Housing and Planning Bill (Fifth sitting)

Chris Philp Excerpts

Thursday 19th November 2015 Public Bill Committees

[Dr Blackman-Woods]

The picture is quite complicated, but Shelter has been helpful in the evidence it provided. I am not sure whether I have its document in front of me to show the hon. Gentleman, but in its detailed analysis in “Starter Homes: will they be affordable?” it gives a detailed breakdown for each local authority area. I found that helpful, so he might like to look at it. In that we can see that, across the country, there are a number of areas in which the pricing regime will make the homes unaffordable for many people.

[Chris Philp (Croydon South) (Con)]

Does the hon. Lady accept that the analysis to which she is referring is based on the £450,000 and £250,000 figures, which are ceilings? Many starter homes will be delivered at far lower prices than those caps.

[Dr Blackman-Woods]

Yes, but those are the figures that the Government put on the face of the Bill, so those are the amounts that we want to refer to. I expect that in many areas developers will seek to build starter homes up to the level of the cap, but the hon. Gentleman is of course right that in some areas they might not. We will look at the evidence in a couple of years’ time to see how many homes are being built below the level of the cap.

Shelter is throwing out a serious challenge to the Government. Its analysis shows that the starter home programme will not help the majority of people on the new minimum wage, and in many areas in England it will not help people on average earnings either. Shelter considered how the policy will affect different household types in each local authority area in England, and on a range of different salaries, to assess whether they would be able to afford a starter home. It concluded that starter homes for families earning average wages will be unaffordable in more than half—58%—of local authorities across the country in 2020. Perhaps that addresses the point made by the hon. Member for Peterborough. Families on the new minimum wage, which the Government call the national living wage, will be able to afford a starter home in only 2% of authorities. Single people on low or average wages can more or less forget it, as they will be unable to afford a starter home in the majority of local authority areas.

London, the south-east and the east contain the largest number of areas in which affordable starter homes could be built under the scheme because of the high demand, yet they are the least affordable. Shelter concludes that starter homes will primarily help those on higher than average incomes and couples without children. That might be the Government’s intention. However, if they intend to help those earning more than the average income and couples without children, they should make that clear. That begs the question, which we were considering earlier: how are all the other categories of people supposed to get on to the housing ladder?

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[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.

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[Dr Blackman-Woods]

That is a very revealing comment. It is hard to find any evidence to back up that point. As I said—

[Chris Philp]

rose—

[Kevin Hollinrake]

rose—

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[Dr Blackman-Woods]

In a minute, but first I will deal with this intervention. I pointed out earlier and this morning that although the number of social homes to rent increased from a very low number under the last Labour Government—in 2010-11, we delivered about 40,000 affordable, genuinely affordable, homes—in fact, last year only 10,000 homes for social rent were delivered. I would not have thought that to be too many homes by anybody’s estimation. I do not have the figures before me for the constituency of the hon. Member for Thirsk and Malton, but I am happy to find them. I think he will find that there are a great many people desperate for social housing on council waiting lists around the country, amounting to way more than 10,000 more properties.

In my own area, we have an excess of 8,000 people on the council waiting list, so 10,000 homes across the country does not even begin to scratch the surface. To answer his point directly, do I think that we have concentrated too much on affordable homes for rent? No, I do not. We need affordable homes across all tenures. Should we do more to provide affordable homes to buy? Absolutely. If that is the point that he was making, I agree totally.

[Chris Philp]

That is the point that my hon. Friend the Member for Thirsk and Malton was making: we need to focus on homes to buy as well as to rent. The evidence for which the hon. Lady asked is this: 86% of people aspire to own their own home, yet owner-occupation is declining. That is the evidence, and that is why the starter home measures are so important. That is why they were in the manifesto, and that is why that commitment is now being delivered.

[Dr Blackman-Woods]

I think that we understand that this is a manifesto commitment to increase the number of people who can access home ownership. We totally agree with that. We all want those who can to buy their own property, and we want to help people access home ownership. However, in doing so, we must ensure that those who cannot buy their own home, for whatever reason, are not crowded out of the market, and that those who would provide homes for people in such circumstances can still provide those homes. The evidence before us suggests that we are failing to deliver affordable —genuinely affordable—social rented homes for the people who need them, as well as failing to deliver homes in other tenures. It is as well as, not instead of.