Neighbourhood Planning Bill

Debate between Lord Horam and Lord Taylor of Goss Moor

Committee: 1st sitting (Hansard): House of Lords
Tuesday 31st January 2017 Grand Committee

[Lord Taylor of Goss Moor]

It may be helpful to explain the point in time that the noble Baroness has proposed. At the point when you are awaiting examination, the process has already gone through all the community consultation stages. A final draft neighbourhood plan has been written. It has gone through the approval process with the local planning authority, which has to check that it conforms to the local plan and the National Planning Policy Framework. Any necessary amendment would have been made at that stage and it would also have gone through all the statutory consultees to then be submitted for examination. It then awaits examination prior to an examiner being appointed. At that point, all the processes have been completed. The only issue, and the only thing the examiner tests, is whether it complies with the national planning policy and the local plan.

[Lord Horam]

The noble Lord knows far more about these planning details than I do—I concede that. Speaking as a lay man, the amendment’s language does not seem to convey what he said. It conveys something much earlier in the process than what the noble Baroness said. I am to some extent relieved but, none the less, if the language can be interpreted in different ways—I am neither a lawyer nor a planning expert—it would, frankly, worry me. I am therefore concerned about this amendment, although I understand the sensible motivation by which it is put forward.

Housing and Planning Bill

Debate between Lord Horam and Lord Taylor of Goss Moor

Monday 11th April 2016 Lords Chamber

[Lord Taylor of Goss Moor (LD)]

My Lords, I should draw the attention of the House to various interests that I have around development and with local councils, and in other respects in this area, as set out in the register of interests.

I want to start by saying something which I do not think has yet been clearly articulated, which is that I welcome the Government’s emphasis on the need to provide new homes and to address the issues of affordability. There has been a big change in government understanding around housing need; the issue has risen rapidly up the list of the priorities of the public, as is shown directly in opinion polls, and not only the Government but all parties have sought to respond to it. We should therefore debate this matter in the context of understanding that the Government are attempting to address some very real issues, not least the fact that the group of people most excluded from the housing market—or at least the ability to buy into it—are those without substantial capital. The key thing about first-time buyers is that, having not been part of a housing market that has seen rapid capital increases, they struggle to put together a deposit. Indeed, when I stood down as a Member of Parliament, my wife and I with young children looked at living in London, which was an obvious place in terms of the way in which my career would go, but the sale of a home in Cornwall would not provide the capital to buy a family home in London. That illustrates the scale of the problem. However, I have strong concerns about the way in which the Government have designed their starter home initiative as part of the work they are doing to address it.

First, we need to understand that the need for this measure arises only from a massive undersupply of homes. The starter homes initiative does not address undersupply: it only changes who has access to the limited supply coming forward. We can perhaps take some potentially affordable homes for rent away and turn them into starter homes with a discount for first-time buyers but, in doing so, second-time buyers who are perhaps moving from a flat to a two or three-bedroom house because they are having children do not get the benefit.

I am afraid that housebuilders may well react to this part of the market being addressed through starter homes by shifting other parts of their mix higher up the market to return the discounts. More importantly, they will not look to sell into the low-cost sector because they know that that is being eaten away by starter homes. Why would anyone buy those products if they could buy a starter home otherwise?

I emphasise that the big issue is to provide more homes—we can have other debates about how to do that—but this policy will not do so. Indeed, it may have the opposite effect. I have spent some time talking to large housebuilders and lenders about this policy and, although the Government have made some adjustment in the phasing of the discount period, there is no question that both are concerned about it. The large housebuilders who have targeted relatively low-cost homes now see a product that effectively rips out the possibility of any certainty in their market for it. Many of them have also relied on pre-sales of affordable rents to housing associations to help fund early development phases. Therefore, relying on future sales to replace those rented products which can be pre-sold to housing associations to provide capital to enable development may make it harder to fund development going forward.

In many respects the concerns raised by lenders should alarm us more. They are concerned not about the inability to lend to people buying these properties—self-evidently, they are a relatively low risk; if they have a 20% discount they can then make back later they are not a high-risk lending proposition—but about those they have lent to previously who are in that part of the market with which this policy will directly compete.

Let me explain what I mean. I live in a poor community where there has been rapid housebuilding because land values are low and houses are sold at low prices. The large numbers of people who have bought those properties in the China Clay district, a relatively undesirable part of Cornwall for many—I do not agree with that view but it is reflected in the house prices—are young people, young nurses, young teachers and first-time buyers, exactly the group this policy is targeted at. When they come to sell, they would expect to sell to first-time buyers again, but how will they sell their property at the kind of prices they previously paid if now people can buy a brand new home at a 20% discount in exactly the same market? That is why the lenders are worried. They are concerned that this will have a dramatic distorting effect on the value of homes that people of the same group already live in but which were simply bought previously without the advantage of the discount.

I started by saying that I think the Government are trying to do the right thing—they are trying to address housing issues and the issues of young people who are unable to raise capital—but there is a simpler solution, and that is to offer the 20% discount in perpetuity. Why would that be so much better? For precisely all the reasons I have just mentioned. It would no longer distort the market because the people who would buy these homes with an in-perpetuity discount of 20% would be those who could not afford to buy a home at full cost. They would participate in any rise in the housing market that happened over time and they would be able to build up capital for when they move on, but this would not distort the market because anyone who could afford to pay the full price would do so and would then benefit from the whole capital appreciation of the value of the home. It would target much more precisely those with limited capital who could not otherwise afford to buy and it would not have the same distorting impact on the wider market because there would still be a market there to sell into for those who could and would afford more.

Perhaps what is most important is that it would not distort people’s decisions about when to move on because I am worried about what we are doing for those who are buying into this proposal. Let us take a young couple who are thinking about buying their first property. They do not yet have children. They cannot afford a lot, so they buy a small flat. But they will have to give up the discount when they have a child in order to get the room they will need for the baby. How can that be right? Or do they delay the purchase and rent for longer because of the possibility that in a few years’ time they will have a child? What do they do if they have had one child and now want another one and therefore want to move on?

People will hold back from their sale, and it is because of that worry that frankly I understand absolutely why Amendment 1 has been brought forward. It addresses some of the issues for lenders and encourages people not to see the discount as a short-term investment, thus creating a new asset investment class with a view to getting it back in five or eight years. On the whole, the amendment is worth supporting because it is better than the status quo, but do we really want to lock people in to thinking that they have to stay in the same home for 20 years in order to get the full benefit of the discount? I cannot see that that is the right thing to do.

Some time ago Cornwall pioneered the principle of homes being given an in-perpetuity discount—not affordable homes, but simply properties built by local housebuilders with a covenant on resale that is tied to local wages. They would always be below market levels and would always be affordable to people on low incomes. There has been a really strong demand for those homes. Housebuilders like them because if they can get land at relatively low cost they are not too costly to build and they know that the sales will be there. Buyers like them because they know that they can then afford to get into the housing market and see the commercial uplift that comes as house prices rise, but they can then sell on again when it is right for them as a family to do so—perhaps when they have a child, the relationship breaks up, or things change because an inheritance comes through.

Making the discount in perpetuity would create a market for those who cannot afford to get their first foot on the ladder. As it stands, the starter home policy creates a very different vehicle: it is an investment vehicle with a 20% bonus at five or eight years. In a market for housing that is distorted by undersupply, which this policy does not address, and a market for housing that is even more distorted because it has become an investment market rather than one for the purchase of a home, the last thing the Government should be doing, in genuinely trying to address this issue, is introducing a product that is even more finely tuned as an investment product aimed at producing a return rather than providing a step towards the security of a home that meets people’s needs.

[Lord Horam (Con)]

My Lords, the noble Lord, Lord Taylor, said graciously that there has been a sea change in Government policy towards housing in the past year or so that recognises that there is obviously a severe problem in London and the south-east in particular, but also in other parts of the country. In debates on housing, we have heard occasionally from the noble Lord on the Liberal Democrat Benches about the different perspective of Pendle in the north-west, but broadly speaking it is recognised that there is a real crisis in housing throughout almost all the country. The Government should be congratulated on this imaginative proposal. I do not suppose that anyone will want to stop it going through in its broad shape, given that it has gone through the other place, but we are here to improve things and I think this proposal can be improved.

As the noble Lord, Lord Best, pointed out in his speech moving Amendment 1, it is a very expensive proposal that will cost £8.6 billion if it achieves the full panoply of 200,000 results. That is a lot of money. Even though some of it is offset, it is offset in ways which housing experts rather deplore. For example, less Section 106 affordable housing will be built if this development goes ahead. As the noble Lord, Lord Taylor, pointed out, there will be fewer Build to Rent proposals, which is one of the most imaginative things on the housing horizon. I also get the impression from talking to housing associations that they are concerned about the shared equity homes into which they have put a lot of money, and which are fully supported by Government grant. Those are just three areas that may well be adversely affected by so much emphasis on starter homes.

Housing and Planning Bill

Debate between Lord Horam and Lord Taylor of Goss Moor

Tuesday 8th March 2016 Lords Chamber

[Lord Horam]

I am sure that the noble Baroness will raise the issue if she wishes to. I will certainly not stop her from giving one of her very eloquent speeches.

The point I wanted to make was that, historically—the noble Baroness, Lady Royall, is right—there has been a disproportion between the number of houses replaced and the number lost. However, that has changed in recent times and we are now getting one for one. As I was saying, the noble Lord, Lord Cameron, is right that this whole exercise is designed to galvanise housing associations into doing very much better. We know from the experience that we have had with housing associations that some are very good, some are very large and some are quite small and sleepy. Frankly, to some extent, there should be some merging in the housing association world, and there should certainly be a greater degree of activity than has sometimes been the case in the past. I look forward to that.

Finally, I agree with the point that the noble Lord, Lord Best, made, that there is a danger of overregulating in this area simply because of the “Office for National Statistics problem”, if I may put it like that, of it being part or not part of the public sector. I doubt very much whether any amendments of the kind that have been tabled here would be welcomed by the federation and housing associations, and I doubt that they would be appropriate. It would certainly not help them to get out of the Government’s clutches. The Government want them to leave their clutches and they want to get out of them, otherwise it will lead to all sorts of problems.

What I hope will happen is that, as a result of this debate, noble Lords’ concerns will be heard not only by the Government but by housing associations, and we will in effect be nudged—if I may put it like that, using the psychological term of the nudge factor—into recognising that these issues are of concern to people in both rural and urban areas, and I hope that housing associations will take them fully into account, as I expect they will. None the less, I believe that the Government are right to proceed down the path that they are following.

[Lord Taylor of Goss Moor]

My Lords, I draw noble Lords’ attention to my list of interests but I declare a couple in particular. One is that I am president of the National Association of Local Councils, which has a particular interest in rural communities. The second is a past but recent interest in that I was chair of the National Housing Federation for six years until September, therefore covering the period during which the voluntary agreement was negotiated with the Government.

I particularly associate myself with the comments of the noble Lord, Lord Cameron, and especially with those of the noble Lord, Lord Best, about some of the background to this issue. I was disappointed when the Conservative Party put forward the right-to-buy policy in the run-up to the general election and was even more disappointed to see it feature in its manifesto. However, I have to accept that it featured in the manifesto and, inevitably, the policy will be delivered. My disappointment stems from the fact that, if the Government feel that they have those kinds of sums to spend—or, more accurately, are going to require local authorities to sell houses in order to have those funds to spend—there are better ways of investing the large sums involved than giving a one-off benefit to a particular tenant who, at a particular time, happens to be in a certain property. There are many others who cannot afford a home and who are not in that privileged position.

None the less, that was not the context in which the voluntary agreement was negotiated. It was negotiated in the context of a Government with that manifesto commitment and a clear intention to deliver it, and they would always be able to see it through the Commons with their majority. I do not think that this issue would divide Conservative Members of Parliament in principle but they might have concerns about elements of it, and it is a particular element that we need to address today.

I take the view of the noble Lord, Lord Best, that it is extremely important that this House always defends the principle that the charities that are housing associations —the great majority are charities—are independent organisations. There are many reasons for defending that principle of independence. It is extremely important to the organisations themselves. It bears on their history and on their ability to do what is right for their tenants and their communities. It has produced enormous diversity and, through that diversity, has allowed them to face many different challenges. The negotiations around the voluntary agreement were above all intended to preserve that principle of independence but they also achieved an important series of exceptions in principle. Those were acknowledged and therefore there was no question that housing associations would be able to make decisions about whether, in particular circumstances, a right to buy was appropriate.

The portable discount is an important element of that. If tenants in general have a right to buy and the discretion to refuse is with the housing association, it seems to me that that discretion cannot lead to a particular tenant being disadvantaged compared with other tenants. Therefore, I accept the principle of the portable discount in the circumstances in which we are now.

However, I believe that the circumstances of rural communities and villages are exceptional. In 2008, I conducted a review of rural planning for the then Government. One thing that I particularly focused on was the delivery of affordable housing in small rural communities, and the importance of that was clear. Many of these communities had seen affordable housing stock lost—not just council houses which had been sold but old farmers’ cottages. In the past these cottages had often been rented out by landowners but they were gradually sold off at very high values to people who might be retiring to the community or might have a holiday home there. Unlike what had traditionally been the case with those more affordable properties, the people who bought them did not work on the farms or in the school, the shop, the pub or the local businesses. They did not have children who would go to the local school and they did not spend money in the shops and the pubs. Therefore, the risk was that these rural communities would become more and more unsustainable. They were becoming enclaves of wealth and retirement and enclaves of holiday homes, and they no longer supported a living, working countryside.

I observed that that had become of huge importance to many villages and parishes. We saw a transformation in the willingness to address the problem through the delivery of affordable housing. Increasingly, we saw communities support small numbers of affordable homes on exception sites, often with the support of the landowner, who would get little, or in some cases nothing, for the land. Places that traditionally had always opposed development were willing to support it for the delivery of affordable homes. In the Living Working Countryside report, I argued that we should extend that principle further and empower these communities to take those decisions through the parishes—in effect, neighbourhood planning. We have encouraged that and I very much welcome the fact that the last Government empowered communities in terms of neighbourhood planning.

I talked about empowering communities because it was evident that when people looked at their own issues, such as keeping the school open, how the children would be able to live and work within the community, and how the pub and the shop would be sustained, they recognised the central importance of people on lower incomes—working people within rural communities —being able to live within those communities. On sustainability grounds, frankly it makes no sense that these communities have become places for retirees—places where the land that gets farmed at all is farmed by people who live in the town because they cannot afford to live in the village. If care is provided at all, it is provided by people who live in the town because they cannot afford to live in the community. Therefore, that principle seemed to me on every ground absolutely fundamental, and local communities supported it.

However, above all local communities supported one principle, which was that the homes should be affordable for the community in perpetuity. They supported that because the landowner would not make land available if someone was going to make a profit from the sale of a house a few years later and it was going to become just another retirement home or just another done-up cottage to be used as a holiday residence. The community would not extend its support for that sort of planning through neighbourhood plans and, in the past, parish plans. I saw communities go through the process of finding the right site and welcoming the homes that were built, but it was always understood that these would be affordable in perpetuity.

Some of those homes were guaranteed to be affordable in perpetuity because the landowner was wise enough to put a clause in the contract on the sale of the land. In other cases, the landowner was far-sighted enough to include it as a planning condition. However, in many communities that was not the case. The houses were understood to be affordable in perpetuity, and it was understood that there was no right to buy. There was some discretion but a process with the regulator had to be gone through if the sale of a home was to take place. However, without the discount there was no great incentive for it, and these homes were not sold off.

We now have a different circumstance in two respects. First, the discount offer makes it infinitely more likely that tenants will come forward, if not with an eye to making money for themselves, very often with an eye to wanting to secure the home for their children—an understandable human response. Secondly, with the rent cuts and the falling away of grants, housing associations will inevitably be aware that if a sale takes place, it is unlikely that it will fund one-to-one replacements; it will actually fund a multiple of that. Therefore, if they sell one house, the truth is that it will, as a result of the rental streams and so on, allow multiple investments in new housing, potentially somewhere else.