Brandon Lewis
Main Page: Brandon Lewis (Conservative - Great Yarmouth)Housing and Planning Bill (Fifth sitting)
Brandon Lewis Excerpts
Stephen Hammond (Wimbledon) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan. I want to make two brief remarks. I was not going to comment on amendment 61 but, after the unanswerable and pertinent question asked by my hon. Friend the Member for South Norfolk—a reason in itself for rejecting the amendment—I am concerned by the possibility of myriad different definitions of affordability by every council in the country. If amendment 67 is a probing amendment, amendment 61 is certainly a wrecking amendment. I hope the Minister will reject it out of hand.
The Minister knows I want to make a few brief remarks about amendment 67. He would be right to reject it on the basis that, if five years is too restrictive, so is “in perpetuity”. More importantly, the thrust of the amendment should refer to subsection (1)(e), which is effectively about the regulations.
As a London MP, I have had a number of developers and mortgage suppliers come to me. They support the idea of starter homes but question whether defining five years is too restrictive. The insertion of the two words “minimum of” five years in regulations would keep the thrust and purpose of what the Minister wants. It would allow some of the financing and the value. The hon. Member for City of Durham made the point about the difficulty in determining value if there is a cliff at five years.
Inserting those two words into regulations would make it easier, without contradicting what the Minister wants to do. Will he look at that on Report? Indeed, he might be able to reassure me he can do that via regulations.
The Minister for Housing and Planning (Brandon Lewis)
It is a pleasure to serve under your chairmanship, Sir Alan, and I look forward to working with you in the course of these Bill Committee sittings.
The hon. Member for City of Durham spoke about a few things that go beyond amendments 61 and 67. I will try to cover the general piece, as well as the specific amendments. She touched on the issue of quality, which we covered to an extent in our evidence sessions last week, and I can only reiterate what I said last Tuesday: the homes have to be high quality. I agree with her on that. We want people to have high-quality homes in terms of both build and design, as well as building high-quality environments and communities that we, the developers and the residents who live in them can be proud of.
That is why I was pleased to bring together on the design panel we convened earlier this year some of the country’s best and most renowned architects, such as Quinlan Terry and Sir Terry Farrell, to produce some design templates. We published those earlier this year and made it clear that starter homes will, at the very least, follow those design templates. It is obviously then for developers and local authorities to go with either those templates or something they think is more appropriate or better for their local community. Quality is absolutely at the forefront of our minds when designing and delivering starter homes.
Dr Blackman-Woods
Putting in place the design panels was a step in the right direction. However, what guarantee is there that the starter homes will be built using those templates or even better ones outlined by the local authority?
Brandon Lewis
Again, this is one of the differences between the Government and the Opposition: we trust local people and local authorities to do the right thing for their local communities. That is what decentralisation is truly about.
Starter homes are a new product, designed to serve a pressing need. We have set out the key parameters: a starter home is available to first-time buyers under 40, at a minimum discount of 20% of market value, and subject to a price cap. A starter home is a new build property or a new conversion.
My hon. Friend the Member for Wimbledon is absolutely right; amendment 61 would replace the minimum 20% discount on the open market value with affordability criteria based on average local household income. Affordability would be determined by the local authority. Much was said on Second Reading about the affordability of starter homes. Research on affordability by Shelter was based on median house prices in each region, but I challenge whether first-time buyers actually access the market at the average house price.
The hon. Member for City of Durham made a point about the timelines and how the mortgage companies work. We work with and talk to developers and hear what they say. We will do the same with mortgage companies, which I have met, including the Council of Mortgage Lenders. If we apply the discount in perpetuity, we are in effect asking the lender to give a 100% mortgage, because the market value is not realisable. That simply does not fit with what we are looking to do. There are niche products out there that offer that, and there is a place for them, but I will touch on that in a moment.
Helen Hayes (Dulwich and West Norwood) (Lab)
I do not accept that no value at all could be realised by maintaining a 20% discount in perpetuity. The purchaser of the home would still be able to realise the uplift in value; the uplift in value would just be at 20% less than the market value, so as market values rise, there is still a value to be realised. Does the Minister accept that point?
Brandon Lewis
The hon. Lady is absolutely right, but that again highlights the difference between the Government and the Opposition, because she misses the reality that neither the mortgage company nor the property owner can ever realise 100% of the property’s value, which means that, at the point of taking out the mortgage, someone is effectively taking out a 100% mortgage. Banking and gambling on a future increase in a property’s value is partly what got this country into the mess with house prices we suffered under the previous Labour Government, so I am not prepared to put first-time buyers at risk in the way she outlines.
The average market price for homes bought by first-time buyers in 2014 was £173,000 in England, excluding London. That compares with an average house price for England last year of £243,000. In London, first-time buyers paid £364,000 on average compared with an average house price for London of £470,000.
We expect starter homes to be an entry-level property, valued at below the average first-time buyer price for the local area. We have examined affordability of homes for 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 64% of households currently renting privately would be able to secure a mortgage on a typical starter home, compared with just 50% who could buy a similar property now at full market value.
Within London, up to 55% of households currently renting privately would be able to secure a mortgage on a starter home in the lower quartile of the first-time buyer market, compared with 43% who could buy a similar property now priced at full market value.
Chris Philp
Given how widely accessible the starter homes will be to first-time buyers on median and low incomes, does the Minister agree that it would be appropriate to define starter homes formally as affordable homes for planning purposes? Would the Minister consider introducing amendments to that effect?
Brandon Lewis
My hon. Friend makes an interesting point. There are things we will do in primary legislation and others we will do through regulations and guidelines, but I will consider his comments.
Those figures demonstrate that starter homes at a 20% discount will provide a genuine opportunity for home ownership for many more households. The Opposition wish to remove the 20% discount on local market values. Our model for starter homes, with the discount, gives people a real opportunity to secure themselves a lasting foothold on the property ladder. They will be given the opportunity to sell their property after five years, as currently planned, to realise its full value, enabling them to move onwards to new housing, should they wish, giving them the same rights in their property as any other homeowner, mirroring what happens with someone who acquires their home through right to buy.
We will deal with the five years provision through regulations, but amendment 67 would introduce another significant change, to restrict starter homes to an in-perpetuity model in which the discount is retained permanently with the property. I am very aware that there are discounted market sale products with in-perpetuity restrictions delivered across the country now. They offer an important opportunity and play an important part in the home ownership market.
However, it is not clear how far the majority of first-time buyers would want to be subject to restrictions in that way. In London and some rural areas where prices are high, people have accepted that trade-off between restrictions and owning a home in those locations, but that does not have to be the case everywhere.
In addition, such long-term restrictions can make it more difficult to sell and move on. If the property is sold at a discount, can the owner move upwards to a larger home or to a new area? Our intent is very clear: starter homes will continue to be provided through 2020 and well beyond. New supply of starter homes will become available for future first-time buyers who will benefit from the same opportunities as the early buyers.
Those homes will provide first-time buyers with the opportunity to move up to a larger home as their family needs grow or circumstances change. That is central to our vision for first-time buyers: a genuine discount that provides a genuine opportunity for a long-term future, and a determination to continue to grow and build that supply.
Teresa Pearce (Erith and Thamesmead) (Lab)
I am listening very carefully to what the Minister is saying about helping first-time buyers on to the property ladder through starter homes. In the regulations, will there be a restriction to stop cash buyers buying that product?
Brandon Lewis
We will look at the regulations when we come to them, and I am willing to look at any recommendations people make, but I would be cautious about restricting people from buying their first home in whatever manner is right for them.
A starter home is a new product to give young people a permanent place on the property ladder. I want to ensure that we support all first-time buyers and supply enough homes for them all as we go. I might be some years from my economics degree but the basics of supply and demand still sit large in my mind. If we can drive up supply, we will make prices more affordable and more achievable for all. The 20% discount plays an important part in that. Both of the amendments would make starter homes something very different from what we promised in our manifesto, for which we have a mandate from the people of this country. The amendments would remove the benefits of starter homes for the young people whom we are trying to help. I hope the hon. Member for City of Durham supports our proposals to help young, first-time buyers, and withdraws the amendment.
Dr Blackman-Woods
Once again, I am somewhat disappointed by the Minister’s comments. Amendment 61 seeks to place affordability at a level that is genuinely affordable in all areas of the country, and to give local authorities a key role in setting that affordability. How we can be seen as anti-localist is a bit beyond me. The Government are the anti-localist ones. Given how strongly we feel about starter homes being affordable right throughout the country, we will press amendment 61 to a vote.
On amendment 67, the Minister knows that lots of people are raising issues about the degree of the restrictions and how long they will be. I accept that some of the detail will be in the regulations. We are probably all slightly alarmed to hear that people who already have substantial amounts of cash and therefore, presumably, could put down quite a large deposit on a property will be able to benefit from the scheme. I am not sure why that would be the case.
Brandon Lewis
The reason I would be cautious on the point made by the hon. Member for Erith and Thamesmead is that that could encourage gaming. It could encourage people to go and get a mortgage who do not necessarily otherwise need to, and therefore it would not deal with the problem. The only way to deal with the outlier that I think the hon. Member for City of Durham is trying to identify is means-testing, which, in and of itself, is not something that I would support. We want to supply homes for new first-time buyers.
The Chair
Before I call you, Minister, I will try to be helpful by reminding the Committee that the Bill has 145 clauses. A lot of amendments have been tabled, and there are many other questions to ask. When I came to the Committee today, both sides indicated that they wanted to get to the end of clause 6. We are already deep into the afternoon, and we are halfway through clause 2. The word “brevity” was used a little earlier, and maybe we need to adopt it because it is our duty—my duty as a member of the Panel of Chairs, and your duty as Members of Parliament—to fully examine the proposals so that the House may consider them at a later date.
Brandon Lewis
Thank you, Sir Alan. I fully take on board your comments—I made similar comments just before lunch, when we had considered only one clause. I am also keen to get to clause 7 today.
I ask the hon. Lady to look back and consider what she is saying, because she started to become contradictory. I am sorry that the shadow Minister for Housing and Planning was unable to put himself on the Committee to make some of those points himself, but it is important to remember that he thinks the fall in home ownership, which, as he outlined, started in 2005, is a good thing.
Dr Blackman-Woods
This is the second time that the Minister has said that my right hon. Friend the Member for Wentworth and Dearne (John Healey) is not here. He is a member of the shadow Cabinet, and it is not normal practice for members of the Cabinet or the shadow Cabinet to lead a Bill in Committee.
Brandon Lewis
I appreciate that qualification, but the right hon. Member for Wentworth and Dearne obviously differs with the previous shadow Minister for Housing and Planning, who was also a member of the shadow Cabinet but, as I recall, attended Public Bill Committees, and certainly attended Delegated Legislation and Statutory Instrument Committees.
I note that the hon. Member for City of Durham did not move away from the right hon. Gentleman’s comment that it is not a bad thing that home ownership has been falling since 2005. The Government are determined to change that. We want to ensure that the 86% of our population who aspire to own their own home, as my hon. Friend the Member for South Ribble mentioned this morning, have a chance to do just that, which is also why we should not be placing restrictions—either geographic restrictions or arbitrary income restrictions—on home ownership solutions for people under the age of 40. This is a problem that faces an entire generation, and it would be wrong to say that some people cannot benefit simply because they are either hard-working or happen to live in a particular geographic area.
Amendment 62 would introduce a buy-to-let restriction into the legislation. We do not want starter homes to be investment opportunities for buy-to-let landlords. We agree on that. We want them to be homes for people to live in, and that is why we have included in the Bill the ability for the Secretary of State to set out letting restrictions in secondary legislation.
Brandon Lewis
There is a generation of young people in their 20s and 30s who face increasing challenges, as we have heard in past weeks and have no doubt seen in our constituencies. We need to ensure that more people can enjoy the benefits of home ownership, in the same way as their parents and our parents did.
I understand that housing markets differ across the country, but the aspiration to own a new home does not. Every first-time buyer under the age of 40 should have the same opportunity to buy a starter home. The problem affects an entire generation and it would be wrong to say that some people may not benefit from starter homes, or buy a home in a location that works for them, simply because they currently live or work elsewhere. They might, for example, currently be priced out of the neighbourhood of their choice, or they might be relocating for work or other personal reasons.
It is important for first-time buyers moving around the country—people’s mobility is extending further and faster—that there should be a clear and consistent starter homes model. That will aid mobility and choice as jobs continue to change and grow and people move around the country for reasons linked to business and work.
Consistency is also important, so that our reforms and commitment to deliver 200,000 starter homes will be widely understood. That is particularly important for lenders—we touched on the subject of lenders earlier—and for developers. Setting differential requirements such as a local connection test as a matter of course would introduce complexity to the starter homes model, which could pose a risk for delivery. We do not want to introduce complicated local checks when we are facing a housing challenge and the need for a national crusade to build more houses.
Although I recognise that councils are already required to consider local housing needs when planning for housing, we are clear that every first-time buyer under the age of 40 should have the same opportunity to buy a starter home. That is a national priority to help a generation of people into home ownership.
Dr Blackman-Woods
I know the Mayor of London has made that submission. Indeed, it was partly as a result of his intervention in the discussion that I thought he might find it extremely helpful for me to include him in the amendments. Consultation about price caps and so on would have to take place not only with local authorities, but with the Mayor of London. Of course, it again begs the question of what will happen when we get greater devolution, because we will have a mayor for Manchester and a mayor for Liverpool. Is the Minister saying that, even though they will be directly elected mayors who have responsibility for housing in their area, their views about what the price cap should be or who should be defined as in need of a starter home will not be heard, and that the decisions will be whipped away from them and given to the Secretary of State without any opportunity whatever for the mayors to have a say in the process?
Given the advance of time, I will not go through the many examples of people who made representations to the Committee that we need to amend the power given to the Secretary of State to limit that to a smaller range of circumstances. If he is carrying out those responsibilities, we need amendments in the Bill or in regulations to say that that can happen only in consultation with local authorities or mayors and—this is a critical point—with the agreement of local councils or mayors, because they are the people who know best what is needed in their areas.
Brandon Lewis
Let me respond to both amendments by saying up front that I do not think that a statutory requirement to consult local government on the regulations that underpin the starter homes statutory framework is necessary. As Opposition Members know, statutory consultation requirements, even with the best of intentions, can create unnecessary delays and undue bureaucracy and undermine delivery. We need to get on with building the 200,000 starter homes that this country needs. I do not want house building to be paused because every time we need to make changes to the regulations, we have to consult and wait first. That would be unfair to developers, landowners and, most importantly, this generation of first-time buyers.
When having such debates, I find it ironic, as I did in the last Parliament, to hear Opposition Members talk about centralisation. As somebody who was a councillor, like the Under-Secretary of State for Communities and Local Government, in a council under a Labour Government, I know absolutely what centralisation feels like. The Bill moves more power, again, to local people and we will come to much of that later in the Bill.
Amendment 66 will require the Secretary of State to consult the Mayor and local authorities on changes to the maximum price cap for starter homes in clause 2. We are introducing a price cap for starter homes of £250,000—£450,000 in London—to ensure that our reforms are not abused. It is important that starter homes remain within the reach of the average first-time buyer. Earlier today, we outlined what the realistic price of those lower-level affordable homes can be. However, the cap is not an expectation of the going price for a starter home. We have aligned it with the maximum threshold for the Help to Buy ISA to ensure consistency for first-time buyers. It is meant to withstand the passage of time so that developers, lenders and other interested parties all have certainty over the medium term.
In many areas of the country, I expect that the price will be significantly below the cap because developers know that starter homes are being exclusively built for young first-time buyers who are looking to get their first step on to the property ladder, and will price their homes accordingly. We noted that in the evidence session last week, where I was able to outline some ideas for prices in my constituency, as did other Members. We touched on that earlier today.
We will want the cap to be set at a level that will allow for flexibility in the type and size of housing delivered, whether in the constituency of my hon. Friend the Member for Burton, where a two-bedroom home is below £100,000 in a new build, or elsewhere. We are looking to ensure that the majority of starter homes are not created to be small units, perhaps not suitable for a young family, which is what a lower cap may mean. It could also result in the potential for some individuals to gain an unreasonable uplift in value when they sell on the open market.
I believe that it is right for the cap to be set nationally rather than locally. We need to ensure consistency with other Government products and provide a very clear product for developers and lenders. I accept, however, that there will be regional differences, which is why we have taken powers to amend the cap through regulations. I can assure hon. Members that we understand the need to have a cap that works fairly and clearly and we will want to engage with developers, lenders and local planning authorities if we decide to change the price caps in future. I am sympathetic to the points raised by the hon. Lady on working with local government to ensure that the proposals are responsive and reflective. I will look at that in the weeks ahead, before Report. In response to a direct question from the hon. Lady, the regulations for the price cap will be affirmative regulations.
Amendment 72 would require the Secretary of State to consult on the regulations that underpin the starter homes requirement on reasonably sized sites in clause 4, where different provisions are made for different areas. My Department will publish a technical consultation shortly on the details of the requirement to inform the preparation of the regulations. A key part of that consultation will be to seek views on the percentage of starter homes that would be expected on reasonably sized developments. I do not want to prejudge that technical consultation now, but I am clear that a one-size-fits-all approach to setting a regulation with a blanket requirement that blindly applies to all housing sites from Brighton to Berwick-upon-Tweed and all points in between, irrespective of local circumstances, will not work. The needs of Great Yarmouth are not the same as those of the south-west and Cornwall. That is why clause 4 gives the Secretary of State the power to set different requirements in different areas.
Equally, I do not expect the requirements to be set by an official sitting at a desk in Whitehall without any regard to local circumstances. I see the provision of starter homes as a joint endeavour, with central Government working closely with local government to deliver the starter homes our young people need and want, and which we should provide.
Brandon Lewis
The hon. Gentleman makes a good point about the importance of the devolution deals and the fact that they are about moving more and more power in decision making to the local level. However, devolution is not just about moving power from central Government to local government; it is about moving power into the hands of local people. Again, we will touch on some of those issues later in the Bill when we discuss driving neighbourhood planning further. The technical consultation that we will launch will give all local authorities, and indeed other partners, a chance to feed in their views. I will certainly seek to engage further with key partners on the details. With those points in mind, I hope hon. Members withdraw their amendment.
Dr Blackman-Woods
We are making some progress this afternoon; that was another largely helpful response. It is such an important matter of principle for us that devolution should be meaningful, and that local authorities should be given a real say. I was tempted to divide the Committee on this set of amendments, but having heard the Minister’s response and bearing in mind that we await the technical consultation, which might have some of the details and further information about what will be in the regulations, which will be affirmative regulations, we will simply make the point to the Minister, for the time being, that we want a degree of local engagement. If that is reflected in what he introduces, it will be a good thing and will extend the devolution agenda. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 ordered to stand part of the Bill.
Clause 3
General duty to promote supply of starter homes
Question proposed, That the clause stand part of the Bill.
Stephen Hammond
I will make a short contribution on clause 3, in the attempt to find friendship with my colleagues. In his earlier remarks, the Minister clearly recognised the aspiration in 86% of people to own their own home. I rise to put on record a point that I have made to him in private. London is a city of 8.6 million. Most recent growth has been in the 25 to 35-year-old age group, and most of the predicted growth over the next 10 years will be in that same age group. As a London MP, I put on record my unreserved support for the Government’s desire for more people to own their own homes, and my complete support for starter homes. It is also important to put on record the fact that in numerous discussions, the Mayor, the deputy Mayor and the Mayor’s office have unreservedly supported the addition of starter homes to the Bill.
The Mayor occasionally uses jovial remarks to make his point. If he were standing here today, he might make the jovial remark of the great Peter Cook and Dudley Moore about “not only, but also”. His point would be that not only should there be a duty to promote starter homes, but the Government should also consider a slightly wider point. The Minister will recognise the number of intermediate products there are in London, mainly coming through the Mayor’s First Steps scheme. The Mayor is justifiably proud at seeing 52,000 Londoners helped into homes since 2008, which is a record and an achievement to be proud of.
For many people, the shared ownership route has been a route to home ownership and there have been a wide range of providers and indeed funders of that route. Therefore, the key is not only to boost starter homes and home ownership but to recognise that there should not have to be a choice between starter homes and other forms of low-cost home ownership, because both London and the rest of the UK need both. I hope that the Minister will accept that point.
Brandon Lewis
I will touch briefly on that point. This clause will require all planning authorities in England, which for these purposes includes the Secretary of State, to promote the supply of starter homes when carrying out relevant planning functions. These functions include, for instance, preparing local plans, co-operating with neighbouring areas on strategic planning matters, and determining planning applications. The clause will apply to the Secretary of State, for example, when he determines called-in planning applications or recovered appeals.
This duty will mean that English planning authorities have a legal requirement to promote the supply of starter homes in their area to assist with their delivery and will ensure that starter homes are embedded within the statutory planning framework. However, as we outlined earlier, my hon. Friend the Member for Wimbledon makes a powerful point, not just in reconfirming the full support of the Mayor and his office for starter homes but in pointing out that these homes are an additional product. Yes, we are focused on wanting to see home ownership go up, but we are also focused on seeing housing supply continue to increase, and shared ownership is an important part of the toolkit that local authorities, developers and we in Government have to ensure that we drive that agenda of housing supply increases and home ownership increases over the next few years. I know that the Mayor’s office will be key, and I know that my hon. Friend the Member for Richmond Park (Zac Goldsmith) has already outlined his determination to continue to see shared ownership grow, while also ensuring that we deliver this priority of seeing starter homes for first-time buyers.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
Planning permission: provision of starter homes
Dr Blackman-Woods
I beg to move amendment 71, in clause 4, page 3, line 15, at end of line insert—
“(5A) The regulations may provide that sites can be exempted from the requirement to promote starter homes where a site has a scheme that—
(a) is a “build to rent” scheme;
(b) contains supported housing for younger people, older people, people with special needs and people with disabilities;
(c) contains a homeless hostel;
(d) contains refuge accommodation; or
(e) contains specialist housing.”
The amendment would remove sites from the starter homes requirement where other types of affordable housing have already been planned for.
The amendment would alter clause 4, so that sites could be exempted from the requirement to promote starter homes where they are delivering a scheme that is either a build-to-rent scheme or one that contains supported housing—for younger people, older people, people with special needs or people with disabilities—or where it contains a homeless hostel, refuge accommodation or other forms of specialist housing. In a sense, this amendment is returning, albeit in a much more specific way, to the theme that we have already rehearsed a few times today, which is whether the starter homes requirement will crowd out other forms of housing that might be needed in a local area.
Clearly, anybody who is providing supported housing for older people or younger people, or specialist housing for people with particular needs or disabilities, is already discharging a very important function for society and for the local community in building and funding that type of accommodation. We just wonder whether there would be huge viability issues for sites if they are trying to build specialist accommodation, for example bungalows that are accessible for people with disabilities or for older people, or if the local authority wants specialist or supported accommodation for younger people or for people fleeing domestic or other forms of violence as part of a planning gain.
This is a genuine concern. The Minister will know that a number of different organisations are terribly worried about the fact that, for example, women’s refuges are suffering dreadfully from cuts to local government funding. They have urged the Government,
“to take a step towards securing the long-term future of the network of specialist accommodative domestic violence services. It is essential this money is spent properly”,
so that refuges and the provision of refuges do not suffer because of the requirement.
Since 2009-10, there has been a huge rise—I gave the figures earlier—of 26% in the number of people who are homeless. This is a truly shocking picture, as is the rise in the number of people who are sleeping rough. My question to the Minister is, is it not just as important that a new development contains, or funds, a homeless hostel or specialist and supported accommodation for people with specific difficulties and issues? That set of needs should not be overridden by the desire for starter homes. The issue is probably one of viability, which is why we need to hear from the Minister in some detail about how section 106 agreements for this type of accommodation will be forthcoming when there will also be discounts for the starter homes initiative, and there may be CIL contributions for infrastructure and section 106 agreements to meet other needs.
We are hearing from a lot of developers—the Minister must be hearing this too—that the finances are simply not going to stack up. There will simply not be enough uplift in the land values across the country to be able to ensure that the sorts of schemes mentioned in the amendment come forward through section 106 agreements. Is it the Minister’s intention that hostels and supported housing for young people, and specialist accommodation for people with disabilities will be funded in another way? Will he guarantee that funding is available, so that there is no shortage of refuge places for women fleeing domestic violence or of supported housing places for young people? If so, that would be extraordinary because there is a huge shortage of those places at the moment. Indeed, local authorities are already finding it difficult to secure the accommodation needed to support young people.
The Minister seems to be incredibly interested in Durham. I will go and do a bit of work on Durham’s budget and bring a bit of reality to the Committee about what Durham local authority is experiencing. It simply does not have the means to provide supported accommodation to young people in my constituency. It is a really desperate and growing need.
Brandon Lewis
I found the intervention from the hon. Member for Bootle interesting. I hope his authority will get on with using the £20 million to get those houses built, because that is the point I am making. The hon. Lady talked about her own council, and it is a valid point; it is important that local authorities look at how they use their reserves that are not ring-fenced. Councils say they are struggling for income but have increased their reserves from £13 billion to £22 billion, so it is reasonable for people to want to ensure that money is being used for good things. What councils do with their reserves is a matter for them to decide locally.
Peter Dowd
I appreciate the point that the Minister is making, but I think it is a blunt instrument, and I do not think it is helpful to make a political point out of it because, in my authority’s situation, that is a figure that, following an agreement made when decent home standards were transferred, we have to set aside in the event of legacy remediation or contamination. So it is a big figure that, in reality, we have very little freedom to use. We would love to, but we cannot.
Brandon Lewis
The hon. Gentleman’s authority might want to have a look at how much money it has got to set aside, that he says it wants to use but it cannot. Setting money aside for something you can never spend it on does not seem a very sensible thing to do. What the authority should be doing is looking at the reserves it has. Councils should have reserves that are appropriate, but the reserves that are ring-fenced to be spent on something, particularly if it is about providing ability and viability for new homes, I would encourage them to get on with that process.
As we all know, young people today are struggling to do something their parents and many of us took for granted: buy a home of their own. Since the early 1990s, the proportion of under-40s who are homeowners in England has declined by over a third. That is why the Government made a manifesto commitment to provide 200,000 starter homes by 2020. Meeting that commitment will require starter homes to be delivered on most conventional housing sites. We will set out the proportion of starter homes that we expect to be delivered on each site in regulations, and my Department will bring forward proposals in a technical consultation to be launched soon. A key part of that consultation will be seeking views on what sorts of exemption to the requirement should be allowed, and I do not want to prejudge the outcome of it.
I have sympathy with some of the points the hon. Lady made. I recognise that there will be some specialist housing where it would be inappropriate to require starter homes to be an integral part of the development, given design, property management and investment needs, so there will need to be exemptions to the requirement. Her amendment gives some examples that I sympathise with, such as purpose-built build to rent developments, which I have strongly encouraged—I will continue to encourage such institutional investment in our property market—where the financing model requires 100% rental, to provide certainty to investors. For those developments, we will have an issue not with the financial viability but the appropriateness on the particular site, so commuted off-site contributions may be more appropriate.
There are other forms of specialist housing—for example, accommodation for workers; the list goes on—that are not mentioned. That is why I want to consult on the detail and not rush into making a decision today. I do not think it is appropriate to take that decision before we have finished the consultation. With that in mind, I hope the hon. Lady will withdraw her amendment.
Dr Blackman-Woods
We seem to be on a roll here, so I shall continue. I shall take the Minister at his word and assume that further down the line we will see more detail about the sites that will be exempted and the circumstances under which they will be exempt. His response was helpful, so on that basis I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 ordered to stand part of the Bill.
Clause 5
Monitoring
Brandon Lewis
Clause 5 requires English local planning authorities to prepare reports about the actions that they have taken under the starter homes duties in chapter 1 of the Bill. The Government’s current proposals strike the right balance—they give communities the information that they need and, essentially, avoid creating an overly bureaucratic process. I am absolutely clear that local communities, particularly first-time buyers, must be aware of the action that their local planning authority is taking to promote the supply of starter homes and the clause will deliver that as it stands.
Amendment 73 would require local planning authorities to report annually and to publish those reports on their websites. Clause 5(4) already provides that an authority must make its reports under this section available to the public. The clause also provides that the Secretary of State may make regulations about the timing of the reports and whether they should be combined with the local authority’s authority monitoring report, which must already be published at least on an annual basis. We do not want to introduce unnecessary burdens, and it would be sensible to combine reporting with the existing requirement.
Amendment 74 would require local planning authorities to report on their functions in respect of affordable housing as well as starter homes. Local planning authorities are already required to do that. They must report on the extent to which their planning policies are being achieved through their authority monitoring reports. That is a statutory requirement in regulation 34 of the Town and Country Planning (Local Planning) (England) Regulations 2012, which includes a specific requirement for a local planning authority to report on its affordable housing delivery performance against adopted planning policies. Both amendments 73 and 74 are therefore unnecessary and are already covered by the current legal framework.
Amendment 75 would require local planning authorities to report on the number of starter homes that remain to be sold at 20% below market value. Clause 2 provides that the Secretary of State can place restrictions through regulations on the sale and letting of starter homes, as we discussed earlier. Such restrictions on the sale or letting of a starter home at open-market value are likely to be for a period of five years. Starter homes will not be restricted in perpetuity as long-term restrictions make it more difficult for the first-time buyer to sell and move up to a larger home as their family needs change and grow. We want people to have a permanent place in the property market that evolves to suit their needs.
Therefore, amendment 75 does not reflect our central proposal for a starter home and reporting on the requirement would cause confusion. It is essential that we have a consistent set of scheme rules so that builders, lenders and, importantly, first-time buyers all have the same expectations of a starter home wherever and whoever they are. That will help to deliver on our manifesto commitment of building 200,000 starter homes over the course of this Parliament.
Amendment 76 would require all local planning authorities to report in detail about the appropriateness of all sites where starter homes are proposed. In particular, it asks local authorities to demonstrate that the sites were not otherwise needed for employment, retail, leisure, industrial or distribution use. The burden would fall on starter homes proposed on exception sites, as they use land that has not been previously allocated for housing. We see exception sites as playing a crucial part in delivering starter homes by providing communities with a stock of new and cheaper land that can be used to build the housing they desperately need. Because the land tends to have a lower value, it helps to improve the viability of starter home developments.
Let me be clear: this is not about building houses at the expense of all other types of use; it is about releasing land where there is no reasonable prospect of its being used for its original purpose. If there is a disused former garage site in a town, surely we all want it to be used to build new housing rather than sit there disused. We expect local authorities to be proactive in identifying and publicising exception sites. Where applications for starter homes are made, local authorities must be prepared to give planning permission. The intention behind the new duty to promote starter homes in clause 3 is to encourage local authorities to do just that.
Before local authorities grant permission, they will need to assure themselves that the brownfield land is an exception site and, in particular, that it is underused and unviable in its current land use. I believe that local authorities are capable of taking that decision without the Government’s looking over their shoulder. For that reason, I think that amendment 76, which would require all local planning authorities to report in detail about the appropriateness of sites, is unnecessary and overly bureaucratic.
I return to what I said at the start. What matters in terms of reporting is that people have the information they need about the number of applications for starter homes that have been made and how many have got permission, and we should not create a burdensome reporting system to check every decision a local authority takes. I believe that the clause as drafted provides that information. With that assurance, I hope the hon. Lady will withdraw the amendments.
Dr Blackman-Woods
I think our roll has come to a shuddering standstill.
We tabled the amendments largely as probing amendments because there is so little information in the Bill about how the monitoring will be carried out. Although it says that reports will be available to the public, it does not say how they will be made available, how often they will be available, in what form they will be published and whether they will be on authorities’ websites. The Bill gives the Secretary of State powers to outline the reports’ form, content, timing and so on.
Presumably, at some point we are going to see a set of regulations. Perhaps we will have to postpone some of the detail of this discussion until we see that. Our plea to the Minister is that he makes the information readily available to people. It should probably be made available on an authority’s website because that is how most people access information these days—not everyone, but most people. It needs to be available in other ways too, and it needs to be put in context. With that, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 ordered to stand part of the Bill.
Clause 6
Compliance directions
Helen Hayes
I beg to move amendment 78, in clause 6, page 4, line 10, at end insert—
‘(6) Before issuing a compliance direction, the Secretary of State must take account of any local housing and planning documents based on an assessment of local housing needs.”
It is a pleasure to serve under your chairmanship, Sir Alan. There is a long-established principle that both planning policy and planning application decisions should be taken within a national framework in the context of considering local need. The coalition Government prioritised localism through neighbourhood planning and objectively assessing housing need. The Bill imposes a new obligation on councils in relation to starter homes, with absolutely no regard to objectively assessed local need. The new obligations do not cover other forms of affordable housing.
The Minister said a number of times that he sees starter homes as part of the mix. The Opposition support that, but it does not make sense, in that context, that such strong duties are being imposed on local authorities, in relation to starter homes, with no comparable measures to protect any other form of housing. Local need varies dramatically across the country. In each of my two boroughs, 20,000 people are on the waiting list for a council home. We have heard witness after witness query the lack of local discretion in the Bill for individual local authorities, and that is what the amendment would address.
Turning to some of the evidence we have received, the respected voluntary sector organisations Shelter and Crisis said that in most parts of the country, lower-income households would not be able to afford starter homes. They said that starter homes will primarily help couples without children and those on average or above-average salaries. They will be inaccessible to families on or below the Government’s national living wage in all but 2% of council areas. For single people on average wages or lower, only six local authority areas will have affordable starter homes.
The Home Builders Federation states:
“There is potential for market distortion if the numbers of Starter Homes that ministers are targeting to be built actually come onto the market. The effect is likely to be highly localised and could impact upon the saleability of units on new sites”.
The Royal Town Planning Institute states:
“Now not only is social rent and shared ownership potentially driven out and replaced by starter homes up to £250,000 in price, but this appears to be obligatory and not open to local negotiation. This lack of discretion may affect delivery.”
PlaceShapers states that it supports measures to increase home ownership
“but do not believe that this should be at the expense of those who also aspire to get on in life but are unable to afford to buy a home of their own.”
It believes that it should be left to the relevant planning authority to make decisions as to the mix of new homes.
All those comments are from respected organisations across a range of sectors saying that there is a need for more local discretion. The amendment would give local authorities a necessary safeguard by requiring the Secretary of State to take account of local need before issuing a compliance direction. That would help to ensure that the Government and the local authority are considering the same housing needs assessment and would give a safeguard that all types of tenure—the Minister says that he believes in all types of tenure—can be supported.
If local needs are overridden by the Government, the consequences will be serious. A reduction in the supply of homes for those on lower incomes risks exacerbating unaffordability and increasing the housing benefit bill. Combined with the housing benefit cap and the lack of regulation in the private rented sector, it will lead to an increase in homelessness. London already houses 49,000 households in temporary accommodation at considerable cost to the public purse. Without the amendment, which would create a safeguard that local needs would be considered, there is a considerable risk that the Bill will deliver new homes while ignoring the needs of those with the greatest housing need. That will make the housing crisis worse and cost the public sector more.
Without the amendment, there is also a significant democratic deficit. In London, borough planners have to take account not only of their local plans, but the London plan. All of that can be trumped by the new national-level requirement that is not subject to examination through a local plan process. How can the Minister be sure that Whitehall will know what is best in each locality and housing development? I do not think that he can. The amendment simply seeks to ensure that the new homes that are delivered, whether they are to rent or to buy, meet local needs.
The Minister has stated that the mix of tenures, among other things, will continue to be a negotiation between the developer and the local authority. If he is not willing to support the amendment, will he please explain how that will be the case? How is the Bill compatible with localism? How will the Bill not result in a reduction in the social housing provided for those in the greatest housing need?
Brandon Lewis
Clause 6 provides for a compliance direction if a local authority is failing to comply with its starter homes duties. Where the council has a policy in a local development document that is incompatible with the starter home duties, the direction would say that that policy must not be taken into account when certain planning decisions are taken. The hon. Lady gave some figures and details that we heard in evidence from Shelter last week. We outlined after that session, and earlier today, that the figures for new build homes in constituencies around the country simply do not stack up to back that argument.
The compliance direction must set out the Secretary of State’s reasons for making the direction and must be published.
It is important that we deliver the starter homes so that people have an opportunity to buy a home of their own with the 20% discount. That will open up home ownership to a new range of people who aspire to own their home but have been locked out of the market probably for the best part of a decade now.
We have considered carefully how best to frame the compliance direction. The new statutory duty on councils to support starter homes should have teeth, otherwise it will not deliver the housing opportunities for first-time buyers that are so badly needed. We want to ensure the compliance direction presents a strong incentive to councils to support the delivery of starter homes, but we also want to ensure that local plans continue to shape planning decisions for an area. We want local plans by, for and with local people.
As drafted, the direction would act on a policy or part of a policy that is being used to prevent delivery of starter homes. The remaining planning framework for the local plan would remain in force. Communities will continue to shape development in the area, and this is a reasonable and balanced approach. The direction would not act on a neighbourhood plan policy or a London plan policy. I want to reassure hon. Members that it is our firm intention that the compliance direction is a backstop provision. It would rarely be used, but it can act as a strong incentive to deliver. There are other examples of planning law where a sanction exists to act as an agent of change, but it is used sparingly.
The planning performance regime, introduced in the Growth and Infrastructure Act 2013, has already driven quicker decisions on applications for major development, from 57% to 76% in 2015. Only three councils have had to be designated, two of which have already been lifted out of that category as performance has improved. I want to reassure hon. Members that a compliance direction would be issued only after very careful consideration of the evidence by the Secretary of State. Councils must report on their actions to support starter home delivery under the requirements in clause 5. This will be core evidence, but there will be the opportunity for councils to submit further evidence to the Secretary of State. Any exceptional circumstances could be considered at this point.
The hon. Member for Dulwich and West Norwood spoke to her amendment to require the Secretary of State to take into account planning documents based on an assessment of housing needs. The local plan will contain valuable evidence on housing need. As plans are updated, we would expect the evidence to consider the needs of first-time buyers. Up to date, the Secretary of State could choose to take such evidence into account. However, this sanction is about the statutory duty to promote the supply of starter homes. We will set out clear guidance as to how councils should work to fulfil this duty, but this is not a negotiable ask; it is a clear legal requirement to support starter homes for first-time buyers. If we are to achieve a real difference for first-time buyers—the step change we need and want to see—we must ensure all locations do everything they can to deliver those homes for first-time buyers at a rate they can afford.
The Secretary of State should have discretion as to what evidence is considered. If there is overriding evidence that the council has done everything it can to comply with the starter homes duty, but has not been able to deliver, that could be taken into account. The element of discretion is necessary to ensure we have an effective and operable sanction. I hope that with that assurance the hon. Lady will withdraw her amendment.
Helen Hayes
I thank the Minister for his response. However, I find it astonishing that he appears not to be listening at all to evidence from a range of very respectable organisations that are all involved in the delivery of housing and deeply concerned about it. Councils across the country, including London Councils, which has given its support to the amendment, are deeply worried about the compliance direction. They are particularly worried about its use in order to trade off the needs of one type of housing need against another type of housing need.