Helen Hayes
Main Page: Helen Hayes (Labour - Dulwich and West Norwood)Housing and Planning Bill (Second sitting)
Helen Hayes Excerpts
Helen Hayes (Dulwich and West Norwood) (Lab)
Q 115 Just returning to section 106, at the moment that section makes a very important contribution to delivering social housing for rent, school places, high-quality green space, GP practices and so on. With the starter home obligation, to what extent do you think house builders will still be happy to make those contributions to creating successful communities where you are delivering new homes?
Andrew Whitaker: I think those contributions have to be proportionate to the development and, therefore, excluding an element from the community infrastructure levy does not exclude them from site-specific section 106 requirements. Overall, developers will continue to pay planning obligations towards social infrastructure, even with the starter home obligation. On brownfield sites of around 100% starter homes, I think we then struggle a little to see the overall contribution to the cumulative impact of development, which is of course supposed to be addressed by the community infrastructure levy. That takes some sites out of their fair contribution towards that and we have some concerns about that. The problem is, you have to do something to make those sites viable for residential development with their 20% discount and that is one of the few things you can do to ensure that those sites are still viable.
Ian Fletcher: I am sympathetic to the points that Andrew was making. I would just add that we have a comprehensive spending review coming up, and if those brownfield sites are going to work and are going to be great places to live, there needs to be some way of supporting that social infrastructure. If it is not coming from the developer then it has to come from other sources.
Helen Hayes
Q 116 If I may, I wanted to ask about permission in principle. The Minister came to the Communities and Local Government Committee yesterday and said that his understanding of permission in principle is that it is simply a site that has been agreed by the local authority that will have permission for housing. Could you explain to me, from the industry perspective, what is the value of that? How does it give you any more certainty and any more leverage with your lenders than a site allocation, on the basis of which a local authority could still not turn down an application on a matter of principle without losing an appeal?
Brian Berry: I think it is particularly attractive to small builders, because getting the permission in principle at the beginning gives them the confidence actually to bring the application forward. It also means they are not having to spend large sums of money on providing technical details at the first stage. That, as I understand it in the Bill, is removed into the technical consent part. Turning it into two parts and getting the permission in principle at the beginning will, I think, bring forward more applications from smaller builders, and it does not pose any risk in terms of discussing the merits of the scheme because that will be in the second part. This is a welcome development and very similar to the redline application route endorsed in the Lyons review.
Andrew Whitaker: I would like to share your optimism that an allocation in a local plan would mean that you did not have to argue the principle of development on that site when making a planning application. Unfortunately, I can point you to many, many examples of where the principle of development gets discussed at length even for an allocated site. I think what this will do is ensure that local authorities, when allocating sites, do a lot more due diligence about whether they are committed to bringing that site forward for development. If we never need to make an application for permission in principle, that will be fantastic, because it will mean that local authorities become more committed to the delivery of the sites that are in their local plan.
Kevin Hollinrake (Thirsk and Malton) (Con)
Q 117 This Bill, taken in the round, is designed to tackle the fundamental problem in the housing market, which is lack of supply. And the lack of supply is partly about who is going to build the houses of the future. I am thinking particularly of SMEs, Mr Berry. SME house builders used to build about 100,000 homes a year in the UK. I think that at the moment they are building about 18,000 homes every year. Is there enough in the Bill to help SME house builders?
Brian Berry: You are absolutely right. The number of house builders has declined rapidly over the last 25 years. In 1988, two thirds of all new homes were built by SMEs; that fell to 30% last year. There is a desperate need to get more SMEs into the market if we are to deliver those homes. The challenge, of course, is that there are barriers to SMEs coming into the market. Those barriers fall outside the scope of this Bill, but access to finance remains a concern for SMEs—62% of our members say it is a barrier to bringing forward developments—so it would be useful if the Government considered some form of help to build, perhaps underwriting homes. That would be very beneficial.
The other key issue that affects the house building sector is the growing skills crisis and how we are to address that, because if we do not have the skilled labour, we are going to have a serious problem. It is already an issue. We know this from our own surveys: 60% of our members are having problems recruiting bricklayers, and 50% are having problems recruiting carpenters. It is right across the board. There are a number of issues that are outside the scope of the Bill, but that are absolutely fundamental to delivering the number of homes required and that we all need to work with Government on.
The Chair
We are now glad to be able to welcome Shelter and Crisis to the panel. We have a total of half an hour to take evidence from you. Perhaps you could start by introducing yourselves for the record.
Campbell Robb: I am Campbell Robb, the chief executive of Shelter.
Jon Sparkes: I am Jon Sparkes, chief executive of Crisis.
Helen Hayes
Q 133 Both of you, in your written submissions—thank you for them—have emphasised the need to address supply issues in order to address our housing crisis. To what extent do you think that the starter homes proposal will do that?
Campbell Robb: The first thing to say is that the drive towards more building is a welcome one, and the Bill is attempting to do that. Our concern with starter homes is that they will replace, rather than be on top of, existing provision. We are fearful also that the type and the cost will be out of the reach of what would be considered to be average families. The removal from section 106 of the requirement to fund social rented, and the replacement of that with starter homes, is the issue that we would have with that.
Jon Sparkes: I would make a very similar point. The concern for us is what happens to people at the very low end of income, for whom the starter home is a mile away. We think that if starter homes are instead of truly affordable rented homes, we will see an increase in homelessness.
Helen Hayes
Q 134 Who do you think will benefit from starter homes?
Campbell Robb: In the analysis that we did, we were quite generous in the types of deposits people would have and the costs, so we took a reasonable approach to our analysis of what would be available. I am afraid that our analysis showed that in about 60% of the country, even people on middle incomes would be outpriced. For people on what would be the new national living wage introduced by the Chancellor, when that comes in, in 90% or more of the country, starter homes will be unaffordable. We think that a very specific group of people in a very specific, quite high-end income bracket will get them. That is not to say that it is not a good thing, per se, for them to get a leg up and to own their own home, but the problem is with it replacing social rented and genuinely affordable homes.
Helen Hayes
Q 135 You both lead charities that seek to support homeless people. Will the starter homes benefit any of the clients you seek to help week in, week out?
Jon Sparkes: No. The clients we work with—about 8,000 clients a year—are living in shelters or sofa-surfing, and some of them are rough sleeping. There will not be a benefit to them from this. As Campbell said, that does not mean that it is not a good thing for the people it does help, but it will not help the clients we work with.
Campbell Robb: From our analysis, it genuinely will not help most people who are on an average wage. It should be the aspiration, I think, of any home ownership policy to open that up. That is where we see the problems with it. It would not help many of our clients.
Seema Kennedy (South Ribble) (Con)
Q 136 Mr Sparkes, I am looking at paragraph 14b of your submission, in which you say:
“Outside of the North of England, Starter Homes will be unaffordable to the majority of households on wages below the median”.
What is the north of England, first of all, in geographical terms? How many people comprise the north of England? I am interested in how you came to that.
Jon Sparkes: I have to say, we lifted that item completely from Shelter’s research, so I will pass it to Campbell.
Campbell Robb: I do not know off the top of my head what the north of England is in terms of the analysis, but I will happily send the detailed geography to the Committee. In terms of incomes and numbers of people, we took Government statistics on average wages and national income and used that analysis against what the cost of starter homes would be, on average, what an average deposit would be and what a normal deposit would be. That is the analysis data.
Seema Kennedy
Q 183 Perhaps that is because of that stock transfer from Macclesfield Borough Council, but surely in the rest of Cheshire there are definite examples where this sort of percentage would not be paid.
Tim Pinder: Absolutely. I would agree with that.
Helen Hayes
Q 184 I wanted to ask your views on the pay-to-stay measures in the Bill. I would be interested in your views on what you think the impact of pay-to-stay will be on your organisation, administratively and in terms of your capacity, on your tenants and your relationship with them, and also on the wider communities that you manage as housing associations.
David Montague: I will start by saying that we welcome any flexibility on the way that we set our rents. As charities, we will always use that flexibility carefully and prudently. We would prefer to see that flexibility extended across all of our stock, particularly given that we are not sure what will happen to rents in five years’ time. We think that the best people to set rents are the boards of charitable housing associations. We broadly welcome any flexibility that we are given.
On this specific measure, we think that pay-to-stay, for those who can afford to, will equal right to buy. It will encourage people to exercise their right to buy. They will have a choice of either seeing their rent doubled or accepting a discount of up to £100,000 to buy their home. It is a big incentive to buy their home. The difficulty is that if someone is living in a one-bedroom flat in Westminster and they cannot exercise their right to buy, then they could be stuck. That is why we welcome the flexibility that we are being offered through the voluntary deal, which will mean that the discount is portable —people can take it to a more affordable area. We are concerned about the administrative complexity of pay-to-stay. It is going to be a bit of a burden, and we are not yet convinced that the income we will receive will outweigh the cost of collection. It will require co-operation between us and statutory agencies in a way that has not happened before.
We would like to see some of the detail as well. We are not sure whether the same rules apply to a single person on £40,000 as to a couple on £40,000. There is a danger if it does that we could be drawing more people into the benefit system as a result of this policy.
Sue Chalkley: If it was a simple system to administer, we think that pay-to-stay might help to offset some of the rent reductions that we are facing. However, there are rural considerations with this initiative as well, in that many of the schemes that we have built for rural communities have been built with an undertaking that we will hold them as affordable housing in perpetuity. This could trump that deal with the rural community and cause a lack of confidence going forward, so that is a concern.
The other issue from the point of view of a rural community is that many families have seasonal part-time work and they have a portfolio of jobs, so it will be potentially quite complex to decide what the income is and how the rent is calculated on that. On top of that, there is plenty of evidence to show that living costs in rural communities are between 10% and 20% higher than they are in urban communities. Should the taper be in some way tapered to reflect the difference between rural and urban communities? We really just call for this to be fully rural-proofed.
Tim Pinder: We welcome pay-to-stay. I said before that our association had taken its view on right to buy because of its charitable status. On the same basis, pay-to-stay makes sense to us as a charity because to maximise our charitable assets, they should be going to the people in greatest need. We actually welcome it as a principle. I think, again, there is a bit of a potential conflict here with the Government’s intention to have us reclassified as private bodies, because they are talking about a legislative provision rather than a voluntary arrangement.
Some of our concerns are around the proposed level. For us, it is £30,000 outside London. From April 2015, a couple on the living wage would be at that £30,000 mark, so in our view £30,000 does not feel like the right level to reflect a high income household. Some of the details around how this would work in practice also give us some concern. If you are £1 above the £30,000 limit, does that immediately mean that you will move to market rent? If so, you are suddenly faced with an extra £3,000 rent per annum, which seems to fly in the face of the whole concept of “work must pay” and people bettering themselves in a way that does not have a financial disincentive. We very much welcome the principle. We would very much like, perhaps through the National Housing Federation, to work with the Department for Communities and Local Government to look at how that would pan out in practice.
The Chair
We have 10 minutes left, so we will have to be quite swift.
Carolyn Uphill: If I may just add to that, I think there is a place for institutional investment but we are not like Germany, as David says; we are an entrepreneurial buy-to-let sector. We have lots of small landlords, but that does not mean either that they should not be professional, which is the purpose and objective of the Bill, or that they are not in it for the long term. I have certainly invested in my portfolio as a pension plan. Many, many landlords want a longer-term income and therefore longer-term stable tenancies.
Helen Hayes
Q 219 Sticking with this issue of forms of tenancy, in one of the boroughs that I represent, 40% of residents are now living in the private rented sector. You are right to say that many of those landlords are happy for tenancies to roll on, but a lot of those tenants feel that they are very much at the mercy of landlords and relying on the good will of landlords to let those tenancies roll on. Many of those households are families with children. They have no prospect, in the short to medium term, of getting into the housing market and purchasing a home of their own. There is a shortage of social rented housing. They want to know that they can send their children to the same school for the duration, that they can settle in their communities and play a full role in community life.
I would not suggest that long-term tenancies should be mandated, but would you not agree that now is the time for further diversity of options in private sector tenancies, so that where it suits the landlord and where there is a need in terms of tenants, those tenants can have more security of tenure for the longer term?
David Smith: Yes, absolutely. We accept that point. We agree with that point. We have tried to educate our members about longer tenancies but I cannot educate my members to do something that they know they cannot do.
Helen Hayes
Q 220 Do you have any idea why the Government are not incorporating such a measure into the Bill?
David Smith: I am thinking they will.
David Cox: I think that something we have to factor in as well is the legislative regime versus actual market practice. For a landlord or a letting agent—I slightly disagree with your earlier point, David—we want longer-term tenancies, for the simple reason that that is the most efficient way of generating rent and fee income. A tenant who stays for a long time, is keeping the property in a good condition and is paying the rent on a monthly basis, or however often they pay it, is a tenant that you want to keep for as long as possible. That is why, when they have such a tenant and a renewal is coming up, the vast majority of landlords and agents will not increase the rent because they want the tenant to stay for as long as possible. Therefore, yes, the legal framework is a tenancy of a minimum of six months, but as long as both parties are content and are complying with their requirements, a tenancy can go on for as long as possible.
If I may just slightly disagree with your earlier point, David, agents will also want longer-term tenancies, because they take their fee on the initial tenancy. If the tenancy is renewed for a further 12 months, their fee usually halves or goes down more than that. Therefore, if it is a three-year tenancy, at an initial fee of 8% that then goes down to 4% if the tenant renews, they will be getting that 8% for the three years of the initial tenancy, not just the first six months. It is, therefore, in all parties’ best interests to have longer-term tenancies, but can we legislate where there is not the market demand? If the market demand was there, agents and landlords would be providing longer tenancies, but at the moment the market demand just does not exist.
Carolyn Uphill: I think we are all agreed that landlords are interested in providing longer tenancies, but it has to work. I do not have them with me, but we have some statistics from the tenant panel research we have done that show that the vast majority of tenants do not ask for a longer tenancy but, equally, that when tenants had asked for a longer tenancy a good percentage of the landlords had agreed to it. Very few landlords had refused them. So that is not the case in the majority of cases. I know that we always have a minority of problem landlords, which is what the rogue database is about, but the majority of landlords can be very accommodating, where it suits them. But landlords want to feel supported as well—not got at.
One point I would like to make is that although we support the legislation in its general principle, we are concerned about the secondary legislation and the guidance yet to be published. What landlords need to know is what is happening and when, so that they can plan towards that. We, as professional associations, want to help them and to give them information. Much as we want to work, and hopefully will continue to work, very well with DCLG, we would appreciate a little more notice of legislation.