Self-build and Custom Housebuilding Bill

Brandon Lewis Excerpts

Friday 24th October 2014 Commons Chamber

[The Minister of State, Department for Communities and Local Government (Brandon Lewis)]

It is a great pleasure to say that the Government strongly support the Bill, as I think the House is well aware from the comments that have been made. I welcome the commitment of my hon. Friend the Member for South Norfolk (Mr Bacon), a fellow Norfolk MP, who has championed the cause of self-builders and custom builders as chair of the all-party group on self-build, custom-build and independent housebuilding—I understand that its name is shortly to change again. I am happy to endorse this innovative piece of legislation.

This debate is a really good example of what this House does fantastically well and of the importance of private Members’ Bills. My hon. Friend has taken up this matter of his own accord, worked it through and come up with a Bill that enjoys cross-party support and will be an important step for our country. Thousands of people across the country are taking on this type of building project, and we want to see that grow much more. In years to come we may well be able to look back and see that that growth in the market started here in the work we are doing this morning on this private Member’s Bill.

I will take this opportunity to explain to the House why the Government are so strongly supportive of custom builders and how the Bill will help to take forward our proposals for a new right to build, which we are currently consulting on. The Government are committed to increasing housing supply and helping more people achieve their aspiration of a home of their own. When we came into office, house building in England had fallen to levels not seen since the 1920s and many sites across the country were stalled. We have spent the past four and half years fixing that, and we can see our policies working.

However, we must also accept that for many years this country has not built enough houses and that our population is growing. We can see that when we think about our own families. My parents had three children and we lived in one home. All of my siblings now have a home of their own and we all have, or are about to have, two children. That means that within two generations one family will have gone from needing one house to needing 10 or more, depending on how many children my siblings end up having—my wife has made it very clear that two children, wonderful though they are, is quite enough. We are seeing our population and the need for housing grow.

We are rebuilding demand through Help to Buy so that hard-working people with sufficient earnings can get on and fulfil their aspiration to own their own home. We are boosting supply through planning reforms, as the hon. Member for Wolverhampton North East (Emma Reynolds) outlined, with the national planning policy framework widely recognised as a fantastic step forward. We are investing through our get Britain building campaign, large sites and builders finance funds, which make sites viable for builders so that they can build out their sites and do what they do best—build the homes we need. That action is delivering more new homes. Nearly 480,000 homes have been built since 2010, including over 200,000 affordable homes. New housing construction orders and the registration of new homes across country are at their highest level since 2007.

However, we know that we cannot just rely on a delivery model that is dominated by volume house builders. Much of the housing built during the last boom was in the wrong place and was of the wrong size, which did not meet homebuyers’ aspirations. That is why, looking forward, we want to see greater diversity in the housing market, with more competition, more small and medium-sized home builders, more new entrants and more new development, to increase the speed and quality of the housing we build in this country.

We want to see small builders grow further. The hon. Lady outlined the importance of small builders building on small plots. The Bill can directly provide a huge boost to the small building industry, because it will appeal to those kinds of builders to pick up the contracts from home owners, and potential home owners, who want to be part of the custom and self-build market. We have also introduced the builders finance fund for small builders. I was pleased to see Lloyds announce this week its plans, following our meeting last week, for a £50 million fund aimed directly at small builders.

The Government strongly believe that custom and self-build housing can play a crucial role as part of a wider package of measures in securing greater diversity and helping to deliver the homes people actually want. The hon. Lady and the hon. Member for Nottingham North (Mr Allen) mentioned television programmes such as Kevin McCloud’s “Grand Designs”, which bring a new profile to custom build. The intention of this Bill, and the fantastic work my hon. Friend the Member for South Norfolk is doing, is to make people more aware of that opportunity and make it more available to them, turning it into a wider market. More people will start to appreciate that they can build their own home at an affordable price, and often more affordably than buying directly from a developer.

It is right to put on record the important distinction between custom build and self-build within the sector. The definition of “self-build” covers someone who directly organises the design and construction of their new home, while “custom build” covers someone who commissions a specialist developer to help to deliver their own home. What matters for the purposes of this Bill and our proposals on a new right to build is that we develop a framework that promotes both.

[Mr Allen]

That is a really important distinction if we are to retain credibility and trust as this Bill moves forward. It is not good enough for the big-volume builders just to offer to put a few extra knobs on and call that custom building. The custom building that I am referring to—as is, I suspect, the hon. Member for South Norfolk (Mr Bacon)—occurs where there is a sense of creating something. It might not be entirely original; there may be elements that can be drawn down and fitted in. I think that is the concept—I am sure he will correct me if I am wrong—that we are all proposing in trying to move self-build and custom build forward.

[Brandon Lewis]

The hon. Gentleman makes a good point. Having explained the differences between the two, for the purposes of this debate I will use the terms “custom build” and “self-build” interchangeably—but I want to make it clear that there is a difference between them. He is absolutely right. With regard to volume house building, including on large sites, we would like eventually to see opportunities within that put aside for these projects. I will touch on that later, particularly as regards garden cities and the garden city principles we are using in areas such as Ebbsfleet.

It is realistically possible that, with the use of modern technology and the way in which modern building techniques are now moving, we will not be that far away from house builders, even in large-volume house building, adapting parts of their site, at least, to a point where a member of the public who wants to buy their own home can walk on to it and instead of doing what they tend to do now and saying, “What plots are available and which house are you building on that plot,” and, “Thank you, that’s the one I would like to buy,” being able to say, “I want that plot with this style of house, and I want to do this or that with it,” so that they can then have that house built for them by the builder more quickly, we hope, than the 20-plus weeks that it takes at the moment.

[Bob Stewart]

Does self-build also apply to someone who takes a wrecked old barn, say, and decides to make it into a home? If it was not anything much before—a sheep pen or something—but then becomes a home, is that defined as “self-build”?

[Brandon Lewis]

My hon. Friend gives me a chance to clarify the situation. Earlier this year, we changed the permitted development rights on farm buildings, in particular, to allow them to be converted into homes. They would probably come more into the conversion category, unless it involves somebody being able to get planning permission to demolish what was there and then move on to self-build or custom build, as appropriate. I guess that it somewhat depends on the size and quality of the sheep pen.

Many people across the country would love to build their own home, whether by building it themselves or by commissioning a specialist developer. As has been noted, research by Ipsos MORI has shown that over 1 million of them are looking to do so in the immediate future. We know from the latest Building Societies Association consumer survey in September that more than a third of Britons are open to building their own home. That is a phenomenal number to whom this Bill could open up a new market.

That strong level of interest is not surprising. Custom and self-build housing offers people more choice and the ability to design a home to suit their own needs, leading to greener and better-designed homes. If people design their own home, as I am sure the hon. Member for Wolverhampton North East remembers from the home with her parents that she described, they tend to live there longer, and that is good for building stronger communities. In many cases, it is also more affordable than buying a home in the conventional way. A report published by Lloyds Banking Group in 2013 concluded that self-builders can save between 20% and 25% on the cost of an equivalent home on the open market—a crucial saving for many looking to get on the housing ladder. That brings things up to the levels we are talking about with the new starter homes programme under the next Conservative Government.

There are wider benefits too. A strong custom-build sector brings new opportunities for medium-sized and smaller house builders, as well as for housing associations that are looking to diversify their offer. We know this because the Federation of Master Builders and the National House Building Council have found that most smaller builders want to do more custom-build projects. More housing associations are now looking at the option of custom build. It presents a huge opportunity.

[Heidi Alexander (Lewisham East) (Lab)]

As my hon. Friend the shadow Minister said, there is a very exciting project in my constituency, where L&Q has worked with a group of young people to develop 10 new self-build properties. Does the Minister recognise that such projects give important skills to young people who want to develop their careers, as well as providing them with a house at the end of the process?

[Brandon Lewis]

Absolutely; the hon. Lady makes a good point. That is a super scheme. L&Q is also doing some fantastic work in regeneration across London. She gives a good example of how house building is not just about providing homes but plays a hugely important part in our communities, as we all know, with people building their own homes and learning new skills in everything from the building itself right through to project management and financing. That is a hugely important option. This also mixes well with modern technology. I saw the building opportunities created by Accord up in Walsall, where there is a factory with 19 staff, 17 of whom were unemployed before it opened. Within weeks, they were building houses, which helps them with their skills challenges.

This sector can speed up the supply of new homes where there is a strong demand for plots, because custom builders do not build for profit—they want to get their project up and running, built and finished as quickly as possible so that they can move in. The up-scaling allowed by modern technology can help even more, so that we start to move from the 20-plus weeks that traditional building can take to just a few weeks. It sustains and creates new jobs and, as the hon. Member for Lewisham East (Heidi Alexander) just outlined from the experience of her own community, supports local economies. The sector already makes an important contribution to our overall housing supply, with about one in every 10 homes being built or commissioned by individuals. Many people are not fully aware of how widespread this already is. It is important to the national economy, turning over about £4 billion per year.

However, the sector in England is not yet fulfilling its potential. In many other European countries, more than half of all new homes are built or commissioned by self-builders. Several hon. Members have referred to this. In Germany, for example, the figure is about 60%, while Austria builds over 80% of its homes this way. Crucially, in these countries, building one’s own home is not just for the privileged few—there is a strong tradition of self-build and custom build right across the social spectrum, and there should be in this country as well. Although I, like many others who have spoken, greatly enjoy “Grand Designs”, it is important that we see custom build not as a hugely challenging activity that only a few have the resources and time to aspire to, but as a mainstream activity that people from all walks of life can participate in. Crucially, hard-working people on modest and reasonable incomes should have the opportunity to build the homes that they want for themselves and for their families.

That is why it is important that we tackle the four key barriers that face self-builders and custom builders. First, there is a lack of suitable plots of land to build on, as we have heard. Only yesterday, I was delighted to be able to talk to the landowners at Ebbsfleet about the opportunities for making land there available as part of the project. Secondly, there is limited finance available to custom builders, especially in the development phase. Thirdly, the significant amount of red tape, especially around securing planning permission, can put off many prospective builders and make life very difficult and costly for them. Fourthly, there is a lack of independent advice that can take people through the process of building or commissioning their own home from start to finish.

We as a Government have taken strong action, in partnership with the industry, to tackle the key barriers holding back the growth of the sector. We are already encouraging more plots of land to be made available through the planning system. Since 2012, local councils, through the NPPF, have been required to assess and plan to address the need for all types of housing, including the demand from those wishing to build their own homes. This has been backed up by our planning guidance earlier this year. I am pleased to say that many are responding with a wide range of policies, proposals and initiatives, many in partnership with the private sector, from Newcastle to Plymouth, and from Norfolk—I am pleased to say, as a Norfolk Member of Parliament—to Cornwall. This past year has seen a record number of permissions, with 230,000 homes being approved through the planning process.

We have also identified 12 Government-owned sites, which the Homes and Communities Agency is releasing for self and custom-build development. The sites include Trevenson park in Cornwall, where Carillion-Igloo proposes up to 60 plots, which sets a good trend.

We have been actively addressing the finance challenge, too. In 2012, we launched a £30 million custom build homes fund to provide repayable finance for larger custom-build developments. That has since been completed by giving self-build groups access to £65 million under the affordable housing guarantee programme, and by introducing, earlier this year, a £150 million five-year “serviced plot” investment fund to finance up to 10,000 more plots. We have been engaging with lenders—including meetings I have had in the past two weeks directly with the major lenders—to see how we can improve the number of self-build mortgages available to the sector.

We have been removing red tape. Self-builders are now exempt from the community infrastructure levy, potentially saving them thousands of pounds on individual projects. We have just finished consulting on a similar policy change to section 106 charges, which, if implemented, will exempt smaller scale housing projects from paying costly planning obligations—the very things that can sometimes prevent this kind of small-scale personal development from happening. We have also simplified design and access statements and made it easier to change the use of buildings to housing, which we know the industry has welcomed.

We are working closely with the National Custom & Self Build Association, which, as other Members have said, deserves great credit, particularly its chair, on the work that it and others in the industry have been doing to improve the advice available to consumers and developers, including the development of an online self-build portal to provide better information for self-builders, which now includes a plot-finding and “find a self-build contractor” service.

That action is having a real impact. According to the National Custom & Self Build Association, there are now more than 5,000 new plots in the pipeline, with many new projects across the country. Many councils are now bringing forward land and developing new initiatives to support custom builders, and there are more lenders operating in the market—26 compared with just 16 in 2011.

We recognise, however, that there is still a long way to go if this form of housing is to become a mainstream option in our country. In particular, we need to do more to address the lack of suitable plots of land being made available for self and custom build, and we know from our constituency mailboxes about the frustration that that lack of land can cause people.

That is why we announced in the Budget earlier this year that we would consult on a new right to build. The idea is simple: prospective custom builders will have the right to a plot of land from their local council to build their own home. Implementing that right in different land markets across the country, with different challenges and opportunities, is potentially complex, so we want to consult widely. I am pleased to say that we published our public consultation on the right to build yesterday, to coincide with the Second Reading of this excellent Bill.

The consultation sets out our vision for the right to build. First, eligible prospective custom builders, including groups of individuals, will be entitled to register with their local planning authority for a suitable, serviced plot of land on which to build or commission their own home. They will be recorded on a right to build register. Secondly, the demand for custom build on the right to build register will be taken into account in the preparation of local plans, so that appropriate planning policies are in place to bring forward sufficient plots of land for custom build. Thirdly, and crucially, registered custom builders will be offered suitable plots of land, with planning permission, for sale through the local planning authority at market value.

This is an ambitious vision, giving local councils an important new role stimulating custom build in their area. I hope as many prospective custom builders, local authorities and businesses as possible respond to the consultation over the next few weeks, to help us tailor the right to build to every local area and every aspiring self-builder in the country. As part of the process, we also intend to ensure that we consult the National Custom & Self Build Association and the Local Government Association. We want all the partners that can deliver this future prospect to work together in order to deliver it in the right way. To underpin the consultation and ensure that the right can work across the country, I announced in September a network of 11 right to build vanguards to test how the right can work in practice in a range of different circumstances.

I want to be clear that the full right to build will only be legislated for in the next Parliament. In particular, the idea of local councils offering plots of land to registered custom builders needs careful consideration. I am delighted that there is cross-party support to make sure that we can work to deliver that. We want to ensure that the right forms an integral part of the planning system and that it does not override the local plan process or trump existing planning designations that are designed to constrain inappropriate development and protect precious landscapes such as our green belt. We want to proceed carefully but fully, and to ensure that the views from the consultation and the experience of the vanguards play their part in informing the full legislation.

We think, however, that there is merit in legislating in this Parliament to establish a key foundation of the right to buy, namely the establishment of local registers of custom builders who wish to acquire a suitable plot of land to build their own home. I am delighted that my hon. Friend the Member for South Norfolk has given us the opportunity to work with him on his private Member’s Bill to put in place that early legislation.

Specifically, as my hon. Friend has emphasised, the Bill will ask local planning authorities to maintain a register of custom builders who want a serviced plot of land in their area and to have regard to the demand of the register in the exercise of their planning, housing, regeneration and land disposal functions. As such, it builds on national planning policy and guidance, which already requires local planning authorities to identify and plan for local demand for custom build in their local plans and five-year deliverable housing supply. In particular, the guidance already recommends that local planning authorities should develop registers of custom builders to help identify local demand.

The Bill as drafted sets out the broad framework for the register and the need for local authorities to have regard to it. The Secretary of State will have the power to make regulations about the operation of the register and issue statutory guidance to local authorities. We are very keen to ensure that regulations and statutory guidance take account of the outcome of the consultation and, crucially, the experience of the vanguards.

Ultimately, it is important that the register is seen as valuable to prospective custom builders—who are, after all, the consumer—and proportionate and not burdensome on local authorities, which we want to deliver this opportunity. That is why we are keen for the consultation to seek views about the practical operation of the register and the balance between a common national framework and—this is hugely important—local discretion and local accountability. In particular, an individual or group of individuals that seeks to acquire a plot of land in a local authority area to build their home would, under the Bill, be entitled to apply to register with the local planning authority.

However, it is important that custom builders have the opportunity to express preferences about the nature of the plot that they ideally seek for their home. We therefore propose, through regulations and statutory guidance, that applicants would have the opportunity to set out broad preferences in their application, such as general location—for example, a particular town—or a realistic price range for the plot based on local land values.

At the same time, the register is intended to demonstrate local demand for custom- build plots. Those on the register should genuinely be seeking to build or commission their main home, and have the financial means to acquire a plot at a going market rate and to build their home on it. We therefore propose to set out eligibility criteria in regulations. If an applicant fails to meet any of the criteria, the local planning authority would have the right to reject the application and not include it on the register.

The consultation specifically suggests four possible criteria—age, local connection, financial viability, and a main residence test to ensure that people are registering only to build their own main home, not a second home or a property to rent out. There is particular merit in giving local authorities the discretion and the right to ask prospective custom builders to demonstrate a local connection to be eligible for registration. That is especially important as new custom build developments should contribute to meeting local housing need, as identified in the local planning process.

We want to ensure that authorities have at hand the tools they need to manage demand effectively; for example, in areas of high demand, such as national parks. That will ensure that those areas are not overwhelmed, and allow the register to focus on identifying and supporting local need. At the same time, we recognise that some parts of the country will want to attract custom builders from outside the local area as part of a wider regeneration plan.

Local authorities will have the power to remove an individual from the register on certain grounds to be specified in regulations—for instance, if an individual notifies the local planning authority that they wish to be removed from the register, or if they cease to be eligible for the register. To ensure that the eligibility assessment and removal powers are not abused, a prospective custom builder who is deemed ineligible for the register following their expression of interest, or who is removed from the register, will have the right to request the local planning authority to review any such decision.

We are keen to ensure sufficient transparency. The register will not be made publicly available for data protection reasons, given that it is likely to contain personal data. It will, however, be legitimate for local planning authorities to make publicly available, on an annual basis, the headline data about the level of demand on the register—for instance, the number of individuals registered and their broad preferences. These data are particularly important as they will help to ensure that local planners, landowners, building contractors and custom builders have a clear idea of aggregate local demand for custom build in their area, and can therefore plan accordingly for their area or business. In particular, the aggregate data would form an important contribution to the process of making the local plan.

The Bill will require local planning authorities to publicise their register so that local custom builders are aware of it, and the Secretary of State will have the power to issue statutory guidance. How the register is publicised will be at the discretion of the local planning authority, taking into account statutory guidance and reflecting its individual circumstances, but I make it clear that we expect publication to be proportionate and not burdensome for local taxpayers.

There is no doubt that the detailed operation of the register will throw up practical issues and challenges. That is why I am pleased that we had such a strong response over the summer from local authorities wanting to become right to build vanguards. I especially welcome the diversity of those authorities, which has allowed us to select a wide range of different types of authorities. All the vanguards are committed to establishing registers and making plots available in response to the level of demand on their register. We will work closely with them over the next year to test the practicalities of maintaining a register and of making sufficient land available across a range of different local housing and land markets so that regulations—under this Bill, as well as under the legislation for the full right to build—can be informed by the practical experience of delivery on the ground.

The list of vanguards includes several authorities that have established a strong custom build track record. Cherwell district council in Oxfordshire has led the way in establishing registers for prospective custom builders through its Build! programme. It is pursuing the largest custom build project in the country at Graven Hill, which will offer nearly 2,000 plots over the next decade on land bought from the Ministry of Defence. Similarly, South Cambridgeshire district council is keen to work with major developers in the area to ensure that its significant growth plans reflect the demand for custom build and enable homes to be delivered faster. Shropshire council and Teignbridge district council, which cover predominately rural areas that face local housing growth pressures, have been at the forefront of developing innovative policies in their local plans to make more land available for custom build.

Perhaps more interestingly, it is not only local authorities with strong growth pressures that are actively considering custom build. Two of the vanguards, Stoke-on-Trent city council and Oldham council, are in areas in the north and the midlands with lower housing demand. They see custom build as part of the solution to regenerate their areas. Sheffield city council is keen to offer its surplus public land for custom build. Its inclusion in the vanguard process will allow us to test how a register can operate in a large conurbation.

We have chosen a number of authorities as vanguards, such as South Norfolk, which is the home council of my hon. Friend the Member for South Norfolk, and Pendle and West Lindsey in Lincolnshire, which are keen to pursue custom build, but are only starting to formulate their final plans, so that we can learn lessons for the majority of authorities that are yet to engage proactively with the custom build agenda.

Perhaps the most welcome bid was a joint bid for vanguard status from the Dartmoor and Exmoor national park authorities. I am delighted that the national park authorities are actively engaging with our proposals. We have no intention of using the right to build as a means of encouraging unacceptable development in our most precious landscapes. However, the national park authorities are keen to explore how the register could be used to identify and address local housing demand from long-standing residents who work and live in their national parks.

Finally, we will work with the Greater London authority on the merits of a pan-London register of prospective custom builders. Although the Bill proposes that the requirement to maintain a register should fall on London boroughs, we recognise that London poses particular challenges, such as high potential demand and significant land constraints, especially in inner London. Just this morning, the hon. Member for Lewisham East (Heidi Alexander) outlined what is happening in her area. Recently, I saw the YMCA using modern technology to put together properties that could just as easily lend themselves to custom build and self-build opportunities for first-time buyers. The experience of Berlin, where there is a growing culture of custom building, shows that custom build can be a viable option in world cities that, like London, face significant growth pressures. We are keen to hear people’s views on the most appropriate approach for our capital city.

I believe that the experiences of the vanguards will enrich the development of the registers for which the Bill legislates. The legislation has been drafted deliberately to ensure that there will be sufficient flexibility in the regulations governing the detailed operation of the registers to reflect the vanguards’ experiences.

We are keen to explore how the right to build can be used to support more custom-built affordable housing. Although custom build is generally considered to be a form of market housing, it has a track record of delivering affordable housing. We think that registered providers can play an important role in bringing forward custom-built affordable housing by bringing sites to market, enabling and supporting others, and providing information and support.

Not that long ago, I was proud to take the Secretary of State to see the first council-built homes in a generation being built in my constituency of Great Yarmouth. Those homes are being built using modern technology and the skills of local people from the great Great Yarmouth college. The very same technology that is delivering those homes could easily be used to deliver homes on a larger scale for custom build and self-build projects in constituencies right through the country from Great Yarmouth to Cornwall, Newcastle, London and elsewhere. Our consultation proposes that the register should enable prospective custom builders who are eligible for affordable housing to register in partnership with a registered provider.

In conclusion, I am determined to ensure that we help everyone who aspires to build a home of their own. The Bill marks an important milestone along the road to achieving that. Along with the consultation and the vanguards that I have outlined, I am keen to build a consensus on how the right to build can be implemented effectively to deliver long-lasting change and make more high-quality homes available to hard-working people. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).