Shared Ownership Housing
Debate between Lord Jackson of Peterborough and Iain StewartWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Iain Stewart
I will touch on that point a little later, because one problem with expanding shared ownership is that tenants can find it difficult to take a big additional equity share. I will touch on a proposal in a little while that helps to address the problem the hon. Gentleman rightly identifies.
Mr Stewart Jackson (Peterborough) (Con)
I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I congratulate my hon. Friend on his excellent debate. Does he agree that, with respect to the Landlord and Tenant Act 1985, because housing associations are considered to be private entities, the reasonableness or otherwise of service charges concerns people who wish to staircase in terms of shared equity and shared ownership?
Iain Stewart
That is indeed a problem, and I am grateful to my hon. Friend for raising it. A linked issue, which I shall come on to, is that tenants can be liable for 100% of the maintenance costs of the property, but do not own 100% of the equity. That is an unfairness in the system that I hope will be addressed.
The Minister for Housing and Planning can relax; I do not expect an immediate answer to my suggestions today. In fact, some of them go beyond his bailiwick and are rightfully matters for his colleagues in the Treasury, but I hope to make them constructively and he can put them into his thinking box; they are proposals for the long term.
Organisations such as Shelter, the Cambridge Centre for Housing & Planning Research, Orbit, and the Chartered Institute of Housing have, at different times in recent years, conducted reviews of the shared ownership sector and produced some useful recommendations as to how it could be expanded and reformed. I will draw on those recommendations, and indeed the earlier intervention touched on them, too. However, I will also introduce some fresh ideas that are linked to the Government’s reforms of the pension system and also, possibly, to the neighbourhood planning process.
One problem that has been identified with the shared ownership concept is a lack of general information and understanding among the public about what it entails. Schemes such as Help to Buy have very quickly gained popular resonance—Help to Buy is widely understood and widely advertised—but the same cannot always be said of shared ownership. Shared ownership is a complex brand, and it can be hampered by a lack of understanding of what it is, how it works, who might be eligible and what journey a person would take if they started off down the path of shared ownership, which can include knowing what exposure they might have if they wanted to increase their equity share; that was the point made by the hon. Member for Strangford (Jim Shannon).
My first proposal therefore echoes the call that others have made to develop a more effective common marketing branding for shared ownership houses, and perhaps a one-stop shop to advise people who think that shared ownership might be for them. Clear Government backing, simplicity and a standard model would also help.
Another disincentive with the current system is the liability for maintenance costs, which I have already mentioned. In many cases, the tenant bears 100% of the liability for maintenance costs despite not owning 100% of the property. That cannot be right or fair. Surely it would be fairer to have such liabilities in the same proportion as the equity share.
Issues have also been identified with the bureaucracy of the eligibility criteria. One person quoted in one of the studies I have referred to said that the system can seem more like an allocation process than being able to select one’s own home. The system can also be too rigid, and many users find it expensive and complicated to staircase—that is, increase their share of the equity—not least because revaluation costs are incurred at each stage. Hurdles are often encountered if a family wishes to move while keeping a share in a shared ownership property, either because they are moving to another town or city, or simply because they want to change the size of their property because their family circumstances have changed. Such difficulties contribute to a view in the financial world that shared ownership is a complex and risky proposition, which can diminish the appetite to lend and develop new products.
Some solutions to these problems have been suggested, and I am sure that the Government are considering which of them can make the current shared ownership schemes work better. One solution is micro-staircasing, although I hope that it is possible to come up with a slightly better name; it sounds like a flight of steps for very little people, and one of those horrible new words that will encroach into our language. However, it is a good idea. What it means is that, rather than someone having to take large steps up in the share of equity that is owned, smaller and incremental steps of perhaps 1% or 2% at a time can be taken, which would smooth out the path for both sides of the ownership. That would help to address some of the concerns that the hon. Member for Strangford raised.
These suggestions will help and I urge Ministers to look at them, but I am not sure that in themselves they will realise the full potential of shared ownership. So I will outline my principal suggestion about seriously expanding the sector and injecting new capital into it.
The Chancellor has rightly liberalised the pension annuity rules, and many people relish the opportunity of being free not to buy an annuity. Once the temptation to buy Maseratis, yachts or fancy foreign holidays has passed, many people will look for a solid investment home for their capital that will generate a decent income for their retirement. For an increasing number of people, investing in buy-to-let property is the answer, and I do not want to diminish the importance of that option. However, as I touched on earlier, buy-to-let is not without risk, and if too many people choose it, that can lead indirectly to problems.
Why should we not explore ways in which such investment capital could be used to fund an expansion of shared ownership? I believe this could be done on both a large scale and, perhaps more importantly, at a very local and individual level. I do not want to remove the important role that the public sector and housing associations play in funding shared ownership developments; what I am suggesting would sit alongside that model rather than replace it. However, at the large scale I would like the Government to explore ways in which developers and financial institutions could work together to develop investment vehicles so that the capital from pension funds could be used to part-fund the development of shared ownership properties on new housing estates. This is not a new concept. In essence, it goes back to the first principles of building societies before they morphed into something else, with all the associated problems.
However, my suggestion could also apply on a much smaller scale. Let me give a hypothetical example. Imagine I was somewhat older and had recently retired, and that I wished to invest some of my retirement funds in property rather than in buying an annuity. I could choose the buy-to-let option and run the risk of an uneven income stream if it was not always possible to find tenants, and I would have to pay letting agencies to find and vet tenants. There is also the risk of having antisocial tenants, and I would still be liable for the general maintenance and upkeep of the property.
Alternatively, I could invest in a shared ownership property with another individual. I would still have a capital investment and would gain an income from a mix of rent and releasing further stakes of equity over time. I would have greater security of tenant, and a tenant who would have a keen interest in maintaining and even enhancing the value of the property. Again, I would like the Government to explore the viability of a legal structure through which such a small-scale shared ownership arrangement could work. Such a structure may require some financial incentives, but in the Budget last week the Chancellor gave one in the rent-a-room scheme, improving the tax incentive for that scheme. Once again, I accept that that goes beyond the powers of my hon. Friend the Minister for Housing and Planning, but the Government may wish to consider it.
Finally, this model could be applied at a community level, whereby a consortium of local residents could invest in new shared ownership developments for their particular area. We often hear complaints that young families are priced out of their home villages because of soaring property prices. This model could be a way round that. It could also link into the neighbourhood planning process, helping communities to plan for the extra housing that they want to see rather than the enormous and out-of-character developments that they often fear.
I freely admit that I am no expert in housing finance or planning. I am sure that there will be many experts and professionals who can shoot holes in what I have just proposed. However, Parliament is a place for debating ideas and presenting new concepts, and I give these ideas freely to the Minister, and indeed to anyone else who cares to listen to them and take them forward in a way that I genuinely hope will help more people to realise the noble aspiration of owning their own home. Let us not try to find a myriad of reasons why we should not do something; let us try to find lots of ways in which we can make it happen.
Regional Spatial Strategies
Debate between Lord Jackson of Peterborough and Iain StewartWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Iain Stewart (Milton Keynes South) (Con)
I, too, am delighted to make my first contribution in Westminster Hall. I congratulate my parliamentary neighbour, my hon. Friend the Member for Milton Keynes North (Mark Lancaster), on securing this important debate. I strongly endorse all the points that he made, although I will not go through them all in the interests of time. However, his point about the Government’s interim measure, which other hon. Members have raised, is particularly important. I strongly welcome the letter that the Secretary of State for Communities and Local Government sent to councils, but there is some doubt about its legal status. I had a conversation with officials in Milton Keynes council, who say that there is legal doubt about the suggestion that the Secretary of State’s letter announcing the abolition of regional spatial strategies will be treated as a material consideration at appeal in the courts. In the interim, that is a significant matter, and I would be grateful for the Minister’s clarification.
My constituency contains two areas where planning submissions are under way. The concern is that those submissions will be rushed through and imposed before the full change in the law takes place. One of those areas of development is in the south-east of Milton Keynes, around Woburn Sands and the Brickhills. There is great concern locally that a semi-rural area will suddenly be infilled with hundreds or thousands of new houses.
The second area, Salden Chase, is south-west of Milton Keynes, and it will be in the strange situation of being physically part of Milton Keynes—there will be a seamless divide between the town’s existing settlements and the new estate—while also being in the neighbouring local authority of Aylesbury Vale. That has met massive local opposition, not only because it would be a huge imposition of housing on the fringes of Milton Keynes, but because the new residents would look to Milton Keynes for services—a hospital and schools, for example—and because there would be a significant impact on the transport infrastructure; yet all the revenue from council tax would accrue to Aylesbury Vale. Milton Keynes would bear most of the cost and receive little of the benefit. I should appreciate some guidance from the Minister about how he envisages cross-border developments being considered once the RSS is abolished.
There is time to pause and think again in Milton Keynes. There are already permissions for some 20,000 new houses and the existing local plan continues to 2011. The argument that suddenly abolishing the RSS will mean that all house building will grind to a halt is false. It is important to pause and think through the future. Hon. Members may not be aware that Milton Keynes has pretty much reached the size planned for it when it was designated a new city in the late 1960s. We have pretty much reached the population of 250,000 that it was designed to have. The existing developments will take us to that level. The question is how we grow from there. I think that there should be a local debate about that, rather than anything being imposed, top-down, from central Government. There is a disconnect in politics. People often feel that developments that will have a significant impact on their quality of life are imposed on them, without their having any say. We need to reinvigorate local democracy by giving people a say not just about the quantity of new development, but in the shaping of the style of developments.
We have talked primarily about housing numbers this afternoon, but I should like more detail about what we intend to do to give people the power to shape the design of communities. Will we, for example, scrap density targets and allow local decisions to be made about how many car parking places there should be and about the style of houses? We have been good at building one and two-bedroom flats in Milton Keynes recently, but there has been a dearth of family-sized accommodation with proper-sized gardens and spaces for children to play in. I want more open source planning—the buzzword—in the shaping of new estates. It is not just the number of houses that is important, but the type of housing.
Mr Stewart Jackson (Peterborough) (Con)
My hon. Friend is making a strong case. Does he think, as I do, that it might be appropriate for Ministers to give guidance in regulations about allowing local authorities to develop, with housing associations, many more intermediate schemes—not just rental, but do-it-yourself shared ownership and shared equity, when the time comes—so that the 125% subsidy for social housing will not just be about a bog-standard approach but will relate to a variety and plurality of housing tenures?
Iain Stewart
My hon. Friend makes an important point. One of the arguments that is often made for the central imposition of new housing is a reduction, somehow, in the cost, thus making housing more affordable. That is a laudable aim, but it should not be at the expense of local areas, completely transforming them and imposing settlements that are not welcomed by the existing residents. I am very much in favour of a more flexible system of shared ownership than the present one, to allow a greater mix of the equity that people can hold; that should also be transferable, so that they could take it with them on moving, as they move up the ladder and the needs of their family change.
Milton Keynes is at a crossroads and we want the power to shape our own future to be in our hands. That would go a long way towards reinvigorating local democracy. I hope that different parties will put forward different visions of how Milton Keynes could grow, but the critical point is that it should be our decision. We welcome the idea of the power being in our hands.