Housing, Planning and the Green Belt

Justin Madders Excerpts

Tuesday 6th February 2018 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

The profits of the top five UK house builders have risen by 388% in the last five years, sometimes at the expense of the people we are trying to help on to the housing ladder. One area in which developers’ profits have come first is commuted sums for grounds maintenance and other communal services. It seems that the idea of a developer paying the local authority a commuted sum to cut the grass and maintain common parts has had its day, and I am not clear whether the blame for that lies with local authorities asking for too much money, or developers not being prepared to cough up the funds in advance. I suspect they would blame each other.

The net effect is that more and more homeowners are having to pay twice for the maintenance of open spaces: once through a management fee; and once through their council tax. Of course, council tax pays for a lot of things, but something as visible and obvious as grounds maintenance leads people to ask why they face a double whammy. My suspicion is that if developers can save themselves half a million pounds, they have a big temptation to cash that and let the customer pay further down the line.

Not only is there a double payment, but the system is inefficient and lacks accountability. If the grass does not get cut on the verges in most parts of my constituency, either a local councillor or I will hear about it and respond, but it is not so easy to get a response when dealing with a private company.

The most high-profile example of how developers shift costs on to consumers is the leasehold scandal. How much have developers pocketed over recent years by selling the freeholds for new estates to investment companies? I hope the message is now getting through to them that that racket has to stop and that they will be ultimately be responsible for their misdemeanours. I am pleased that Ministers have indicated a willingness to act, although I am sure that they are aware of the frustration felt by many who are trapped in unsellable homes, for whom the Law Commission report feels like a lifetime away.

I know that developers have effectively been put on notice that they should not sell any more houses on a leasehold basis, but there are reports that that is still happening. Can the Government issue supplementary planning guidance to local authorities to say that selling properties on a leasehold basis unnecessarily would be a reasonable ground for refusing planning permission?

Members will have heard countless stories about leasehold and an industry that is out of control. Now is not the time to recount those, but suffice it to say that although there are some positive examples of responsible developers, I have little confidence overall that the industry has the right moral structures in place to deliver the houses that we so desperately need. We need answers to how these feudalistic practices were allowed to start in the first place.

[Theresa Villiers (Chipping Barnet) (Con)]

One of my constituents suggested to me that breaking up some of the bigger house builders might improve competition in the market, deliver a better deal for people buying homes and enable us to deliver more homes. I would be interested to hear the hon. Gentleman’s views about that suggestion.

[Justin Madders]

That is an interesting point. Over recent years, the number of developers has contracted. The sums involved and the years of advance planning needed to build some of these developments tend to favour the bigger builders. I am not sure how we would go about achieving that, but it needs to be looked at.

The Communities and Local Government Committee should also consider this issue because developers—big and small—must explain how their duping of customers was allowed to start in the first place, how much profit they have made from this scam, who drew up the leases that nobody will now sign, how many properties were made leasehold needlessly, what role lenders and solicitors played in allowing through leases that nobody will now sign, and exactly who the beneficiaries of these leases are? Until we know the answers to these questions, we cannot be sure that the new homes we need will by owned with no strings attached by the people who buy them.

I want to say a few words about enforcement, because the rules of the planning system have value only if they can be effectively enforced. The significant funding cuts that local authorities have experienced in recent years are bound to have had an impact on the number and extent of enforcement activities that a council can undertake.

The classic example is the Mostyn House development in Parkgate in my constituency. Originally, the site was a boarding school in a listed building, but once the school ceased, the site was certainly an attractive one for developers to consider—and so they did. The site is now an impressive mix of new builds and apartments woven into the fabric of the old school, but it suffers from one major disadvantage. Despite some people having lived there for over four years, there is still no planning permission in place.

The reason for that is that revised plans were submitted halfway through the redevelopment, and despite the best efforts of the local authority enforcement officers, the developer, P. J. Livesey, constantly drags its heels, with the result that there is a list of outstanding works as long as your arm. From what I understand, the developer has a similar patchy record elsewhere in the country, but it seems to be able to get away with it, because there just is no capacity to follow through enforcement consistently.

As Mostyn House is a listed building, it is a pretty technical job to keep on top of it all. Fortunately, however, some of the residents have a surveying background, so they have been meticulous in logging the issues. Despite that, P. J. Livesey has still not met the required standards, and I wonder where we would be if we did not have such proactive and knowledgeable residents.

What about bringing roads up to an acceptable standard, so that they can be adopted by a local authority? There is an estate in my constituency that people started moving into almost a decade ago, and the developer—in this case, Bellway—still has not done the necessary works that would enable the local authority to adopt the roads. I do not blame the local authority. It has set out what needs to be done, but it does not have the resources or the time to constantly chase the developer, which has now sold the homes and moved on. What is the incentive for the developer to go back and complete the work it should have done?

I am pleased to say that, after many years of stagnation, there is a significant amount of house building in my constituency, particularly on brownfield sites, but very little of that housing is affordable. That is because the permissions were all granted some time ago, and the developers used the coalition Government’s rules on viability assessments to argue that it was not cost-effective for them to keep to their affordable housing obligations on individual sites. They plead poverty as they tell us that the requirement to build affordable homes means they cannot maintain their 20% profit margins.

As a result, no affordable housing is currently being built on just about every development site. Most developers sought release from their obligations three or four years ago, and many have only started building in the past six to 12 months, so it is quite clear that the affordable housing requirements were not stopping developments from proceeding. There is more than a suspicion that developers have played the system to maximise profit and had no intention of proceeding with their buildings previously. We have had empty sites for three or four years longer than needed, and an opportunity to build much-needed affordable housing has been lost.

[Mr Richard Bacon (South Norfolk) (Con)]

It should come as no surprise to anyone that private sector house builders build when—and only when—it is sufficiently profitable to do so. That ought to be an axiom, and I am sure the hon. Gentleman agrees with that. Does he therefore agree that part of the solution ought to be to provide a much wider range of genuine choice to potential consumers—people who want somewhere to live in the affordable space and homeless people, as well as those in the purchasing market—so that private sector developers cannot exercise an oligopoly, as they currently do?

[Justin Madders]

That is an interesting point. At the moment, developers will build at the time that suits them best and will build the types of property that suit them best, but that is not necessarily what suits the demand best. That is something I hear regularly in my surgery, and it is probably still the No. 1 issue raised there. I am pleased that my local authority, Cheshire West and Chester Council, is now building some council housing, because there is huge demand for it in my constituency. This is the first it has built for nearly 40 years, although, unfortunately, that has taken the borrowing limits under the housing revenue account to the limit, so we need that cap to be lifted.

Most disappointingly, once those properties are built, we will still have less council housing in my constituency than we did a couple of years ago. That is due to the huge increase in right to buy applications in recent times—who can blame people for taking advantage of 70% discounts?—but that policy is short term in the extreme. It is the Government’s stated aim that every council property sold under right to buy should be replaced, but the reality is that that one-for-one replacement is actually running at a rate of about one replacement for every five properties sold.

Is there any wonder? Recently, a three-bedroom semi in my constituency was sold under right to buy for £27,000, and do not forget that the council will get only a third of that money to replace the house it has just lost. The average cost of a semi-detached house in my constituency is about £148,000, so Members can do the maths and see that this policy is completely unrealistic and needs to be changed.

To conclude—a number of Members have talked along these lines today—I would like much greater political direction and oversight over the house building industry. After all, those involved are the people who will build the homes that we all need. At the moment, they quite understandably organise their affairs to maximise their profits, but housing is part of our infrastructure and a roof over our head is a fundamental right. We cannot just rely on the market unfettered to deliver that.

[Several hon. Members rose—]