Kevin Hollinrake
Main Page: Kevin Hollinrake (Conservative - Thirsk and Malton)Housing and Planning Bill (Second sitting)
Kevin Hollinrake Excerpts
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.
Peter Dowd (Bootle) (Lab)
Q 118 Could I get a clarification from Mr Fletcher? I think you referred to the issue of local authority plans being out of date with regard to industrial use.
Ian Fletcher: That is a recent piece of work by one of the big planning consultants, Turley, which has looked at the evidence base that local authorities are using. More than 50% are pre the introduction of the national planning policy framework. Significant periods of time have passed and significant changes in policy have passed since they put their evidence base together on their requirements for industrial land.
Kevin Hollinrake
Q 164 You have both expressed concerns about the sale of high-value homes, but is that not just releasing assets to fund more building of more affordable homes? David Orr of the National Housing Federation said that it will increase new homes in all parts of the market, including the rental market. Is that not easing your concerns?
Jon Sparkes: I do not agree that it will increase the availability—
Kevin Hollinrake
Q 165 Even though he said that it would?
Jon Sparkes: If I could finish my sentence, I do not believe that it will increase the availability of social rented property.
Kevin Hollinrake
Q 166 Even though he said that it would, in all parts of the market?
Jon Sparkes: I do not believe it will.
Kevin Hollinrake
Q 167 We have heard evidence here today to that effect. One of the largest housing associations in the north say they will quadruple their numbers of properties—of new supply.
Jon Sparkes: There is a disincentive to build new council houses inherent in the Bill. There is a right to purchase social housing, but there is nothing to stimulate the availability of social housing.
Kevin Hollinrake
Q 168 David Orr said himself that housing associations do not want to move away from the business of providing houses for those in need—why would they?
Jon Sparkes: I would be very pleased if they do not, but I do not believe there is an incentive here to build social rented properties.
The Chair
With that we come neatly to the end of our session. Before we close, I thank our witnesses for their evidence and for taking questions so gamely, and our Committee for asking questions so sensibly. We move swiftly on to the next panel.
Examination of Witnesses
Mark Patchitt, David Montague, Sue Chalkley and Tim Pinder gave evidence.
Dr Blackman-Woods
Q 214 But with some safeguards, you think that it could be made accessible to the public? Would its secrecy not be a huge disincentive to the whole system, because only local authorities would have access to it?
Carolyn Uphill: I think that we need to reflect on that and respond in more detail.
Kevin Hollinrake
Q 215 Mr Cox, you referred to the banning orders operating at a company level rather than an individual level. You want them to operate at a company level.
David Cox: No, we want them to operate at an individual level, which is the proposal in the Bill. This was not the proposal in the discussion paper earlier in the year. There is one reference in the Bill to a body corporate, but I am not quite sure where it comes from and where it ties in to all the other clauses. We certainly think that it should be at the level of the individual agent. Where it is offices of a company that have caused a problem, then again we could still ban the agent, not the agency. If you ban David Cox Lettings, for example, there is nothing stopping the company directors of David Cox lettings from setting it up again as David Cox Lettings and Property Management Ltd, at which point the agency has been banned but the agents are still trading. They could also go and work for another company. That is why we believe that it should be at the level of the individual agent, which it is in the Bill.
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.