Gareth Thomas
Main Page: Gareth Thomas (Labour (Co-op) - Harrow West)Housing and Planning Bill (Second sitting)
Gareth Thomas Excerpts(8 years, 7 months ago)
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Mr Gareth Thomas (Harrow West) (Lab/Co-op)
Q 129 Following on from Mr Philp’s interest in SMEs, presumably the situation facing SME house builders is even worse in a London context than it is nationally. Therefore, would you go into a little more detail about some of the other challenges faced by SME house builders, particularly those wanting to operate in London? With imagination—imaginative drafting, in particular—some of the issues that you have touched on, perhaps regarding access to finance and the skills shortage, might be able to be included in the scope of the Bill through possible amendments.
Brian Berry: As I said, access to finance remains a serious issue, so a help-to-build measure would be very useful in underpinning loans to SMEs. The availability of small sites has been a problem, because local plans have tended to allocate larger parcels, but our members need smaller parcels. The brownfield register of small sites—five units—is a step in the right direction.
The skills thing is actually a much bigger debate about challenging the perception of vocational training and about the university route not always being the best for every child when they could be learning a trade. We have a role within the industry to demonstrate and improve the image of construction, because this serious problem will only get worse.
The other thing is about making better use of existing buildings, 85% of which will still be in use in 2050. The changes to permitted development to bring more residential back into city centres are positive, particularly in creating sustainable communities. That mix of people living and working, for which there is provision in the Bill, creates dynamic cities. There is a lot in the Bill that is positive, but the finance side would be particularly helpful.
Mr Thomas
Q 130 Specifically, would a section 106 requirement on big sites to offer apprenticeships be a helpful requirement for the SME sector? It clearly would not affect SMEs building on smaller sites, but they could benefit from construction apprentices coming through.
Brian Berry: The real solution is a cultural one, so that young people recognise that a career in construction is positive. We have to overcome some of the stereotype thinking. A survey by the Construction Industry Training Board revealed that 35% of careers advisers were advising young children not to go into construction because of the mud and boots image. If that continues, it will be no wonder that the best are not coming into the building industry. Our role is to change the image of the industry. The main challenge is to get more young people and more apprenticeships.
Maria Caulfield (Lewes) (Con)
Q 131 To follow on from the unanimous verdict that permission in principle would really help to kick off house building, I know from talking to developers and builders in my area that planning is a real stumbling block. With the technical details consent, are you concerned that we are just pushing blockages and delay further down the pipeline? Are you worried that you will get permission in principle but that there will still be a blockage further down the line?
Andrew Whitaker: No, we do not see that as a problem at all. As I said in my earlier response, we see this as bringing valuable focus to local authorities, who may say, “Yes, there is nothing wrong with the principle of development. We have identified this site and always knew that it was going to come forward for development. Let’s bring it forward as quickly as we possibly can.” A lot of what the Bill is trying to do is exactly that. It is trying to draw local authorities’ attention to the fact that they can facilitate more sites coming through the planning system to facilitate greater delivery of housing to alleviate the housing crisis that we find ourselves in. If we are to deliver more houses, it is important that the Bill does that and that local authorities refocus what they are doing.
Brian Berry: I would echo what Mr Whitaker said.
Ian Fletcher: I would echo that, but I would just add that one of the remaining challenges when you get to the technical stages is resource at a local level, which is variable across local authorities in terms of support in the planning process.
Andrew Griffiths
Q 145 Could you share those numbers, so we can get some further analysis?
Campbell Robb: I am absolutely happy to do that.
Dr Blackman-Woods
Q 147 We will get more evidence from you and can come back to that. What I have picked up is that you have real concern about whether the starter home scheme will crowd out genuinely affordable housing. What do you think can be done to prevent that from happening?
Jon Sparkes: Clearly, the Bill makes it advantageous to build affordable starter homes as defined. It not being advantageous, leaving local authorities to have the flexibility to have houses for the population that they have, and to make an assessment on the availability of truly affordable social rented housing for the people who need it. The answer to it being crowded out is to not crowd it out, and to leave it for local authorities to decide and be flexible.
Campbell Robb: I would agree with that. Section 106 currently delivers about a third of all genuinely affordable for rent properties in England. Removing that stipulation on local authorities could reduce those numbers and replace them with starter homes. That is the difficulty in that situation. More local flexibility would definitely help us to answer it.
Chris Philp
Q 159 That brings me on neatly to my final question. One proposal in the Bill is for social housing tenants, once they reach a certain level of salary at the end of the taper, to move to market rents. That will presumably encourage some people on higher earnings, who had moved into social rented but have progressed in their career, to move out of social rented and into some other tenure, creating space for exactly the kind of vulnerable people you are describing. I presume that therefore you would welcome that clause in the Bill.
Jon Sparkes: The principle that social tenants who can afford to do so should pay more is something that we are not against. There is a detail in there, which is about the onus of evidence. If someone is unable to provide evidence of their income we do not believe that they should be put on to a market rent by default. That will impact on vulnerable people, but the principle of paying more if you can pay more is not something we have a problem with.
Campbell Robb: I agree with that—we are not against the principle of it.
Mr Thomas
Q 160 Given the anticipated rise in population in London over the next decade, do you think this Bill will help us to tackle the housing crisis, or do you think the housing crisis in London will get worse?
Campbell Robb: Some of the policies, as we discussed earlier on, may not have as much impact in London as they will have in other parts of the country, as has been pointed out. Some of the sell-off of high-value council homes, in London in particular, will have a bigger impact in London to pay for the right to buy. Overall, I suspect that London will struggle without further measures to tackle the housing crisis.
Mr Thomas
Q 161 So you do not anticipate that the housing crisis will get worse in London, notwithstanding the various provisions within the Bill?
Campbell Robb: It will be interesting to see whether Help to Buy and right to buy—those types of measures—will generate new development. London needs to build a lot more homes, pretty quickly—up to 50,000 a year. It is hard to see at this stage whether these measures will work. Some of the evidence you are hearing from the builders and developers may help, but it is hard to believe that that is definitely going to happen.
Mr Thomas
Q 162 One last thing: the Bill has not been written with the interests of renters primarily in mind. What other measures to help those in rented accommodation would you like to have seen in a Bill such as this?
Campbell Robb: The one that we would like to see is a move towards longer tenancies. The very short nature of the shorthold tenancy—it has been shortened to six months—is a massive detriment, particularly to families living in the private rented sector, with children in schools who want to be able to settle. Many leases are rolled on, but knowing that every six months you might face moving is a real challenge. We have made proposals about three-year tenancies and even five-year tenancies. We are seeing big institutional investors that offer long-term renting offering longer tenancies, and not just in London. That gives security. We could have seen more on that area, which would have helped.
Jon Sparkes: I agree, but in addition to that, we would like to see as much effort being put into stimulating the supply of suitable and truly affordable rented property as the Bill puts into stimulating the supply of houses to buy.
Mr Thomas
Q 163 How would you do that?
Jon Sparkes: The way the Bill does it is ensuring that there is a priority around affordable houses to buy and that grants are available to make sure they are top of the priority list. Do the same for the others. There are models that show that investment in social housing is beneficial to the public purse over time, so invest in those as well. But it should not be “instead of”—our biggest fear is that affordable houses to buy are instead of truly affordable houses to rent, so do both.
Mr Thomas
Q 199 Mr Montague, can you flesh out a point you made in your opening remarks about your concerns that the Bill will not add to supply in London?
David Montague: We believe there is a lot that is positive in the Bill, as I mentioned earlier—brownfield sites and so on—which will help us to deliver more homes in London. The tides that we are swimming against in London are the loss of local authority stock that will be difficult to replace and the effect of the starter home initiative, which is still difficult to determine. Our fear, as others have suggested, is that it will replace social housing.
Dr Blackman-Woods
Q 200 Can I follow on from that? The G15 are quite strongly against this forced sale of council housing. Do you share the concern that the Government should not be seeking to support the right to buy through the forced sale of council housing?
David Montague: We are concerned that it will lead to the loss of affordable social rented housing in London. We would have preferred to have seen the voluntary right to buy funded through other means—means which we suggested. Given that we are where we are, we are determined to work with local authorities to protect against the loss of social housing in London.
Kevin Hollinrake
Q 216 What further provisions, on top of this, would you like to see in terms of control over the quality of both lettings agents and landlords?
David Cox: This comes back to what we put in our manifesto earlier in the year for the general election. We argued that this Government should take a two-pronged attack. First, we would like to see much greater regulation and much more appropriate regulation of the lettings and management industry, something akin to the London Mayor’s London rental standard. Boris has created an appropriate model of regulation of the sector, which utilises the existing skills and infrastructure set up by the professional bodies and therefore will not cost the public purse huge sums of money to create a regulator. In fact, the London rental standard is very similar to the way that the Bar is regulated and has been regulated for many hundreds of years.
We would argue that that is an appropriate form of regulation going forward, and would very strongly urge that that sort of regulation goes into the sector, particularly around qualifications for agents and client money protection. If the Committee takes nothing further from this, I would strongly advocate—I think everyone would—for all letting agents to have client money protection. We hear far too often of agents running away with millions of pounds of other people’s money. Client money protection would offer landlords and tenants the ability to get their money back.
The other side is enforcement, which is very much contained within the Bill. We very much welcome the requirements of the Bill. Enforcement has been derisory over the past few years. The number of prosecutions is low and the actual awards made are awful and effectively nothing more than a cost of doing business for a lot of these criminal agents.
We want to see local authorities being adequately resourced. At this time, that money cannot come from the central Government fund, which is why I agree entirely with Carolyn that local authorities need to be able to keep the fines, rather than them going back to the Consolidated Fund. Local authorities, particularly trading standards and environmental health, are departments that are revenue drains on local authority resources. If they get to keep the fines and the fines are ring-fenced for further housing enforcement activity, that will start making the environmental health and trading standards departments revenue generators for local authorities, instead of revenue drains.
Just to give you one example, if I may, one of my members in the east of England went down their high street when the Consumer Rights Act 2015 came into force with the fees elements. Of 23 agents, 19 were not displaying the necessary fees. At a £5,000 fixed penalty notice, that is £195,000 in on-the-spot fines that could be levied with very little work by a trading standards officer. If they had not got the fees on their website, which they probably had not, that was another £195,000. If local authorities were enforcing that, they could make hundreds of thousands of pounds for their department and start ridding the industry of the people we do not want in it.
Mr Thomas
Q 217 I draw the Committee’s attention to my declaration in the Register of Members’ Financial Interests. I want to pick up on the question that Mr Hollinrake was asking about client money protection. Mr Cox, can you flesh out the detail and the type of amendment that you would want to see that would offer that? Similarly, Mr Cox and Ms Uphill, do you agree with Mr Smith on the potential benefit of three-year tenancies and on a provision for that being included within the Bill?
David Cox: If I can deal with the client money protection issue first, client money protection is at the moment primarily provided by the professional bodies. All our licensed ARLA members must have client money protection, so that in the event that any one of them goes bust or misappropriates the funds—it has happened 12 times in our 34 years—we will cover the moneys up to certain caps.
There are providers out there that offer client money protection for agencies through the open market, but client money protection means two things. First, it is an insurance premium, so that in the event of an agency going bust or misappropriating funds, clients—both landlords and tenants—get their money back. Secondly, and more importantly for us, it means that agencies have to have their client accounts audited, so that you know whether something is going wrong. We audit every single one of our member firms’ client accounts, and we require that in order for them to join the professional body.
In terms of an amendment, I am afraid I do not have the specific wording here today, but I can provide the Committee with a set of words. We provided a set of words for the Consumer Rights Bill last year, and that was supported by more than 20 organisations, including landlord associations, letting bodies, consumer groups and Shelter, Generation Rent and Crisis. It is an issue that has unanimous support among everyone involved in the housing sector. The Consumer Rights Bill started moving us in the right direction, with firms having to display whether they have client money protection, but we estimate that on average on any given day—my members alone account for about 60% of the market—firms will hold just under £3 billion of other people’s money. That is protected for our members, but what about the other 40% that is not protected?
On the three-year tenancy question, three-year tenancies can work. I do not think they should be mandated because there are a lot of situations where people do not want a three-year tenancy. In my previous answer I talked about somebody who may be coming to London or one of the other big cities on a short-term contract. The other prime example is a student. When they have been in halls for one year and have only two years left of their undergraduate course, do they want to sign a three-year tenancy when they do not know what they will be doing at the end of their third year? So we would suggest that the current tenancy regime works.
According to our latest survey of our members, the average tenancy is now 20 months, and we have to remember that, according to the Government’s statistics—I think it was the last survey of English housing—well over 90% of tenancies actually end at the request of the tenant, not the landlord, so removing that element of flexibility could do more to harm those that probably want it than actually help.
Carolyn Uphill: As the clients, when we are talking about client money protection by our landlord members, we would of course support client money protection because it is only right that the money should be ring-fenced within agencies. I am sure David will supply you with a suitable form of words.
As for three-year tenancies, the English housing survey of 2013-14 evidenced that the average tenancy was three and a half years, so tenancies are not as short as some people imagine. Many, many landlords are more than happy for tenants to either be given as long a tenancy as the mortgage provider allows or roll on to a longer tenancy, because what landlords want is good long-term reliable tenants without the costs associated with churn. But if that were to be imposed as a minimum, it would seriously damage the availability of accommodation for those who need it on a much more flexible basis.
David mentioned students. I am a student landlord. It would tie me in knots when my students decide to stay on in Manchester as young professionals and say, “Can we stay on for a year because we don’t know where our career is taking us?” so I end up with a mixed house. Any imposition of a period beyond the 12 months that, in that particular case, suits the academic year would cause me as a landlord to consider, “Can I stay in this business?” There are lots of other landlords who are letting because they are away for 12 months and various other factors. There really should be flexibility in the market. There are tenants who want flexibility and there are plenty of landlords willing and happy to give longer tenancies to those who want them.
So we support the principle of longer-term tenancies being available if the mortgage provisions can stop that being constrained, but not as an imposed three-year or any other fixed minimum.
David Smith: I was not in any way suggesting that three-year tenancies should be mandated. All I am talking about doing is removing barriers. I should also say that the statistics are very difficult to interpret, because longer tenancies are more common outside London and the south-east. As soon as you drive into London and the south-east, it is not so much that tenants do not stay for two or three years, but they are forced to sign a series of 12-month tenancies. There are a range of reasons for that. At the risk of incurring David’s wrath, I will point out that one of the reasons for that in London is that letting agents encourage a series of 12-month tenancies to secure their fee structure. That also, in our experience, is one of the things that most actively drives rent increases, particularly in the capital, and we feel that if tenants were able to sign two-year tenancies, and those barriers to two-year tenancies were removed at the front end, the pressure to drive that rent up during the course of the tenancy on each renewal would be reduced.
Brandon Lewis
Q 218 On that point, on the issue around tenancies, when we look at what is happening elsewhere around the world, many places have a much larger and more advanced rental market than we do and still have one-year tenancies. Would you agree that one of the differences seems to be that we have a buy-to-let-led system—I think the colloquial phrase is “mama and papa” landlords who own a small number of properties, about 91% of the market—and the biggest risk to a tenancy is that property being sold to an owner-occupier, whereas in other models, such as multi-family housing, if the property gets sold, the invoice from the managing company might change from Greystar to Amlin or somebody else, but the property tenure remains the same and the tenancy issue is of a different nature. That leads back to one of our earlier evidence sessions, when somebody made the point about how more institutional money with a more professional rented sector changes the dynamic around the tenancy lengths, anyway.
David Smith: I am not sure I would agree with that. The statistics already show that the majority of tenancies end at tenants’ requests, not because the landlord wants to sell. Increasingly, the sector’s structure, even among smaller landlords, is changing. Landlords are often now increasingly selling with tenants in place to other landlords. Some of this is the buy-to-let sector in England and Wales growing up and perhaps becoming more like some of the buy-to-let sector abroad. Our view remains that one of the reasons that we tend to have many 12-month looped tenancies is that it has grown up that way through influences from the opposite side of the equation, from mortgage company pressure, from long lease pressure and from lettings agency pressure. At the moment, landlords are very linked to six-month or 12-month block tenancies. There is very little other discussion about term in the market. If we can break out of that cycle, we feel that would do a lot to change the dynamic.
David Cox: I would agree with that, and at the same time with what the Minister said about looking at other countries. We hear a lot that we should look to Germany and France and their tenancy models. However, in relation to our tenancy model, that is comparing apples with pears. We have to factor in that in places such as Germany, they have indefinite tenancies but it is the tenant’s responsibility to maintain the property during those tenancies, and many do not come with kitchens and bathrooms. Here, the obligation is entirely on us as the landlords to maintain the properties and the goods inside the properties, whereas in Germany and France it is the tenant’s responsibility. We also have to factor in that they have a much more mature rental market. They have many more institutional investors. In Germany and France, the vast majority of the private rented stock is owned by institutional companies, whereas ours is owned predominantly by the “mama and papa” landlord.
It is also still a relatively new market. Looking back 100 years ago, 90% of the UK’s stock was in the private rented sector. By the time we had regulatory liberalisation under the Housing Act 1988, that had shrunk to less than 7% of the sector. It has only grown back to the size that it is today with that regulatory liberalisation, particularly the ability to use section 21 of the Housing Act, coupled in 1996 with the introduction of the buy-to-let mortgage, which provided a financing vehicle to allow people to start investing in property in the UK.
We need much more investment in property. There is a chronic housing shortage in the UK at the moment. The Government estimate that for every house built, two new households are created, therefore the level of housebuilding is not at a sustainable level. The only way we are going to get rents under control, get house prices under control, particularly in places like London, is by a massive house building programme.