Housing: Affordability

Lord Shipley Excerpts

Wednesday 22nd January 2014 Lords Chamber

[Lord Shipley (LD)]

My Lords, I am very grateful to the noble Baroness, Lady Ford, for initiating the debate. I declare my interest as a vice-president of the Local Government Association.

As we know, affordable housing is the sum of affordable rent, social rent, intermediate rent and affordable home ownership. It is provided to eligible households whose needs are not met by the market, and that eligibility may reflect local authority allocation policies, local incomes and local house prices. However, for someone seeking housing, the question is a different one. It is: can I afford what is said to be affordable?

We have debated social housing on several occasions. We know that we have a waiting list of 1.8 million families. We know that house prices are rising, particularly in London, with a consequential rise in rents. We know that we need to build more and we know that large numbers of people can never aspire to home ownership and need to rent. This problem is compounded by reduced council tax support and the underoccupancy charge, together with the benefit cap, particularly in London, all of which are causing serious strain in the finances of many households. For them, their rents can become unaffordable when they used to be affordable.

What should be done? Many good ideas have been put forward—and we will hear some tonight—for the short to medium term, but I want to suggest a number of possible actions the Government could take quite quickly. First, it should be an absolute requirement that when one council home is sold it is replaced by another. This “one for one” is government policy but councils, unsurprisingly, can have great difficulty delivering it since they may not get enough money to meet the cost of the replacement home. They need help in that regard.

Secondly, will the Minister examine the realities of the underoccupancy tax? There are tenants who want to move to something smaller, and therefore something that is more affordable, but who cannot move because there is nowhere suitable to move to. Will the Government increase support to encourage more providers to modify more properties to create more units quickly to which people can downsize?

Thirdly, as regards the housing borrowing cap, in the autumn Statement the Government announced that borrowing limits for housing revenue accounts would be raised by £150 million a year in 2015-16 and 2016-17. This was very good news and something that many in this House have been urging the Government to do. If the cap did not exist, up to 60,000 new homes could be built over the next five years. The risk is minimal because the markets would set the cap, as the prudential borrowing required would be secured by the rental income. Removing the cap would of course bring local authorities into line with housing associations. So I hope that the recent announcement, which is welcome, could be followed by a further rise in the borrowing cap.

I recognise the measures the Government have taken since 2010 to try to drive up housing starts and affordable homes. The trouble is that the impact has been limited and further intervention is clearly needed if the supply is to be increased and the cost to individual households is to be made reasonably affordable.