New Homes: Developers, Housebuilders and Management Companies

Debate between Eddie Hughes and Mark Francois

Wednesday 5th January 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Eddie Hughes)]

Thank you, Mr Betts. It is a pleasure to serve under your chairmanship. I congratulate my hon. Friend the Member for Wantage (David Johnston) on securing the debate. From the contributions that have been made, we can see that this is a topic that promotes passion on the part of not just those right hon. and hon. Members who have contributed, but their constituents.

I welcome the hon. Member for Greenwich and Woolwich (Matthew Pennycook) to his place. I wish him a happy—but obviously not too successful—new year. Regarding future legislation, particularly on leasehold reform, I look forward to discussing that with him, and with other Members, to ensure that we get the legislation in a good place before it is brought forward.

I understand how important it is that infrastructure comes with new housing. Indeed, my hon. Friend the Member for Wantage is a one-man campaign machine in working to secure infrastructure for his constituents along with housing. As he says, they are not NIMBYs; they just understand that houses must come with the infrastructure they require. Section 106 agreements of around £1 billion towards infrastructure were agreed in 2018-19. That includes contributions to transport, open spaces, the environment, education and medical facilities.

The community infrastructure levy also allows local authorities to obtain the funds needed to deliver infrastructure such as roads, schools, health facilities and flood defences. Currently, around 50% of local authorities charge CIL. It is estimated that the liability for new planning permissions amounts to roughly £1 billion since 2018-19. The housing infrastructure fund provides £4.3 billion so that improved transport connectivity, healthcare services and other infrastructure can be put in place before housing is built.

We have already made changes to reduce the renegotiation of affordable housing in infrastructure commitments made through section 106 agreements. To reduce renegotiation, the Government require local authorities to have clear policy requirements in their local plans so that landowners and site purchasers are aware of likely costs up front and can take them into consideration when agreeing land transactions. The Government have also set out clear guidance on how viability assessments should be undertaken and made public to ensure consistency and transparency.

The Government recognise, however, that the existing system of developer contributions can sometimes be costly and complex, and can delay developments and reduce certainty for communities, which is why we are exploring the introduction of a new infrastructure levy to replace the current system of developer contributions. That levy will seek to deliver at least as much value and on-site affordable housing as at present. To reduce the renegotiation issues to which section 106 agreements are prone, we propose making the levy a non-negotiable charge on a fixed proportion of the development value. Our intention is that the proceeds from the levy will be collected and spent locally, and that councils will have flexibility in that spending.

Unfortunately, I do not have much to add on planning reforms. The Secretary of State took control of the newly empowered Department in September, and he has an awful lot in his in-tray to work through, but he is committed to looking at planning reform and fulfilling the Government’s levelling-up ambitions by carefully considering what reforms to the system are needed and how they are best taken forward. An announcement will be made in due course.

[Mr Francois]

It is disappointing that the Minister cannot give any timings on when the planning Bill is coming, because some of us would like to know before we retire. He has heard 10 very good Back-Bench contributions in this debate, all of which have been, in one way or another, highly critical of the housebuilding industry in this country. When will the Government support a Competition and Markets Authority inquiry into the UK housebuilding industry?

[Eddie Hughes]

As I have set out, the Government are already working closely with the CMA to push forward their ambitions. There are some ongoing court cases, so it would be inappropriate to comment except to say that we are enthusiastic in our support. I put on the record that the Secretary of State read my right hon. Friend’s book over Christmas, and I think he has been in touch with him to say how good a read it was.

[Mr Francois]

He has, but I was told I could not plug it in the debate. [Laughter.]

[Eddie Hughes]

Briefly, as I am running out of time, a number of Members have highlighted that for net zero, we need to build homes that are as environmentally sound and low carbon in their production as possible. People are concerned about the transition to the new legislation. Just before Christmas, we introduced part L of the building regulations to improve the energy efficiency of homes. For a developer to make use of the transitional arrangements, they must have submitted an initial notice, a building notice or a full planning application to the local authority prior to the new regulations coming into effect in June 2022. They must then have commenced work on an individual building to which they want to apply the previous standards before June 2023.

Members referred to the idea of simply digging a trench in order to have started work on a site, but we are going to be more stringent with the application of the arrangements. For the previous regulations to apply, developers must have started the foundations of a building, for example. Those transitional arrangements mean that developers can no longer build to out-of-date energy standards over several years as sites are developed. Unless construction has actually commenced, they will need to build to current regulations. A full technical consultation with regard to the future homes standard is planned for spring 2023. As part of that, we will consider what transitional arrangements are appropriate for that legislation.

Several Members mentioned management companies and, in many cases, their bad practice. Put simply, the current situation is unfair to freeholders, and we are committed to introducing legislation to right that wrong. We intend to create a new statutory regime for freeholders based on the rights enjoyed by leaseholders. This would ensure that maintenance charges must be reasonably incurred, and that the services provided are of an acceptable standard, and would include a right to challenge the reasonableness of the charges at a property tribunal. Freeholders would have a right to change the provider of maintenance services by applying to the tribunal to appoint a new manager. That may be especially helpful for freeholders dissatisfied with the services they currently receive. The Government intend to introduce legislation to implement those changes as soon as parliamentary time allows.

The build-out rate was also raised. The Government are clear that new homes should be built out as soon as possible once planning permission is granted. Sir Oliver Letwin’s independent review of build-out rates found no evidence that speculative land banking is part of the business model of major house builders, nor that it is a driver of slow build-out rates. None the less, we note that build-out is important to communities and are exploring further options. In our “Planning for the future” White Paper, which was referenced earlier, we have been clear that we will explore those further options to support faster build-out rates as part of our proposed planning reform.

My hon. Friend the Member for Keighley (Robbie Moore) and the hon. Member for Halifax (Holly Lynch) raised concerns about Harron Homes. I would be happy to meet them to discuss their concerns to see if there is anything that we can advise. Obviously, we cannot intervene in particular cases, but there might be some advice that we can give. With regard to the Building Safety Bill, the Secretary of State is working closely with Lord Greenhalgh to see what else can be done. I hope that an announcement will be made in the not-too-distant future.

We have had an excellent debate. I am grateful for the opportunity to contribute to and respond to it. I look forward to bumping into Members in the corridor to discuss the issues that they have raised today.