New Housing Supply
Debate between Ian C. Lucas and Clive Betts
Mr Betts
Absolutely, and I was going to welcome the Government’s consultation on relaxing restrictions on local authority pension funds to provide more scope to invest in infrastructure, particularly housing projects. That helpful move forward should be welcomed.
The Committee also considered a bigger deal—a housing investment bank, for example, or an extension of the Green investment bank. Lots of good initiatives scattered around the country are beginning, but small projects often find it difficult to access institutional funds, and small pension funds do not want to get too heavily involved in lending to one particular scheme. A housing investment bank could link up investors who might want to invest—including smaller investors—with borrowers and smaller schemes, and the risk could be spread across those schemes, thereby making the investment more attractive.
Ian Lucas (Wrexham) (Lab)
On speaking to builders in my constituency, it is clear that small-scale construction is supported by individuals buying properties to let, rather than first-time buyers. It seems that considerable numbers of people who want to invest are currently using the buy-to-let market but might be interested in a new type of investment vehicle, provided there was a satisfactory return.
Mr Betts
Yes, and as well as individuals, some potential larger housing providers, which are going to talk to the Committee as part of our private sector inquiry, are anxious to access institutional investment. They want to build properties and manage them in the long term, which is an interesting way forward for the private rented sector. A housing investment bank could provide a significant push in that area.
The Committee visited the Netherlands, which has a similar arrangement. Interestingly, their Government underwrite and guarantee funding that is raised and borrowed by their equivalent of housing associations, but it does not count as Government borrowing. The Government’s response to our proposal on some form of investment bank was that they would keep it under consideration. So, after a year, what has the Minister considered? I am sure that the answer will form an interesting part of his response.
Since then, the Future Homes Commission, which the Royal Institute of British Architects was instrumental in proposing, has had a similar idea: a £10 billion local housing development fund provided by 15 local authority pension funds. The Government told us in response that they would await the Montague report. Of course, Montague said that he did not believe that guarantees were appropriate because they distort the market. The Government have since introduced their £10 billion housing guarantee. They waited for Montague, heard what he said and promptly dismissed it. That is probably an unfair characterisation of the process.