Housing: Affordable Housing

Baroness Thornhill Excerpts

Monday 22nd February 2016 Grand Committee

[Baroness Thornhill (LD)]

My Lords, I declare my interest as a deputy chair of the Local Government Association.

I will be very brief and say that I agree with noble Lords and with much of what was said at Second Reading. There will be much more to come. I shall assume that the generic arguments have already been made—not least by the two noble Lords ahead of me—and shall confine my remarks to my main concern, which is that building starter homes instead of, not as well as, social housing will lead to a reduction in homes that are genuinely affordable. Over time—and for me this is the real crunch of the Bill, as I genuinely believe it to be short-sighted and short-term—it will undermine the precious balance of communities that is essential for cohesion and sustainability. Redefining the problem does not solve it.

Will the Government take notice of the Savills research while the Bill goes through Committee? It has already been quoted. It is fairly conclusive in saying that starter homes will be out of the reach of people in 67% of council areas.

I draw the Minister’s attention to a specific issue regarding the price cap of £250,000 outside London. In my borough of Watford, £250,000 will not buy very much. You may be lucky to get a studio flat with a “bed space”—a new concept that I had not come across until I started looking—but there are not many of them. In my home town of Preston, that would buy a decent family home. That is what worries me about the Bill: the housing market is so diverse that one size does not fit all, yet everything in the Bill appears to be centralising and standardising. Councils must be able to retain some flexibility over what is built in their areas, whereas the Bill appears to be undermining that.

That is the case not least in planning provisions in the Bill, which we have not spoken about much. It promotes significant measures reserved to the Secretary of State. This is in sharp contrast to the rhetoric we had during the coalition, with the notion of local determination and acceptance of development by local people through the neighbourhood planning process. This is a real reversal of previous rhetoric used when the current national planning framework was introduced.

We know that London is a hot spot for costs, but there are those on the outer ring of London who are also suffering high prices. Will the Government consider an outer-ring cap? There are many areas just outside London with housing shortages and high prices. Somewhere between the £250,000 and £450,000 prices might help.

There is a mixed picture on affordability, but there is little argument that those whom this policy will help—if it were stated upfront as a political aspiration, that would at least be honest—are the reasonably well-off with parents who can afford the required deposit, which in my area will be £25,000 if it is a 10% deposit. Those same people are currently renting and lament that they cannot rent at current levels and save for a deposit. Indeed, if they have that deposit and then have the mortgage for the rest, they will need a combined income of £60,000 to take on the mortgage on a 3.5 multiplier. That is considerably more than the £30,000 deemed to be, in the words of the Minister, a high salary for those who fall foul of the “pay to stay” policy. That is a huge inconsistency and discrepancy.

At this point, enter mum and dad, or even grandparents, which is positive news for those fortunate folk, but not for the many for whom this is not remotely feasible. It has been cynically said by many that this is a cash windfall to middle-class families, but in truth when people on an average wage struggle to afford the cost of a home even after a large government subsidy, the scale of the issue is truly laid bare. The starter homes programme therefore makes only some homes 20% less expensive, rather than delivering homes that are genuinely affordable and in a quantity to make the difference after decades of underfunding.

Setting affordability aside—I am sure that there will be many arguments about that—I am deeply concerned that starter homes will be the only game in town when it comes to providing the not-so-affordable homes, while the need for real affordable homes remains unabated. We should also look at the language we use around “affordable” and “social”. We need to clarify that.

The change during the Thatcher years for developers to provide social housing by what we now call Section 106 contributions has meant a year-on-year decline in the number of homes available at social rent levels. Coupled with the right to buy—whatever your political views on that policy—that change has contributed to that decline. We know that only one in 10 right-to-buy properties has been replaced by a similar home.

Much more recently, developers were given an opportunity to opt out of providing social housing by claiming to local councils that the financial viability of their scheme was at risk if they had to provide it. This has happened in many councils all over the country. They could challenge the local authority, and have been doing so. In Watford, we have had to employ specialist housing advice and support to argue those cases and fight for much-needed social housing in my area—at considerable cost, money which I would have preferred to use for housing.

If starter homes count as affordable homes, there will be no provision of social housing for rent under Section 106. The key thing is flexibility for councils to determine where, what and when, rather than starter homes being the only priority.

I will learn to time my speeches better; my apologies, colleagues.