Levelling-up and Regeneration Bill

Baroness Fox of Buckley Excerpts

Committee stage
Wednesday 22nd February 2023 Lords Chamber

[Lord Stunell (LD)]

My Lords, I will speak to Amendment 20 in this group, calling for the provision of safe and affordable homes for all. It references a definition of affordable homes that appears in Amendment 242, to which we will come in due course.

Mission 10 in the White Paper—although they are not actually numbered as such, but it is the 10th mission —sets a target that is only seven years away, focusing on creating a secure path to home ownership. According to the technical annexe to the White Paper, it aims to ensure that everyone has access to good-quality housing, with a particular focus on improving areas where quality is low—I underline that. That is a very big ambition and a very worthy one, and seven years is an awfully short time to deliver it.

It is very important because it is also going to be the gateway to tackling a whole set of other missions, which the noble Baroness, Lady Hayman of Ullock, set out in her speech on Amendment 7—which of course we support very much. Health and well-being are essentially connected to the housing quality of the people who are being measured, and that includes their overall capacity to participate properly in education. Is there somewhere for children to spread out their homework? Is there a bedroom that they can sleep in properly? There is no argument that this is a good idea, and indeed the Government have, within planning policies, an intention at least to make sure that affordable housing is provided.

However, what those non-governmental organisations, the homeless organisations and many local councils’ housing departments fret over is that affordability as defined in the planning regulations is actually unaffordability in real life. If we do not shift that definition of affordability and take a more realistic view about what it is, it is absolutely clear that, however much effort is put into housing and affordable housing, it will fail to deliver what the Government want to achieve by 2030. Homes will be simply too expensive for lower-income purchasers, while renters will remain trapped in overpriced and undermaintained property well beyond that seven-year target.

This amendment is designed to come to the rescue. It sets out clearly a route for the Government’s missions to deliver genuinely affordable and safe housing for everyone, creating enough space in the housing market for people with limited means to afford a roof over their head through either renting or buying or through shared ownership schemes. The amendment also requires homes to be safe. I have to say to noble Lords that 10 years ago it would not have been seen as necessary to include that point in a Bill, but the devastating revelations following the horrific Grenfell Tower fire have undermined that complacent view. Again, we know from Shelter and others working in the field that too many people are living in unsafe as well as unaffordable homes.

However, the substantive part of this amendment and the part I want to explore a little more is “an affordable home for all”. It is a great slogan, and of course it is at the heart of the housing debate currently running in our town halls and planning departments, and of course throughout the Government and particularly among their Back-Benchers, among many others. Every local planning authority has an affordable housing policy—and so do the Government. As I am sure the Minister will tell us, they are spending a lot of money on it. Why, then, does it turn out that so many affordable built under these carefully crafted policies are in fact unaffordable to those who need them most? The fact that undermined so many good intentions is that affordability in planning policy is being calculated by the Government by reference to house prices and not by reference to buyers’ income or spending capacity. Obviously, a home which is going on the market at 80% when the 100% figure is £1 million is a very different animal from one that is going at a time when the housing price is £500,000 or £250,000.

This amendment addresses the slippery word “affordable” head on and proposes a definition of affordable that is based on the income of those seeking a home and not, as at present, a notional discount on current market prices. That definition is set out in detail in Amendment 242, which obviously we shall come to in a different group in due course, which is referenced as “Meaning of ‘affordable home’” in Amendment 20. Briefly, we define affordable in terms of local housing allowance for units provided for renters and as a percentage of income in relation to the mortgage costs for buyers. It provides a fundamental reshaping of the term “affordable” so that there is an objective framework within which policies and funding can be deployed, with the knowledge that the homes delivered via that policy will be affordable to those in pressing need of them.

If we continue to misuse the term “affordable homes” in our public discourse and policy-making, we will continue to miss the targets and the Government will fail in their missions. Much worse than that, families across the country will continue to be left out and left behind, and the circle of deprivation will continue with it. I will add that many of the other missions which also have deadlines of 2030 will be compromised or fail completely. This amendment opens the door to a solution by reframing “affordable” in terms of the income of the family rather than the capital price of the home, and I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, my Amendment 21 joins a queue to add, amend or clarify missions. This queue can feel a little like a fanciful—farcical, even—wish list, but the Government only have themselves to blame for the fact that some of us are just trying to pin down these missions rather than rely on guesswork.

My guess is that, as much as the Bill relates to planning, it is not unreasonable to assume that there will be a housing mission. Indeed, in the missions published in February 2022 we are told so. However, I was shocked when I read its content: increase home ownership and housing standards, tick; more first-time buyers in all geographical areas, tick; and a 50% reduction in non-decent rented homes, tick. But, extraordinarily, there is no mention of increasing the supply of houses or of targets to build more homes at a time when we need that to happen with missionary zeal if we are to stand a chance of making levelling up more than a slogan.

If the Government are serious about increasing home ownership, having more first-time buyers and ensuring that the rented sector expands and improves, we need more houses or the policy will run into the housing affordability road block. We heard a lot about affordability from the previous speaker, the noble Lord, Lord Stunell. At present, the average home costs over eight times average annual earnings, as against the historic norm of three to four times. Put bluntly, house prices and rents have risen beyond what any reasonable person would think it acceptable to spend on one of the most basic human needs. Those high prices and rents are responsible for many of the social ills that the Bill is allegedly designed to address—from worsening living conditions, falling home ownership, rising homelessness and the spiralling costs of housing benefit.

Half of all first-time buyers—rising to two-thirds in the south-east—rely on the so-called “bank of mum and dad”, which is fine if you have parents who can do that for you, although, with more and more mums and dads suffering the brunt of the cost of living crisis, that might be on the wane, anyway. Those who cannot turn to their parents are not only left behind but, ironically, end up paying a lot more in rent each month than their peers with a mortgage. Meanwhile, renters in London spend 40% of their income on rent, which is simply unaffordable, and rental prices are being pushed up by supply not meeting demand. We therefore need to build more houses to bring prices into line with earnings, whether we are buying or renting.

The hugely impressive housing campaign group Priced Out, staffed by young people who are passionate about housing, explains this well. It says:

“The affordability of housing is a significant concern for millions of people. If we don’t fix the root cause of this problem, we will continue to ruin lives and futures”.


Priced Out has hopes that the Bill will tackle that root cause. So do I, and that is what my amendment is about.

Of course, there is more to this than a demand for paper targets. Just because something is written down, I do not necessarily trust it. Over the years, we have all heard endless pledges from Governments of all stripes included in all political parties’ election manifestos, yet we still have a supply problem. The UK remains one of the slowest and least prolific homebuilding countries among all 28 members of the OECD. Too often, under previous Administrations’ versions of housing missions, we have seen distractions from the core issue of increasing the supply side.

This Government in particular have tended to fall back on headline-grabbing demand-side quick fixes, such as help-to-buy schemes. However, this arguably makes things worse. Demand skyrockets by giving young, aspiring homeowners a state loan. But that means that prices go up, especially if we plod along with a fixed, stagnating supply of homes.

--- Later in debate ---

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I commend the noble Lord, Lord Kennedy of Southwark, for keeping the issue of the problems facing leaseholders very much alive, to the point of nagging, repetition and maybe boring the Government into submission. It is so important that he has done that, and those who support him really deserve to be commended.

That is why I support Amendments 42 and 43, but they should not be controversial at all; they should be welcomed by the Government. I also commend recent announcements by the Secretary of State, Michael Gove, clarifying—I hope—that the Government are committed to abolishing leasehold and will bring that forward imminently. Hear, hear for that. On this issue at least, many of us across the House, regardless of political differences, will be keen and willing to work with the Government on what we can maybe call the 13th mission of abolishing leasehold.

I want to look at what this has to do with levelling up, because it is a key point. There are 4.6 million leaseholders in the UK and many are first-time buyers, which the Bill seeks to encourage more of. Many of them are from parts of the country that the Bill seeks to level up. We should remember that, in earlier iterations of regional development, the regeneration and gentrification of so-called neglected city and town centres across England and Wales took the form of building blocks of flats. One argument was that densifying areas by building on brownfield sites would allow new housing without urban sprawl or nimbyist objections. My goodness, we even saw such blocks spring up in towns such as Buckley—the place I am from. We joked at the time about the area going posh, with its apartments and café society, never imagining that this would be a source of problems for people rather than a dream come true.

It is tragic to see endless newspaper reports of how this has turned into a nightmare for so many. A recent Manchester Evening News report says that leaseholders in one of the city’s most eye-catching apartment blocks are

“‘pulling their hair out’ over what they claim are ‘obscene’ management fees”

and monthly service charges exceeding £500—for a service charge in Manchester. Think about it; that is a lot of money. It is often even more than mortgage payments.

We should also remember that Margaret Thatcher’s home-owning democracy project of right to buy meant that many former council tenants bought their own home. In fact, they became leaseholders. These former local authority properties are now in the general housing stock and they are relatively cheaper to purchase, especially in London and the south-east. That makes them popular, affordable options as they put home ownership within the grasp of those who otherwise would be priced out of the market. Indeed, when I bought my first house—well, the only house I have ever bought—at 40, it was in those circumstances: the only way I could afford it was to buy an ex-council flat. That was me declaring my interest as well.

Sadly, it has all been a bit of a con, which was only revealed because of Grenfell, as has been explained. It has become clear that leaseholders are not home owners at all. Yes, they have the huge debt in the form of a mortgage, but really leaseholders are a sort of glorified tenant. I will come back to this with my Amendment 210 later in the Bill. However, unlike renters, leaseholders not only have the mortgage but are saddled with maintenance costs, not just of their own property but of whole blocks in the local area. They have no control over expenditure. We should note that there is a new leasehold crisis on the horizon, with local authorities demanding ever-spiralling costs from their leaseholders for building repairs, as councils rush to renovate poor-quality housing to meet the Government’s decent homes standard and to remedy flats to comply with recent fire and building safety legislation.

Council renting tenants are rightly not liable for such maintenance and repair costs, but the bill for entire blocks is then divided between local authority freeholders and individual leaseholders, who have no right to decide the scope or timing of proposed works, or, in fact, to request comparative quotes for contracts. That means that leaseholders are footing the bill for years of underinvestment in council housing stock.

Growing numbers are getting demands for eye-wateringly unaffordable sums. Neil Hosken, a south London teacher, has received a bill for £44,000. In Lambeth, there have been shock bills of up to £98,000. Sebastian O’Kelly from the Leasehold Knowledge Partnership says that his organisation is contacted every week by residents—leaseholders in council blocks—facing financial ruin, and one local council has officials to deal with right-to-buy sales on one side of the desk and on the other officials dealing with buying back council flats from leaseholders who have been wiped out by major works bills. It will be a real problem if we have a Bill about levelling up and we do not tackle this. We will be fooling ourselves if we do not deal with it.

Meanwhile, leaseholders of private flats find themselves, to quote one, “Fighting off one money-making caper after another by landlords and managing agents”. I take the point that we are talking about rogue incidents of freeholders who rip people off, but leaseholders none the less feel that they are being overcharged for insurance, utilities and everything from window cleaning to major building works. The main thing is that they do not have any control.

I think the reason why the Government rightly and perfectly reasonably say that home ownership is something that many people should aspire to, and the reason why a lot of people do aspire to it, in particular many young people, is because people want to have the freedom, autonomy and control of owning their own little place—or big place—so that they will not be dependent on the landlord or anyone else. That is what you think you are getting, but instead leasehold robs you of that control, which instead often belongs to absentee or offshore freehold landlords or their agents, or councils. It is they who call the shots on what happens in your block and even in your own flat. That is why the issue of control of insurance costs is fast becoming a critical battlefield in excessive charges for leaseholders, who are forced to pay towards a group insurance policy but have no control to, as it were, “go compare” which is the best insurance policy to choose.

I do not know whether noble Lords have been following the heroic work of Angie Jezard from Canary Riverside, who spent three years of her life uncovering that she and her fellow leaseholders had spent £1.6 million in secret insurance commissions to a freehold-linked company. This is potentially corruption, and leasehold campaigners and their tireless volunteer legal reps, such as Liam Spender, estimate that excessive costs have been paid that run into thousands of millions across the UK. That is why the proposals in Amendment 42 from the noble Lord, Lord Kennedy, on mandatory disclosure and so on, are important as a first step, but as I hope I have illustrated, and as he has regularly illustrated, the myriad problems associated with leasehold as a system mean that it has to be abolished. This is a Bill that suits that cause, because we can say that we believe in levelling up and that the whole system of leasehold is holding back that project when it comes to housing.

[Lord Greenhalgh (Con)]

My Lords, I declare my residential and commercial property interests as set out in the register. I am also proudly now a vice-president of the Local Government Association—finally.

I rise, as I naturally do, in support of the noble Lord, Lord Kennedy of Southwark, who is flanked by his formidable wife, the noble Baroness, Lady Kennedy, who sticks up just as doggedly for Generation Rent. I am very pleased to support this amendment. It is a grand coalition, if you like, of the noble Lord, Lord Kennedy, my noble friend Lord Young—who I used to describe as part of the awkward squad, but obviously I am on the Back Benches now so that is irrelevant—and the noble Baroness, Lady Fox of Buckley, who are poised to ensure that this is taken really seriously by the Government. That is why, as a former Leasehold Minister, I join and add my voice.

I want to summarise each of these individuals in one word, which is hard, but I have thought about it for about five minutes. The noble Lord, Lord Kennedy, is dogged—I can remember that there was not a single week when I was a Minister when he would not pop up, and probe, and cajole, and gently swipe, to get stuff done on behalf of all those poor leaseholders when it came to leasehold reform, and to ensure that we got the Building Safety Bill that we needed; that is a truly great contribution and I recognise that.

But I am going to answer some of the points that he raised, because unfortunately I am a bit immersed in the policy detail. There was some action by this Government. When I was the Leasehold Minister, we brought in the first stage of leasehold reform that removed escalating ground rents from the equation, which was the fuel that generated the whole business of leaseholders being exploited by very tricky freeholders. It was the first part of the LKP model—the Leasehold Knowledge Partnership model—of reform, so we got stage 1 done. Now we are set for stage 2 that brings in very important measures for existing leaseholders to enfranchise and get a share of the freehold.

Equally, I chaired many a session of something called the Commonhold Council. I am a commonholder in France and I know that you can be a commonholder in Scotland. It is a tenure that I support and it is something that we want to see widespread adoption of. But we have got to recognise that we have to kill this exploitative business for the future, and that has been partly done by the first stage of leasehold reform. We have got to set a direction that encourages people to have a share in their freehold, and also do what Labour failed to do—I am sorry to be party-political here—under someone called Tony Blair and get it right this time to see the widespread adoption of commonhold.

So the noble Lord, Lord Kennedy, is dogged, and I turn to my noble friend Lord Young, who for me is forensic. There is no element of parliamentary procedure that has not been read by my noble friend Lord Young: he reads everything. The message to the Government is, “Publish the Bill”—which is what the Law Commission advised as well. So I say to my noble my friend the Minister, “Publish the Bill”. We can then start the pre-legislative scrutiny in a constructive way, reaching across the aisle and working together to make this the best possible Bill before we run out of parliamentary time.

I am going to describe the noble Baroness, Lady Fox of Buckley, as philosophical—we have got dogged, we have got forensic and we have got philosophical. What we have before us—a brilliantly crafted amendment —is the opportunity to level up home ownership, and that is why I am here in support of this grand coalition.