Housing: Affordable Housing

Baroness Williams of Trafford Excerpts

Monday 22nd February 2016 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)]

My Lords, I thank all noble Lords who have taken part in this debate, particularly the noble Lord, Lord Shipley, for securing it at what appears to be a very timely moment. I am sure waiting for three months has been worth it.

This Government have a good record on affordable housing delivery. Between 2011 and 2015, 193,000 affordable homes have been delivered in England, which exceeded our target by 23,000. The spending review announced that we will invest £8 billion to deliver a further 400,000 affordable housing starts. Councils will continue to support delivery of a range of affordable housing. A number of noble Lords brought this point up—it is not just about starter homes but about a range of different types of affordable housing. Councils are in the best position to bring forward more land for affordable housing.

I think it was the noble Lord, Lord Beecham, who brought up council housing and asked what our aspirations were for it. More council housing has been built since 2010 than in the previous 13 years, and 2014 saw the highest number of council housing starts for 23 years. However, we are clear on prioritising support for low-cost home ownership. We want current and future generations to experience the benefits of owning their own homes, and I believe our reforms are the best way to achieve this.

The right to buy has already helped 2 million families to realise their dream of owning a home. We reinvigorated it in 2012, and as a result sales have jumped from 2,600 in 2011-12 to 12,300 in 2014-15. This shows that these realistic discounts have enabled significantly more people to realise their home ownership dreams—I see my noble friend Lord Young to my right, who asked a Question earlier about housing. A question was asked in Committee about the decline in home ownership. Last week saw a report that said that, for the first time, decline had halted. Hopefully, we are on an upward trajectory.

[Lord Beecham]

Could the Minister tell us how many of the houses that were sold were replaced?

--- Later in debate ---

[Baroness Williams of Trafford]

I will come to the figure on replacements during my speech, if the noble Lord would bear with me.

Until now, the discounts available under right to buy have been available only to tenants in local authority properties and some former council properties. Extending these discounts to housing association tenants in England will end that unfairness and mean that up to 1.3 million more families will get a realistic chance to own their own home. Working with the National Housing Federation, we have secured a voluntary agreement with housing associations to give their tenants the opportunity to buy their own homes with an equivalent discount to the right to buy.

As set out in the voluntary agreement with the National Housing Federation, tenants of housing associations will be eligible for the equivalent discounts that are available under the right to buy of up to £77,900, or £103,900 within London. The extended right to buy will make home ownership affordable for the first time for many more housing association tenants. The Government have been clear that the sale of high-value vacant council housing—I stress vacant—will pay for the cost of compensating housing associations for the discount.

Starter homes will provide an affordable step into home ownership by offering young first-time buyers a minimum 20% discount on a new home. This model gives purchasers the benefit of immediate ownership and, importantly, will help them achieve the step up to their second home in due course. A number of noble Lords made the point about securing that discount in perpetuity. We do not want people five years down the line—or however long it is before they sell their house—to suddenly be at a disadvantage and find there is another cliff for them to overcome. We have decided not to insist on that in perpetuity discount to allow people to step up on the housing market.

We expect starter homes to be valued at below the average first-time buyer price for the local area. Developers must build them for sale to young first-time buyers and will ensure that they price them for this market. With a 20% discount, average market prices for homes bought by first-time buyers in the third quarter of 2015 could be reduced to £145,000 across England, excluding London, enabling more first-time buyers to buy their own home. We have examined affordability of starter homes to those who are currently in the private rented sector. If they were to buy in the lower quartile of the first-time buyer market, outside of London, up to 60% of households, currently renting privately, would be able to secure a mortgage on a starter home, compared with 45% who could buy a similar property at full market value.

There are a number of different points to make about the market, including saving for a deposit through a Help to Buy ISA. We are also looking at the possibility of allowing a Help to Buy equity loan to be offered on a starter home to ensure that a first-time buyer needs only a 5% deposit.

Starter homes are just one part of our package of affordable housing options. They will help to address a real problem of access to home ownership for the under-40s, the one demographic excluded from this market.

The noble Lord, Lord Shipley, asked about affordable rent. As we have discussed already under the housing Bill, £1.6 billion has been put aside for houses for affordable rent. That will be grant funded, so they are absolutely guaranteed to come on to the market. These are minimum positions for this sector, because local authorities may well do a deal with developers to produce more—and, of course, there is the £4.1 billion that we have put aside for 135,000 shared ownership houses, which will require a deposit of something like £1,400. That may be unaffordable for some people, but I think for most people it will be within the scope of what they can afford.

The noble Lord also made a point about garden cities. The Government are certainly not closed to suggestions about proposals for garden cities; they are a very good way to build a lot of houses and, in fact, to build sustainable communities within certain areas. I know of a number of areas where people are very keen to bring such proposals forward.

A number of noble Lords made the point about the £450,000 cap in London and £250,000 cap outside of London. A cap is precisely what it is—it is not an average house price. Many properties will fall well below that cap, and the Government will keep an eye out to make sure that housebuilders do not abuse that provision for first-time buyers for starter homes.

The noble Lord, Lord Shipley, made the point about the forced sale of high-value assets. The high-value assets sales will not be for occupied properties but for vacant properties at the very top of the market, and details of that will come out in due course. He also made the point about homelessness going to 1980s levels. Homelessness is at less than half of the 2004 peak, and the Government are maintaining spending centrally and locally on homelessness prevention. The noble Baroness, Lady Grender, talked about continuing to discuss this issue and bear it in mind as we go through the housing Bill. I think that the last time we had a debate on this matter, I mentioned the rough sleeping social impact bond, which we intend to bring forward. We have brought forward a homelessness SIB, which was the first in the world.

The noble Lord, Lord Shipley, also talked about replacement of property in the local area. This is what we fully expect: that a housing association will want to build in the local area.

The noble Lord, Lord Beecham, talked about 53% of housing associations renegotiating right-to-buy agreements. If that happens he will, I am sure, reiterate his words to me; we have, however, no evidence that it will. This agreement was made in good faith and the first five pilot housing associations are already starting on it. He also asked how the exemptions on the right to buy would work. We are very keen that these exemptions are negotiated and agreed locally in a form that is best for the local area.

The noble Baroness, Lady Thornhill, talked about starter homes being the only game in town. They are a priority for the Government because of the demographic group that has fallen out of home ownership, but they are not the only game in town. Affordable homes for rent, shared ownership, custom build—these will all be promoted in the housing Bill. She mentioned flexibility for councils, and I totally agree—other than the duty in relation to starter homes, councils will have flexibility on what is best for their areas.

I am conscious of the time, but I had better answer the questions of the noble Lord, Lord Kennedy, before I get told off again. He asked about the quality of housing. That is a very good point. Design quality will be a focus of my noble friend Lord Heseltine in estates regeneration. We are not trying to gentrify estates; we are trying to give people on regenerated estates the quality of life that they deserve.

The noble Lord also asked whether starter homes are a gimmick. They are not a gimmick. We recognise that the under-40s are being increasingly precluded from the housing market and we want to reverse that position. He rightly made the point that historically, London and the south-east have been the hardest areas for people to own their own homes. That is why we are focusing so much on providing not just one-for-one replacement, but two-for-one replacement, for people accessing their own homes in London.

Finally, the noble Lord, Lord Kennedy, talked about infrastructure funding in connection with some starter home projects. Infrastructure funding can be accessed through Section 106. He is right that CIL is not applicable here, although local authorities can negotiate Section 106 infrastructure funding if it is viable—we do not want to push developments out of viability. Finally—because I have gone well over time—he talked about social rented sector rents versus private sector rents. In fact, the percentage increase in the social rented sector has got far out of kilter with the private rented sector, and we have tried to address this through the Welfare Reform Bill, although some noble Lords will not agree with that approach at all.

[Lord Kennedy of Southwark]

Would the Minister come back to me, perhaps in writing, with regard to people on the new national living wage, a big policy of the Government? They have no way of affording a starter home—a number of organisations have said so. How will the Government address that? The Minister also referred to the fact that, in addition to starter homes, other forms of housing would be supported. Will the Minister write to me about the sums involved?

[Baroness Williams of Trafford]

I will certainly write to the noble Lord about the sums of money involved. I agree that not everybody will be able to afford a starter home, which is why we have so many products we intend to bring forward. For shared ownership, which I mentioned earlier, it could be that one needs a deposit of £1,400, which would suddenly make the prospect of home ownership—even if it is part ownership —far more of a possibility. I appreciate, however, that certainly in London the housing market is very expensive.

With that I will finish because I have gone three minutes over time. I did not want to neglect the noble Lord, Lord Kennedy, because I did before, but I have a load of questions I have not answered, so perhaps I could write to noble Lords.

[Lord Shipley]

Before the Minister sits down, can I thank her for her reply? I hope that two things will be explained in writing. The first relates to the figures quoted from the National Housing Federation, the noble Lord, Lord Beecham, Savills and Shelter. I believe those figures to be true. If the Government have had discussions with any of those organisations, or feel that other figures are correct, it would really help the Committee to know exactly the Government’s view of them. At the moment, I think all those figures are correct. If they have had discussions, could we know about them?

Secondly, will the Minister respond specifically on the issue of high-value council properties? I understand that there will be, either through regulation or perhaps in the Bill, some clarification about what “high value” actually means. I draw it to her attention that, by their very nature, larger homes tend to have a higher value and that larger homes are appropriate for larger families. Of course we understand that they will be sold only when not occupied, but if we end up with four-bedroom —or even more—properties being sold, it will help nobody.

[Baroness Williams of Trafford]

The noble Lord makes a good point. We would not want to get rid of all the four and five-bedroom high-value assets in an authority—meaning there would be no houses of that kind—so we have definitely thought about that. As for our discussions with Savills and others, I am certainly happy to write to all noble Lords who have taken part in the debate and place a copy of the letter in the Library.

Committee adjourned at 6.07 pm.