Housing and Planning Bill

Baroness Young of Old Scone Excerpts

Thursday 3rd March 2016 Lords Chamber

[Baroness Williams of Trafford]

My Lords, I think the idea is that we want to make the system as simple as possible, but I completely accept the fact that we do not want to leave it open to abuse. There are examples of that under right to buy, where properties might have been used as second homes. Of course, we hope that the second-home stamp duty should deter some people—noble Lords included—due to the quite substantial price now involved in buying a second home.

[Baroness Young of Old Scone (Lab)]

Could I just challenge something that the Minister said? The nub of this is a point that we are going to come on to debate later: the in-perpetuity issue. A lot of these potential misuses, both at point of purchase and at point of sale subsequently, could be resolved very simply if the Government were to relent and see these starter homes as being starter homes in perpetuity with a permanent discount. I was very unconvinced by the Minister’s argument that, otherwise, people in these starter homes would be unable to get on to the next rung of the ladder in the housing market. Do we really want to be persuading people to go up the housing market ladder in an inflated way? That is partly the problem with the housing stock at the moment: prices are inflated, and the steps between a small property and the next rung up the ladder are huge, particularly in areas of high housing cost such as London. What is the harm of them staying in the smaller property, if they have to, until such time as they can either achieve their aim with additional savings to buy into the next higher grade or get to the point at which they have a sufficient income level to be able do it? It seems to me that the system will struggle in the future with the sorts of abuses that the Minister is struggling with, because of the inability to control what happens after the first sale.

[Baroness Williams of Trafford]

I take the noble Baroness’s point, but the Government’s wish is that people who want to move—and there are many reasons why people would want to move in the future—will be able to do so without being restricted by the same problems that they faced when buying before the starter home discount came in. Also, that mobility introduces a supply into the market. Noble Lords from all round the House have talked about the lack of supply and the lack of supply at a certain level. So it has a dual purpose, in allowing other people to come on to the market but also introducing supply when those people choose to move on.

I now move to non-government Amendments 43 and 44. Over the last 20 years, we have heard that the proportion of those under the age of 40 who are homeowners in England has declined by over a third, from 61% to 38%. There has been a 26 percentage point increase in the proportion of that age group who rent homes in the private sector, from 18% to 44%. Therefore, as one has declined, so the other has gone up. This is a problem faced by an entire generation. It would be wrong to say that some people cannot benefit from starter homes and buy a home in the location that works for them simply because they are currently living or working elsewhere. They could, for example, currently be priced out of the neighbourhood of their choice, or they could be relocating for work or other personal reasons. The effect of a local connections test on starter homes would be to restrict access for some people for no good reason. A starter home purchaser must commit to living in the property for five years and there will not be the opportunity to rent out the property, as we have already discussed. This must be a better test of commitment to an area.

It is also important that there is consistency, in order that our reforms and the commitment to deliver 200,000 starter homes are widely understood. This is particularly important for lenders and developers, and their support and engagement are critical to achieve delivery. Putting differential requirements in place as a matter of course, such as a local connection test, would introduce complexity that we do not want in getting housing delivery on the ground. However, my noble friend Lord Young brought up the point that a local connection may be warranted, and I recognise that. It has long been a common feature of rural exceptions sites, where opportunities for new housing supply are very limited. As part of our consultation on national planning policy, we sought views on whether local planning authorities should have the flexibility to introduce a local connection test for starter homes on rural exception sites. This would reflect the particular needs of some rural areas, where local connections are important and access to the housing market for working people can be extremely difficult. It would also be consistent with existing policy on rural exception sites. We are currently considering consultation responses on this point.