty for a couple of years, then sell it and make a profit of perhaps £45,000. That does not seem sensible. If the Government have not thought out the problem, they ought to do so and come back and tell us whether there is a solution to it.
Baroness Williams of Trafford
My Lords, the matter here is resale. I will certainly write to the noble Lord to clarify the issue if that is okay.
Baroness Williams of Trafford
Perhaps I may take that point away because, like other noble Lords, I am no legal expert. The noble Lord, Lord Greaves, asked about the Help to Buy scheme being used to purchase a starter home. We are certainly exploring whether it can be used but as yet no decisions have been made.
Lord Greaves
Just to wrap up this point if we can, when might decisions be made? The point is that if there is a 20% discount on a starter home and a potential 20% discount in certain circumstances through the Help to Buy scheme, somebody could get a 40% discount out of public funds on the house they buy. That seems rather a lot, and I would like an answer to that question before we finish with this Bill.
Baroness Williams of Trafford
My Lords, Help to Buy is a government loan guarantee scheme as opposed to a discount, but I shall be happy to discuss that further and, as I said, to bring forward in due course government thinking on Help to Buy being used for a starter home.
Putting the sales and letting restrictions in regulations will give us flexibility to amend the restrictions, should this be required in the future. It will also give the opportunity to consult with key stakeholders to ensure the regulations operate fairly and effectively, which is what we all want. Restrictions in any legislation will not prevent gaming at the local level, much as we would want it to, but I reassure noble Lords that we will be working with builders, lenders and local government to secure the best possible mechanism to ensure that starter homes are for owner-occupiers only. We are working to secure a practical mechanism that can be agreed with all parties to ensure that starter homes are real homes for those who will enjoy living in them.
The noble Baroness, Lady Royall, asked a question about second-home owners. I cannot remember what it was but I have something written down in my notes. Would she mind repeating the question?
Baroness Williams of Trafford
My Lords, unfortunately you cannot really stop that, much as we would like to see a perfect housing system in which there is no abuse. Noble Lords have given many examples of when, once the five or however many years are up, in subsequent years some of these houses could be used as second homes. I wish it were not the case but, unfortunately, it is. The point is that they will go back into the market as a supply of houses for people to live in in the future.
Lord Greaves
My Lords, I apologise, but these are new houses and therefore subject to new planning permission. Could it not be attached to the planning permission that they should not be used as second homes?
Baroness Williams of Trafford
The noble Baroness made the point that they would not be able to access these properties; they will.
Lord Greaves
My Lords, I am sorry to keep saying this, but I shall keep saying it until the Government start to engage in the discussion. There are parts of the country where the housing market is stagnant, where there are real housing problems, but they are not the inability of a particular demographic—in this case, people under 40—to access the market. As I demonstrated earlier, where a lot of good-quality properties are already available for the same price as new two and three-bedroom semis would sell for, if they were starter homes and attracted the 20% discount, the introduction of starter homes is likely to have a severely disruptive effect on the whole housing market. There may be answers to this, but for the Minister to suggest that the demographic of under-40s is excluded in the same way in all parts of the country is simply not true. Moreover, the solution being put forward is, as I say, likely to have a severely disruptive effect on the whole housing market and potentially do more harm than good.
This is not particularly my view; it is one that has been put to me strongly by our local council officials who are involved in all this. They are the ones dealing with empty properties and trying to get new build going right across the field: housing officers, planning officers and senior council officers. They say that this proposal as it stands will do more harm than good, possibly far more harm than good, and actually will not seriously improve the prospects of the under-40s to get their own homes.
Baroness Williams of Trafford
My Lords, I shall take the point made by the noble Lord, Lord Greaves, first. He has talked today, as he did the other day, about empty homes in Pendle—I am assuming he means Pendle or Colne or Brierfield—
Lord Greaves
I am sorry; I do refer to the place I know best, but this is not about a single place in England. We have the same sort of housing market across a range of areas, many of which are in the north of England, but there are some in the Midlands, the south-west and others in amazing places where I did not really know that this problem existed. It is generally those places where the housing market is stagnant, and there are quite a lot of them about.
Baroness Williams of Trafford
My Lords, I shall reiterate the point I made the other day. The noble Lord is absolutely right to say that the housing market is stagnant in some parts of the north-west of England and employment is not like it is in the rest of the country. I think that the interventions that the Government have made in, for example, transport and infrastructure will put some of those areas back on their feet again, playing their economic part in the country.
Coming back to the point made by the noble Lord, Lord Campbell-Savours, about cash buyers, I do not know a single person aged under 40 who is a cash buyer, although of course there will be some. But our overriding principle here is that we do not want to disenfranchise people who work hard from the housing market.
Baroness Williams of Trafford
My Lords, the effect of introducing 1 million more new homes into the housing market by 2021 will be to increase supply, which should, first, deal with some of the problems of demand and, secondly, start to moderate house prices in a way that has not been the case over the past few decades.
Lord Greaves
My Lords, I realise that I am ploughing a different furrow from other noble Lords in these interventions, but I have to say with all due deference to the Minister that my concerns about our local housing market and that of many other areas are not answered by her saying that the Government are going to introduce better infrastructure and invest at that sort of level. If that happens it will be extremely welcome. There is not much sign of it in east Lancashire at the moment, but even if there were, investing in infrastructure takes time. There is no doubt that it takes 10 to 15 years and has a long-term payback. As I understand it, we are talking about the housing market over the next few years. Building new roads, reinstating railways and doing all the other things that people are talking about under the heading of the northern powerhouse will not have any significant effect on our housing market and that of many other parts of the north of England in the next five years. Meanwhile, we have to deal with the problems that result from a stagnant, fragile, flat housing market next year, the year after and so on.
I am not trying to be awkward about this. If starter homes are a wonderful thing, I am all for them. But what I am saying is that in these parts of the country the introduction of starter homes risks having a disruptive effect on the existing housing market. While starter homes might be built if anyone can be found to build them, which is a question in itself, the result may well be that the rest of the housing market in the area becomes even more depressed than it is at the moment. That will mean more empty properties and a general reluctance on the part of developers to build, whether for social rent, private rent or owner-occupation. If the return from building houses either through selling them or from rents is less than all the costs put together of building them, they are not going to be built. Because of this bonus—this subsidy—we might get some starter homes, but that will put a severe damper on the rest of the housing market.
All I am asking is for the Government to discuss this with people on the ground in areas like those I have mentioned. We should set up a mechanism for doing this and see how it works, and then perhaps bring forward different rules, exceptions or whatever it might be—or just reach an understanding between us—to see how things can be improved. There is no point in having a starter homes policy or anything else in areas where it is actually going to make things worse.
Lord Skelmersdale (Con)
My Lords, before my noble friend answers, this has gone beyond a joke. My noble friend has given as many answers as she possibly can and, as a result, has been battered by yet further questions exemplifying the miscellaneous points which have been made. My noble friend has offered meetings with any and all noble Lords who want to pursue their points quietly so that they can pursue them again, if necessary, on Report. Surely, this is enough.