Housing and Planning Bill
Debate between Lord Horam and Baroness Bakewell of Hardington Mandeville
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I shall speak to Amendments 72, 75 and 78, to which I have added my name. I remind the House of my entry in the register of interests as a South Somerset district councillor.
As has been said many times in this Chamber in recent weeks, local authorities know their communities, and their officers know the circumstances of individual families and couples within these communities. It is far better for local authorities to make decisions that affect the lives of those families than for a blanket diktat to come down from the Secretary of State. It is also surely not logical for a local authority to be forced to implement a high-rent policy if the cost of doing so exceeds the additional income raised by the charging of the higher rent. This is not cost effective and everyone can see that that is the case. I echo the comments made by the noble Lords, Lord Kennedy and Lord Kerslake, and will support them if they wish to divide the House.
Lord Horam (Con)
My Lords, this is, I am afraid, an idea that probably looks good in the confines of the Treasury or in the rarefied world of special advisers in No. 10. In the real world outside it does not look so good. The noble Lord, Lord Kerslake, mentioned the late Bob Crow. I recognise, as the noble Lord said, that there is a case for saying that people on a higher income or earning over £100,000 should move out of council tenancy and seek a home of their own, thus leaving one for someone on the waiting list. I understand that argument. It is an important one that we should not forget.
However, this is not the greatest problem that we face. In the case of London, for example, where the housing crisis is most acute, 100,000 properties have been bought by secret offshore companies, pushing prices up for ordinary Londoners, who cannot get access in the way that they need to. I also agree with the noble Lord, Lord Kerslake, that this leads to a lot of administration for a small return. He used the word “inefficient”; we should not compromise on efficiency in administration. I believe in smart government, neither large, nor small; it depends on what you need. We should have efficient government and this in principle does not look like that. A lot of bureaucracy will be involved, a lot of mistakes will probably be made and the returns will be quite small. Should the Government be doing something as detailed as this? Should they not leave it to local government? Frankly, this smacks of the sort of thinking that went into the bedroom tax, which I think that many people regret.
While my noble friend Lady Williams has noticeably been listening throughout—I pay tribute to her conscientiousness and her willingness to take arguments on board—there is a case to be made for Amendment 72, which would leave this matter to the local authorities. I agree with the noble Lord, Lord Kerslake, that we need a higher threshold before it kicks in: £60,000 in London and £40,000 outside are a minimum, frankly. In many ways I would prefer a higher threshold, but that would be a starting point, which is encapsulated in Amendment 77 in the name of the noble Baroness, Lady Bakewell. I also agree with the proposal in Amendment 75; if the administrative costs outweigh what you raise in revenue, it is senseless to go ahead.
Finally, if we do go ahead with this and raise some money the local authorities should keep it to invest in further council housing. That is essential. It should not go into the pockets of the Treasury, which does not need this small amount and it should not get it. The amendments in this group are both fair and sensible, and it is my experience that what is fair and sensible is usually good politics.
Housing and Planning Bill
Debate between Lord Horam and Baroness Bakewell of Hardington Mandeville
Lord Horam
It is not quite as brutal as the noble Lord says: there is already quite a mix in London. There is a much better mix in London, for example, than in, say, Paris or New York. All right, the mix may be somewhat lessened if we go down this path—I accept that. None the less, Philippa Roe was saying that she will make special allowance in her housing allocation for people who, for example, have to work in the local hospitals in Westminster. Clearly, you have to make some allowance in your housing policy for key workers and so forth, who you need in your borough. They will still keep doing that; there will still be a mix. The mix might be slightly different from what it is now, but there will still be a mix.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I will try to be brief, given the hour. Very grave concern has already been expressed about the right to buy causing a shortage of homes in certain areas. We all understand that the voluntary agreement between the Government and housing associations is for replacement dwellings to be built, but there is no certainty, as has been said, that these will be anywhere near the home that has been sold. Amendment 60 seeks assurances, as does Amendment 57 in the name of the noble Lords, Lord Kennedy and Lord Beecham, that the right to buy will ensure a steady, increasing supply of homes and not a declining one. It is not going to be acceptable to promise jam tomorrow. Housing associations must identify where the replacement dwelling will be before the right-to-buy one is sold off.
It is extremely important that the tenure of the replacement property is not only in the same location as that sold off but also of the same type. This tenure can only be varied based on legitimately identified local need in that area. We debated earlier in Committee the thoroughness with which local authorities research, plot and assess the housing needs in their areas. This housing need must not go unmet. Replacement homes must fit the gap in the local community created by the right to buy.
The powerful arguments made on the previous group are now on the record and do not need repeating, but they should be taken on board and acted on. However, I will just read the comments made in November 2015 by the beautifully named Yetminster and Ryme Intrinseca Parish Council, which is just over the Dorset border and about six miles from where I live. This relates to both starter homes and right to buy. The council says:
“The Bill gives housing associations with properties in a community of less than 3,000 the right to opt out of the Right to Buy scheme as it may be difficult for them to replace the houses in a rural community. The implication for our rural community needs further exploration.
The principle behind the starter homes idea is good, but after 5 years all the houses could be sold on and we will be back to a situation where young people cannot afford to buy. Surely homes identified as starter homes should remain so when they are sold on with the next purchaser able to apply for the same government-subsidy.
For Y&RI, we agree there is a need to provide low cost affordable housing for young people within the village but the Bill needs to address how our youngsters can afford to buy a house costing up to 200k (the amount may be wrong—but whatever it is—it is too much).
In summary, the policy implications for rural housing in this Bill are very worrying. There is an inherent danger that land owners will cease to provide land at charitable prices for the Hastoes of this world and the only land which will become available will be at commercial value which will reflect in the unit price of the houses. It is hard to see how this Bill will enhance the provision of affordable homes for our young people in rural areas.
We really hope this Bill will come in for serious scrutiny before it comes into force”.
I think we are doing that this evening.
Housing and Planning Bill
Debate between Lord Horam and Baroness Bakewell of Hardington Mandeville
Baroness Bakewell of Hardington Mandeville
My Lords, I agree with most of the points made on this first tranche of amendments in this chapter. Although I welcome the Government’s aim to increase the supply of starter homes for those currently attempting to get on the first rung of the home ownership ladder, like others, I remain concerned that this policy is seen as the only route to provide a home for those who are in need. Home ownership is something that many residents of the country aspire to but, as has been said, by no means all of them.
Limiting the Bill to starter homes rules out other avenues of home ownership. As your Lordships are aware, there are other products in the marketplace, such as shared ownership, which we have already heard about, and the Help to Buy equity loan scheme run by the Homes and Communities Agency. By promoting starter homes to the exclusion of all other options, the Government are raising the expectation of those under the age limit that they will definitely qualify for a starter home with a hefty discount. This will lead many of them not to explore other options which could assist them to get on the housing ladder.
As the Government have already made clear, there will not be a limitless supply of starter homes. Indeed, supply will be restricted by the resources raised through the sale of high-value council homes—a policy to which we will come later in Committee. This rationing of starter homes is not clear to those whose ambitions have been raised. By concentrating wholly on their starter homes programme, the Government are setting many people up to be bitterly disappointed. Realism dictates that the Government should promote other forms of home ownership simultaneously with their starter homes programme.
We now come to the thorny issue of how these new home buyers will finance their purchase. They may have a deposit, but that does not appear to be a requirement in the Bill. They will receive a discount of “at least 20%” on the purchase price. Presumably, this is the cost of the plot plus the building costs—in other words, the market price for which a developer could expect to sell the property on the open market, outside the Government’s starter home programme. The buyer will then need to go out to the market to borrow the remainder of the purchase price of their home, so some of these purchasers will be looking to borrow up to £200,000 outside London and £360,000 in London.
In Clause 2(3), the criteria are very clear as to who these people will be: first-time buyers under the age of 40 who have “other characteristics” to be specified by the Secretary of State—which are not yet decided. The sooner the Secretary of State sets out what these other characteristics may be, the more certainty can be brought to those waiting to buy their first home.
As your Lordships are aware, there are many anecdotal stories about how difficult it is to obtain mortgages from traditional sources, with those who have been in extremely well-paid employment for a long time, looking to move from one property to another, being refused finance on the flimsiest of grounds. We cannot blame the banks or building societies for being reticent to lend when they have had their fingers burnt in recent years. However, if they will not lend to those with a good track record of repaying their mortgages and loans in a timely manner, how on earth will we encourage them to lend to those who have no track record? The very fact that they are first-time buyers means that they will not have had a mortgage in the past. The Government will need to produce an effective scheme which will encourage lenders to participate in a starter homes programme.
I note from the Statement of 19 January that those areas engaged in the pilots will get their administration costs reimbursed only during the six months of the pilot and will be reimbursed for the capital expended once the Bill has received Royal Assent. Given that the consultation is still ongoing on many aspects of this Bill, can the Minister be confident that the Bill will receive Royal Assent in sufficient time to help those housing associations engaged in the pilot to balance their books? Like others, I look forward to these five pilots being concluded.
Even with the discount supplied, research carried out by Savills on behalf of the Local Government Association—and like others I am a vice-president of the LGA—shows that starter homes would be out of reach of all people in need of affordable housing in 220 council areas, as my noble friend Lord Tope, has said, and out of reach of 90% in a further 80 council areas. The definition of people in need of affordable housing are those who have to spend 30% of their household income in rent or buying a home. Many will be spending a great deal more than 30% on housing. With 92% of council areas out of reach for those needing affordable housing, there are going to be some very disappointed and disaffected residents in the country.
Many in this House and outside are concerned that the starter homes will not necessarily be for the benefit of those originally intended. It is essential that these new starter homes should be the only residence of those who buy them. It would be against the spirit of the Bill if these homes were then rented out to others or sold on at a profit after only five years. I urge the Government to put the condition of the home being the only residence of the owner or owners in the Bill to avoid any doubt and to protect those who truly wish to participate in the scheme to acquire their own home.
The Government’s aim is to deliver 100,000 new homes over a five-year period, but that is only scratching the surface of the homes that are needed. A mix of housing is what is needed, including home ownership outside of starter homes. I urge the Minister to accept this amendment in order to achieve the Government’s aim.
Lord Horam (Con)
My Lords, I do not want to speak for any length of time because in discussing these amendments and the following amendments, which cover largely the same area, I defer to the greater expertise of many other noble Lords, such as the noble Lords, Lord Best, Lord Kerslake and Lord Tope. However, I am struck by one thing as a relative newcomer to housing debates—that is, the extent to which we are proceeding in the dark. I went to a very interesting meeting, which I was grateful to my noble friend Lady Williams for laying on, to discuss technical aspects of the Bill. A number of noble Lords were there, and it was very interesting to clear up some of the definitions, and so forth, as far as we could. What was apparent was that the Government really had not begun to finalise any sort of modelling of the effect of the legislation—not only the financial effect, which is very germane to our discussion, but the social effect and the effects on supply of housing.
I think that we would all agree that one has to think very clearly about housing as it is a complicated situation and an important topic. It is the Government’s responsibility to think clearly, and I think we all agree that the issue is really shortage of supply rather than tenure. That is the fundamental point with which we are trying to grapple. Therefore, it behoves the Government not to let issues of tenure, whether in social housing, starter homes or wherever, get in the way of the fundamental point about shortage of supply of whatever kind of housing it may be. In trying to get at what the Government could say about the effect on housing supply and other financial matters, they confessed—and I am grateful for this to the civil servants who were there—that they had not got far enough with their modelling, simply because Ministers had not taken decisions yet. I understand that, too, but we are a long way down the road. We have had 17 Committee sittings in the other place and we are now in Committee here. Some important definitions and considerations have not been finalised and do not look as though they will be finalised for some time, which places the House in a quandary in trying to reach a clear conclusion, whatever point of view you may have.
The only bit of information that I have been able to glean by way of the consequences of this particular set of clauses on starter homes was provided by the Local Government Association. I do not know whether it is accurate or not, but the LGA says that in its present form,
“should 100,000 starter homes”—
and that is an ambitious figure—
“be built through the planning system, between 56,000 and 71,000 social and affordable rented homes would not be built”.
In other words, there is a sacrifice, in concentrating on the single issue of starter homes, of social rented homes, which we know are even more needed by even poorer people than those whom we hope will buy these starter homes.
This is the difficulty that we have. Is the figure accurate? Where has it come from? Is it the Government’s own figure? I would be interested to hear the Minister comment on this, although I do not necessarily expect her to comment this evening because I have just produced it out of the blue. But that sort of figure, without any further government explanation about what they expect the consequences of this legislation to be, is very worrying. Therefore, I hope that we can go into this as thoroughly as possible—but I fear that, even at the end of a day’s debate on this subject, around which there is a great deal of concern and interest on the part of Members, we will not be very much further forward.
I agree with the noble Lord, Lord Kerslake. We are tackling this the wrong way round. The right way round would have been to say, “There is a housing shortage. How do we tackle that and maximise housing supply?” We have three different methods of tackling supply. We have the private sector, housing associations and councils. How do we maximise the output of those three? Let us sit down and discuss that and consult expert opinion. It has happened the other way around. Someone has had a bright idea. I am not against bright ideas, I am all in favour of them, but if they do not go through the necessary and rather boring business of being talked through by people who know what they are talking about, we are liable to end up in the sort of situation we have now. Undoubtedly, this may be a very sensible idea, but we do not really know and we do not have the information to hand to decide on it. Yet this is really rather late in the process, and if we get it wrong we may have adverse effects when the Government are trying to make a favourable effect. So I am concerned from that point of view.