Affordable Housing (Devon and Cornwall)

Debate between Derek Thomas and Anthony Mangnall

Wednesday 27th April 2022 Westminster Hall

[Derek Thomas (St Ives) (Con)]

I can only echo all that has been said so far about the challenging situation in Devon and Cornwall. This acute problem particularly affects Devon and Cornwall, and I commend my hon. Friend the Member for North Devon (Selaine Saxby) for securing an extremely timely debate.

The lack of good-quality, affordable housing for local people is not new, but it is not helped by significant population growth. In the past couple of years, Cornwall has had the highest net internal migration of any local authority area in England and Wales. I do not want to say this, but I know it is a fact as I do a lot of work on empty homes in my constituency: the problem is not helped by the fact that the Church of England, the Methodist Church, Cornwall Housing, an arm’s length company of Cornwall Council, and LiveWest, which we all know in Devon and Cornwall, have a lot of empty homes across Cornwall. The Methodist and Anglican Churches have empty homes in my constituency, and I am trying to get them used to address the significant need that hon. Members have set out clearly. Nor is it helped by the fact that long-let homes are being flipped to holiday lets at an alarming rate.

I refer the House to my entry in the Register of Members’ Financial Interests, and to my housing debate in December, when I had more time to set out the difficulties and potential solutions. During the debate, I called—more ambitiously than has been done so far—for devolved powers to local authorities such as Cornwall Council through the levelling up and regeneration Bill. I believe I have the support of Cornish colleagues in suggesting that all new homes be restricted for permanent residents only in perpetuity, and for a licence requirement if someone wants to use a home that is lived in as a holiday let, a bolthole or for any other business purpose.

Since December, the Government have not done a great deal to resolve the problem, although I appreciate that legislation is to be announced in the Queen’s Speech, but they have sought to address the exemption of second homes from business rates and council tax. From next year, as a consequence of lots of work that many have done—I have raised the issue twice in the Chamber over the years, and the Government ran two consultations—people will have to prove to the local authority that they have rented their house for 70 days before they qualify for the exemption. I still think council tax should be paid on all homes built to live in. That would be very good for our police and our town and parish councils, which at the moment are losing that income.

[Anthony Mangnall]

If the Government decide not to take up my hon. Friend’s suggestion, they should extend that 70 days to 140 and make it more rigorous.

[Derek Thomas]

And stop the opportunities for fraud. At the end of the day, it is fraud for someone to say they have a business that they do not have. I would happily welcome that.

Today, I want to explain why the pressure on housing has intensified in recent months and years. Regrettably, that is in part an unintended consequence of Government policies. I want to pick on two of them. Government policy is effectively driving landlords out of the market. We hear landlords saying—I could use some French, but I am not going to—“We’re not going to do this anymore. We are going to flip our homes into holiday let or do something else with our property,” and they are partly supported by Government policy, such as changes to long-let allowable tax benefits. Since April 2020 —not that long ago—landlords have no longer been able to deduct any of their mortgage expenses from their rental income to reduce their tax bill. The new system means higher or additional-rate taxpayers can no longer claim tax back on their mortgage repayments. Less obviously, the new rules could force some landlords’ total income into the higher or additional-rate tax bracket, depending on their pension or other income. I do not particularly object to that if it is fair across the board, but at the moment it favours holiday lets and does not help private landlords.

Affordable Housing: Planning Reform

Debate between Derek Thomas and Anthony Mangnall

Tuesday 7th December 2021 Westminster Hall

[Derek Thomas (St Ives) (Con)]

I beg to move,

That this House has considered access to affordable housing and planning reform.

It is a pleasure to serve under your chairmanship, Dr Huq, and I am delighted to have the opportunity to take the lead in today’s debate. I would like to declare a registered financial interest in that I have a part-share in a property used for long-term rent. I am glad to have secured this debate, as the severity of the housing situation in Cornwall and the Isles of Scilly, which I represent, requires urgent intervention. It is not a new situation; I recall having a meeting with the current Health Secretary when he was the Housing Secretary, some years ago now, asking him to intervene in the housing situation on Scilly by allowing the council to have powers to address the rate of second home ownership on the islands.

Likewise, in relation to housing in Cornwall, my Cornish colleagues and I have regularly raised the difficulty faced by residents to acquire affordable housing since we were elected. More recently, we have raised this directly with the Prime Minister in meeting of Cornish MPs. I secured a debate in 2018 asking the Government to address the difficulties that second home ownership and the holiday let industry place on families who need affordable homes so that they can both work and raise their families locally.

Various measures have been introduced, predominantly in support of first-time buyers, which is welcome, as having a home of one’s own brings security and a commitment to the local community that is rarely matched by any other intervention. However, recent developments in relation to the pandemic and a clumsy approach to housing by some council officers, until recently, have starved ordinary working families of appropriate and affordable secure housing. Therefore, while access to affordable housing for working families is not a new difficulty, it has become a whole lot more difficult over the past two years.

In the first quarter of 2021, searches for homes to buy in Cornwall topped 15 million, and 1.1 million people searched for homes to rent. Our total population is just half a million, and many of them are finding that the house that they rent and believed was secure is being taken back by the landlord to capitalise on the boom in Cornwall as a holiday destination. I feel slightly guilty because I have promoted Cornwall and the Isles of Scilly as holiday destinations for many years; I might need to tone that down a bit, because although it has had the desired effect, it has also put enormous pressure on our housing supply.

[Anthony Mangnall (Totnes) (Con)]

If my hon. Friend is going to stop promoting people coming to Cornwall, he is very welcome to promote them coming to Devon. However, he makes a serious point about the fact that the impact of visitors and tourists is driving up prices. Does my hon. Friend think that there are ways in which we can act by closing the business rate loophole, for instance?

[Derek Thomas]

I would not want a tabloid paper to misinterpret what I said about coming to Cornwall; please do still come. I am going to Devon as well, so let us not argue about jam and cream. Absolutely, the topic of the debate I had in 2018 was that very thing: how to ensure that properties that should pay council tax do so, because that helps to deliver services that we all need, including for those who own a second home.

If a person is lucky enough to get anywhere near a rental property, then they will pay approximately £100 a week for one bedroom in a shared house; £200 a week for a two-bedroom house with no garden; and £400-plus a week for a three-bedroom house. That may not surprise people living in London, but it marks an enormous inflation in rent in Cornwall, particularly given that the average wage in my constituency is £25,000 a year. It can quickly be seen that such rent is not an affordable housing solution.

As it happens, there is almost no chance of securing a property. A search for houses to rent in my constituency last night returned a total of three three-bedroom houses across the whole constituency. A letting agent has advised me that 100 families compete for each three-bedroom property that is advertised. Those families include key public sector workers who have accepted jobs as teachers, police officers, NHS workers and, ironically, according to our own planning department, planning officers themselves. On the Isles of Scilly, people with jobs that are critical to the islands’ day-to-day existence face the prospect of leaving Scilly in the spring if they cannot find a home to rent. Properties for sale are equally few, and are out of reach for the majority of those needing homes in Cornwall and on Scilly. House prices have risen by 15% in the last year.

I do not want to dwell on the severity of the situation much more, other than to thank a number of town and parish councils in my constituency. They share my concern and have taken time to discuss the issue and write to me, pressing and calling for action. They include Penzance Council, Ludgvan Parish Council, St Just Town Council, St Erth Parish Council, Sancreed Parish Council and a representative of Madron Parish Council, to name just a few.

I am pleased to say that there has been a dramatic gear change at Cornwall Council since May this year. A new Conservative administration, council leaders and MPs are tackling the housing shortage. The council’s strategy, now under consultation, includes commitments to improve availability and access to homes for local residents by working with public and private sector partners to bring forward sites, and to provide modular private rented homes for key workers and local people in towns. After years of pressure from me, there is a renewed emphasis on bringing more long-term empty homes back into use. It is unbelievable that there are thousands of empty homes in Cornwall. They are not second homes or holiday lets; they are just empty—not used at all—despite the pressure on housing that we have had for such a long time.

The council plans to increase the rate of affordable housing provision on exception sites—increasing the minimum number of affordable housing units, I hope to 100%—through the use of grants. It will work with housing associations to develop a pipeline of sites to increase affordable housing, including by releasing council sites, which is a new and novel idea. Critically, the council wants to re-engage with small and medium-sized developers to find and develop land, and to step up work with local councils, parishes, towns and communities to identify suitable and stalled sites.

[Derek Thomas]

I thank the hon. Lady for that intervention. That is a theme with which we are familiar in Cornwall. In fact, in 2015 we signed a devolution deal that talked about one public estate. The idea was that all publicly owned land would be used for the benefit of the local community, including for housing. It would be fair to say that that has not materialised, for various reasons. When we talked to the NHS, it said what the hon. Lady said: that it must get the maximum return. The police station in St Ives, where the housing shortage is most critical, has been sold, even though there was a local attempt to try to secure it for housing. There is a real challenge, and maybe the Minister will look at that. Network Rail owns land, and all sorts of land that could be built on seems to be locked up. That would be a great thing to address, and I am sure that it will be addressed in the White Paper.

Another bugbear of mine has been the sheer number of planning proposals that have approval but are yet to be built. I understand that, in Cornwall alone, there are 19 units that are approved and not yet built. The council intends to work with Homes England to develop a partnership to unlock developments that have planning permission, so that they can become homes for local people. Other ideas include a pilot to explore the conversion of vacant buildings in town centres, which the towns fund is seeking to do in Penzance and St Ives.

I am also hopeful that the council recognises that it is not solely responsible for bringing family homes into existence. For example, despite several attempts by me and other colleagues in Cornwall, the council has repeatedly blocked opportunities to build family homes using models such as rent to buy, because it has an apparent dislike of local people freely owning their own homes. This is a missed opportunity, as I know that rent-to-buy companies have had ambitions to build thousands of homes on sites without using any public money, which would have helped to address many of the pressures that we see. I am hopeful that we will see a change of heart at the council.

The timing of this debate is not an accident. I have been trying to secure it for some time but was particularly keen to get it now, because I am aware that the Secretary of State for Levelling Up, Housing and Communities plans to bring forward revised proposals to address the problems faced by hundreds of thousands of people who need housing across the country. The hon. Member for Twickenham (Munira Wilson) referred to the waiting list for social housing in her constituency. In Cornwall, there are 14,000 homes needed by people on the list. There is no better way to level up than to ensure that people have a secure home of their own.

Secure homes mean secure communities which, in turn, mean secure rural schools, secure services such as post offices, GP practices and bus routes, and the survival of pubs and churches. The Government’s plan must speed up the delivery of homes that are genuinely secure and affordable. Cash that goes to councils for housing must be spent on housing, not on endless meetings and draft proposals. A recent council-owned scheme that I visited took seven years to deliver 55 houses for shared ownership and affordable rent.

Support must be given to small builders, which are best placed to build quality homes in rural areas, and there needs to be a massive effort to attract people into the trade with high-quality training opportunities. The building trade can be seen—I know this from my experience in school, because I went on to become a Cornish mason, which involves slate, stone and different types of plastering—as a negative career, but I can testify that some of our most skilled people work in the construction trade, and we need an awful lot more of them.

As I have just discussed, land belonging to the public sector must be secured in order to build homes that are affordable, and this must be done quickly. I am fully in favour of building homes, but we must ensure that they are built in the right place for the right people, and at the right price. If we do not, which is the greatest fear of people in Cornwall, house building in areas such as Cornwall will never match the demand of an open market, prices will always be out of reach, and green fields will continue to be lost. In the current climate, we cannot leave the situation to the mercy of market forces. Although I would ordinarily support that, intervention is needed in Cornwall, on Scilly and in many parts of the United Kingdom.

Novel ideas must be considered to ensure that people can access the homes they need. With your permission, Dr Huq, I will suggest a few novel ideas to the Minister that would help to address the situation in Cornwall and elsewhere where it is a real issue for local people. First, we could speed up and increase the supply of housing by using Homes England money to pay on results, such as rewarding social landlords and developers big and small on the completion of homes that people can afford. At the moment, it takes an age to even get anywhere near the site by using Homes England money. It would be far better to create the incentive that the money follows the completion of homes.

Secondly, the Government should consider offering local authorities the opportunity to introduce a blanket requirement for all new building to be restricted to primary residence only. This policy idea is reassuring to communities who find that they are quickly becoming ghost towns in the winter months. When I go and talk to my parish and town councils about the housing that is needed, they have no confidence that the houses will meet a local need. To have a blanket restriction—as a tool and opportunity for local councils—that all new housing must be for primary residence only would really help to reassure communities who, at the moment, often oppose such developments.

[Anthony Mangnall]

I am sorry to interrupt and have two bites of the cherry, but my hon. Friend is making a really important point. I understand that somewhere else in Cornwall has introduced such primary residence restrictions, and I wonder whether he might add any weight to the implications of doing so and whether it has been deemed a success.

[Derek Thomas]

It is a great subject, because it actually happens to be in St Ives, which is part of my constituency, so I know a little bit about that. My hon. Friend is absolutely right. A neighbourhood plan introduced the policy of primary residence only, so all new housing has to be for primary residence. They did it—this is years ago now, so it is not a new problem—because purchased properties were often pulled down and others built in their place, which devastated the local community. We have seen villages such as Mousehole, Porthleven, Coverack and others where, in winter, the lights are pretty much switched off.

St Ives has done it and we have not seen a particular impact. In the summer I went to see quite a large site developed by bunnyhomes, where every single home for primary residence was sold without a problem. It definitely can be done and it would make it easier if it applied across the whole authority, rather than in one particular town area. I thank my hon. Friend for his intervention.

The Government should re-emphasise to councils our commitment to home ownership and make it more difficult for councils, such as Cornwall council, to restrict other housing delivery models, such as rent to buy. I fully understand the pressure on houses to urgently respond to the situation today, but I cannot stress enough how positive it is for a family to own a home and put roots down in that community, support the local school and feel that they have a stake in how that community goes forward. Home ownership is a significant part of the mix and must be protected.

The Government should consider an incentive to landlords to sell to their tenants by enabling capital gains tax to be used to give the tenant help with the deposit and purchase price. We remember that a previous Chancellor introduced rules that made the financial incentives for being a long-let landlord much more difficult. Many landlords in my constituency are looking to sell their properties to their tenants, but that is surprisingly difficult to do. One idea came to me from a landlord who is keen to do this. His alternative is to switch it—avoid the tax implications and switch the property to a holiday let, which he does not want to do. We are seeing other landlords do that, but he wants to have the opportunity to sell his property to the tenant, but the tenant needs help to get the deposit together. There may be a way to use capital gains to support that transfer. Otherwise, we will continue to see long lets lost to holiday lets or sold to the highest bidder. These homes are often snapped up by those who can afford a second home to retreat to in coastal areas and other attractive parts of the British Isles. That issue must be addressed.

The Government should consider introducing a licence scheme, so that properties currently lived in require a specific licence before they can become a holiday let or bolthole. This policy idea favours permanent residents. In the past couple of years, because of the need for staycation and inability and sometimes reluctance to fly abroad for holidays, we have seen people flooding into tourist attraction areas and driving up a holiday let market that has seen large numbers of families evicted from their homes, which they have sometimes rented for many years, and these homes transferred a holiday lets. We would therefore like the Government to intervene and require a licence to be given to allow that house to move from a permanent residence to a holiday let or some other use. That is novel, I know, but we are in such a time where families cannot hold down the jobs or get the jobs we need them to have because of the lack of housing.

Councils should consider applying council tax to all homes, irrespective of their use. At the moment, the police, the parish and town councils do not get their share of the council tax if that property is switched to a holiday let or business, as we discussed a few moments ago. Such a policy of council tax across all properties built for living in would also save the UK taxpayer, who at the moment pays the Treasury to refund councils which lose that council tax income. That is a fair idea that recognises and values houses built to be lived in.

The Government have encouraged the possibility of creating new locally led development corporations to encourage local areas to come forward with ideas for new towns to deliver jobs, homes and economic growth. There is an appetite in Cornwall to identify village garden sites. This seems entirely sensible, but the challenge facing this innovation is the immediate escalation of land value when an area is identified for development. That absorbs the very money that would otherwise be used to create the infrastructure to serve a new community.

The increase in land value, which the locally led corporation then has to find, undermines the viability of the scheme and the ability to deliver the infrastructure needed. The Secretary of State and the Minister here, my right hon. Friend the Member for Tamworth (Christopher Pincher), should consider allowing these locally led development corporations to be established much earlier in the process, to secure the sites before the value rockets. This policy idea enables the development of these garden villages, which reduces the incredible pressure placed on existing towns and villages to meet the entire housing demand.

I would like to quickly move on to the thorny issue of enforcement, because as we consider planning reform, enforcement should not be ignored. Currently, we have something of a gold rush in Cornwall, with people and businesses buying any land they can get hold of. Small farms are being sold because they are no longer commercially viable and are often snapped up by individuals who have no intention of farming but would quite like a piece of Cornwall’s real estate. They get hold of this land and carry out all sorts of development and destruction, knowing that the council’s enforcement team is overwhelmed, under-resourced and seemingly lacks power, or at least fears legal challenges at every turn. It is a huge problem across Cornwall, and I am sure it is a problem elsewhere in the country.

It is a complex issue, but I would like to take this opportunity to suggest a simple adjustment. The Government could, and should, introduce a fixed penalty system where councils can apply a significant and proportionate fine to both the owner and contractor. An owner or developer may feel that a breach of planning and possible enforcement is worth the risk, as the financial gain may outweigh any enforcement action. However, such people rely heavily on contractors who will be less inclined to breach planning law if the penalty applied to them. As a former tradesman, I know that I would check to ensure the task I am charged with has the necessary planning consent if there were a potential fine and a blot on my copybook. A fines system would fund enforcement and ensure councils have the capacity to do a good job.

When it comes to housing, this is the time to be bold. It is time to apply some clear, blue-sky thinking and demonstrate that the Government are on the side of those who, in the past, we have described as “just about managing.” Right now, in Cornwall and on Scilly, these families are not managing.