Draft Self-build and Custom Housebuilding (Time for compliance and fees) Regulations 2016

Lord Barwell Excerpts

Monday 17th October 2016 General Committees

[The Minister for Housing and Planning (Gavin Barwell)]

I beg to move,

That the Committee has considered the draft Self-build and Custom Housebuilding (Time for Compliance and Fees) Regulations 2016.

It is a pleasure to serve under your chairmanship for the first time in my new role, Sir David. The regulations were laid before the House on 14 July and, if approved, will come into force on 31 October. They will do two things: set out the time provided for local authorities to comply with the duty to grant sufficient planning permission to match demand on their self-build and custom house building registers; and provide for local authorities to charge fees, on a cost-recovery basis, for people to be entered on or remain on those registers.

The Government are committed to driving up housing supply, and promoting and supporting self-build and custom house building is integral to that commitment. We will set out in a White Paper later this year our overall strategy to meet the Prime Minister’s ambition to get this country building the homes we desperately need, but I will say briefly at this juncture that one of the problems with our housing market is that we are far too reliant on a small number of volume house builders, and we need to get a much wider range of people involved in building homes in this country. Custom house building and self-build are clearly part of that strategy.

Doubling the number of self-build and custom-build homes by 2020 will not only create much-needed new homes but, crucially, enable more people to live in homes that were designed by them to meet their specific needs. It will also provide welcome new business opportunities for smaller house builders, support and create new jobs, and drive innovation in alternative building techniques.

To take forward our commitment, we passed the Self-build and Custom Housebuilding Act 2015 and the Housing and Planning Act 2016, sections 9 to 12 of which relate to self-build and custom house building. I am grateful to my hon. Friend the Member for South Norfolk—I am not at all surprised to see him here—for his support of my predecessor’s work in driving forward the Government’s ambitions for this sector and his continued support, promotion and passion for self-build and custom house building. My advice to any future Housing Minister is that my hon. Friend the Member for South Norfolk is like a stalker—in the most benign way possible—who will follow them around to all the events that they do.

My hon. Friend’s private Member’s Bill, which became the Self-build and Custom Housebuilding Act 2015, came into force on 1 April this year. For the first time, all local planning authorities are required to keep a register of people in their area who wish to build or commission their own homes and must have regard to the size of that register when carrying out their housing, planning, land disposal and regeneration functions.

A fundamental barrier preventing more people from building or commissioning their own homes is the lack of suitable available plots for self-build and custom house building. The regulations, together with the Self-build and Custom Housebuilding Regulations 2016, which were laid last week and are subject to the negative procedure, are the final component of our legislative framework to support the doubling of this sector.

If approved, the regulations will be critical to increasing the availability of land for self-build and custom house building in England. They will require councils to grant enough planning permissions to match the demand on their registers within three years of the year in which those entries were put on the register. That will ensure that land is made available for self-build and custom house building in a timely manner. In the Government’s view, the regulations strike the right balance between ensuring that councils have sufficient time to identify suitable land and satisfying the desire of those seeking land to build or commission their own homes.

The regulations also allow councils to charge a fee for people to be entered on the register and, where entries on the register count towards the number of plots for which an authority must grant planning permission, charge such people an annual fee in subsequent years while they remain on the register. Councils will be able to charge fees only on a cost-recovery basis, which will ensure that any fees charged are reasonable and reflect the costs incurred by councils.

[Jake Berry (Rossendale and Darwen) (Con)]

Fees are crucial in relation to the regulations. What estimate has the Minister’s Department made of the fees likely to be charged by local authorities, if any?

[Gavin Barwell]

We are not expecting the fees to be significant. The work load required for local authorities to maintain a register of this kind is not huge, but given the financial pressures that local councils are under, it is reasonable that they should be able to recover the costs involved in this work, rather than for those costs to sit with the general taxpayer.

In conclusion, self-build and custom house building have the potential to play a significant role in securing greater diversity in our housing market, as they do in many other countries in the continent of Europe. We are committed to doubling the self-build and custom house building sector. We want it to become a mainstream form of housing, enabling more people to design their own homes to meet their specific needs. The regulations, if approved, will increase opportunities for aspiring self-build and custom house builders to realise their dream of designing and building their own homes. I commend the draft regulations to the Committee.

--- Later in debate ---

[Gavin Barwell]

I thank all members of the Committee who have contributed. To handle their contributions in reverse order, I am sorry that my hon. Friend the Member for South Norfolk took offence at my characterisation of him as a stalker. I did say that he was a benign stalker. I am grateful to learn that he has exercised restraint on a number of occasions of which I was unaware.

My hon. Friend rightly argued that, generally, Government should not just assume that passing laws or making policies will drive change on the ground and that part of the job is advocacy and spreading the word—the gospel, as it were—around the country. He suggested that there should be a role for a passionate advocate for the policy around the country; it is difficult to think of a better person for that role than him.

My hon. Friend also referred to his experiences in Holland. I am looking forward to going with him. I should set the record straight: I was bumped by the Secretary of State, who then could not go, but by that point my office had filled up my diary with more engagements and I was not able to go either. However, I certainly look forward to joining my hon. Friend there and I thank him for all his advocacy in the area.

My hon. Friend the Member for Rossendale and Darwen made a number of important points. He started by focusing on the fundamental issue that our policy tries to address, which is the lack of available plots; he said, quite rightly, that increasing supply would drive uptake. However, there is also another issue: in some parts of the country, if people knew they could make land available for self-build or custom build for local people, we might see some landowners making available sites that they would not have made available if they thought they were going to be sold off to developers. One issue that we have not touched on in these regulations, but that is in the negative procedure regulations that go with them, is the ability for local councils to apply a local connection test to ensure that the sites they make available go to local people. That underlines my hon. Friend’s point.

My hon. Friend also made an important point about modular construction. The Government are very keen not just on modular construction but on off-site construction generally. To get the country building the homes we need, we want innovation in the industry. There is huge potential to speed up the rate at which we build homes; I have seen examples of that myself over my last three months in the job. This policy is a potential boon to that. I also point my hon. Friend to the Secretary of State’s announcement at the Conservative party conference that we will use the home building fund to try to stimulate the adoption of innovation in industry. There are people already doing it; what everybody involved says is that they need an order book of scale over time to increase supply, which would, hopefully, encourage others in the sector to take things up. My hon. Friend is quite right to point to that.

My hon. Friend asked what the capacity was. The Government’s objective is to double the number of homes provided through this route. He makes the case that we ought to be able to do better still, given what appears to be the demand out there. If we could recover what was lost in the great recession of 2008-09 and go beyond that, it would certainly be a good start; obviously I would like us to go as far as we possibly can.

My hon. Friend was absolutely right to emphasise the importance of Government-owned land. I point him back to the Secretary of State’s announcement at the Conservative party conference about accelerated construction. The previous historical model for the release of public land has been one of selling off large sites to a volume house builder. We want to use the Government’s position as a major landowner in the country to drive innovation, with respect both to the mixture of people doing the building and to the techniques used. We plan to divide the sites up and perhaps to have some self-build plots, but also to go into joint ventures with smaller builders, to encourage them to get into the development of the industry and potentially to promote off-site techniques.

[Jake Berry]

Many local authorities own very small sites. Until now, there has been no obligation—or, indeed, incentive—for them to release them, except for the financial imperatives they face. Will the Minister give some thought to obliging local authorities to release some of their own lands—smaller plots, such as those with just one house—for self-build?

[Gavin Barwell]

My hon. Friend is luring me into the wider debate about what we are going to do on housing. I will say just two things. First, there is a target to get local authorities to release a similar scale of public land to the Government’s own commitment. We have committed to release land that would be suitable for 160,000 homes over the course of this Parliament; there is a similar target for local authority land.

Secondly, my hon. Friend makes an important point about smaller sites. I think all Members would agree that in recent years there has been a trend for local authority plans to focus on large sites. That brings several dangers. It essentially guarantees that we will be dependent on large-volume developers, because large sites are really only suitable for such developers. It also creates a risk of local authorities falling below their five-year land supply targets, because if one of those sites hits the buffers and drops out, the local authority finds itself below the five-year land supply and the rules on speculative development then apply. There are many good planning policy reasons. If my hon. Friend bears with me until we discuss the White Paper, he will see that there are many good reasons for strongly encouraging local authorities to provide for a mixture of sites in their local plans, especially if we want a more diverse range of people to provide housing.

I am pleased to hear that the official Opposition favour the policy. I have now presented two statutory instruments, both of which have been supported from the Opposition Benches, and long may that continue. I am conscious that other bits of the Housing and Planning Act 2016 did not meet with such favour, but I will gloss over those for now.

The hon. Member for City of Durham asked a number of questions. The first was about how local authorities might identify sites. They can use a number of mechanisms, one of which was touched on by my hon. Friend the Member for Rossendale and Darwen. Surplus local authority land may be suitable for such purposes. Authorities may, in certain circumstances, wish to acquire sites on the market, but there is also potential for them to use the planning system to deliver sites. For example, they could include as an application condition for a larger site that the developer provides a certain percentage of custom build sites.

The hon. Member for City of Durham raised a very fair point: what if local authorities cannot find enough sites to provide for the number of people on the register? The negative procedure statutory instrument that sits alongside this provides the answer to that question, which is that areas that have a high demand for self-build or custom house building, and very limited land for development through no fault of their own, are able to seek an exemption from the Secretary of State. Those regulations broadly set out how that exemption works, but I will provide a little bit of detail.

The Government’s view is that it would be unreasonable to require authorities to grant planning permission in respect of all their future land supply for self-build or custom build. At the moment, about 10% of new homes are self-build or custom build housing, and we want to double that. The regulations will enable those authorities where the demand for self-build and custom build is greater than 20% of their available land to apply for an exemption. That is how we would seek to address that issue.

Even if there is an exemption, the authority would still need to have regard to persons on the register when carrying out their general duties in terms of seeking further sites over time. Individuals in an exempt authority would be able to register in neighbouring areas with greater land availability, so it would not rule out opportunities altogether for people who live in those authorities.

[Dr Blackman-Woods]

Will the Minister confirm whether the negative statutory instrument also covers any possible sanctions against local authorities? If authorities do not meet the supply within the three-year period, will they be subject to sanctions?

[Gavin Barwell]

Obviously, we would have to keep that under review. The evidence from the vanguard programme is that there is generally an enthusiasm in local government for this purpose, but my hon. Friend the Member for Rossendale and Darwen made the point that we need to get out there and evangelise. We need to look at what action we will take if authorities do not meet their obligations. When we come discuss the housing and planning White Paper, the hon. Lady will see that a considerable amount of thought has been given to the extent to which the Government should intervene in local plans, and to what those thresholds should be. If she bears with me for a little while, she will hear some more details about that.

[Vernon Coaker (Gedling) (Lab)]

On the important point of local authorities exempted from the regulations because they do not have the required land, if somebody in such an authority wanted to self-build, would they satisfy the local connection tests for other authorities around them so that they were not disadvantaged through no fault of their own?

[Gavin Barwell]

No they would not, but they would still be able to go on the register. In those circumstances, the neighbouring authority would keep two classes of register. Those people who have satisfied the local connection test would have first priority. However, people from exempt neighbouring authorities would still be able to go on the register and, if there were a surplus of land in that area, they would have an opportunity. They will be disadvantaged to a degree if their authority is exempt, but it will not rule out their prospects of acquiring land elsewhere. There will still be an ongoing duty on their authority to pay regard to the number of people on their list in seeking to secure additional sites over time.

[Vernon Coaker]

I gently say to the Minister that that is a little bit unfair to people who, through no fault of their own, have lost a right to custom build. That goes against the Government policy drive. Perhaps that is something that the Minister could look at with his officials. Has he made an assessment of how many people the issue might affect?

[Gavin Barwell]

We have not made such an assessment yet. I am happy to write to the hon. Gentleman and to the Committee with some thoughts on that. I take his point; we will look into the matter and see how many people are involved. The point reflects the reality that there are a small number of local authorities in this country that are very heavily constrained in terms of their land supply. Clearly, there might be the opportunity for them to look at options beyond their authority boundaries in some cases. I am aware that some councils do that in terms of support via affordable housing.

I turn to the last two issues that the hon. Member for City of Durham raised. All three Members who have spoken in the Committee raised the issue of fees. We should recognise that there are competing pressures here. On the one hand, Members rightly worry about local authorities and the financial pressures they are under, and want to be assured that they are going to receive the level of financial support necessary to carry out these duties. On the other hand, my hon. Friends are also concerned that fees should not be set at levels that are going to prove prohibitive and stop the policy from working.

I want to come back to the specific point that the hon. Member for City of Durham made about new burdens, which she questioned me about. We recognise that this is a new burden and will be funded as such. The Government’s view is that over time, once local authorities have developed their processes and procedures and a pipeline of land has been identified, the cost of meeting the new duty will be recovered through the sale at market value of the plots that are envisaged, and also through the fee process. Clearly, there will be some upfront costs setting the process up before the process of sales begins. We recognise that is a new burden and will be funding accordingly.

The final point made by several hon. Members was about the overall level of resourcing of local authority planning departments. In terms of the conversations I have had in the first three months of this job, this is one of the rare issues where there seems to be a consensus. Those involved in local government, but also those in the development industry applying for planning permission, all say to me that we need to get more resources into our planning departments.

[Mr Bacon]

Before the Minister sits down, as I fear he was about to do, may I invite him to return specifically to the subject of fees? If a local authority can remove a very large broken fridge-freezer from my house for £11 and take it away on a truck—as it has done—it seems that the cost of keeping my name on a list should not be that high. There is huge autonomy at the moment for local authorities within these draft regulations. Although there are some very benign and encouraging attitudes from some local authorities, it is perfectly possible that some other, less enlightened local authorities will seek to use this fee structure as a way of punishing and restricting the activities of people who wish to get a plot of land and build their own house, or have someone build a house to their design. Will he undertake to keep a very close eye on this and, if necessary, to take further action?

[Gavin Barwell]

My hon. Friend has stolen the final remark I was going to make; that is exactly the undertaking I was going to give. Certainly there seems to be very broad support for this idea across this Committee today, so I hope that local authorities will show a similar level of enthusiasm. This is something that the Government will keep under review. Clearly, we would want to take action if we felt authorities were setting fees at levels that were not cost-recovery but were designed to dampen demand in their area.

Let me end by trying to address the point about the resourcing of local authority planning departments. The Government have consulted on this issue and are looking at whether there is a case for a general increase in fees and whether there should be some kind of greater degree of flexibility, so that if a local authority wanted to offer a premium service, in terms of speed, to those people who were prepared to pay a premium fee, or some other kind of service development, there should be some flexibility to allow that. We have got the results of that consultation, and the hon. Member for City of Durham will probably not be surprised to hear me say that if she awaits the White Paper she will get an answer on that issue. I hope I have given a clear impression that we have a lot of sympathy with the concerns that have been raised. This is one of those rare issues in my role as Housing Minister where people on all sides of the housing sector are speaking to me with one voice.

Having done my best to address the comments that were made, I will end by saying that it is good to hear strong support from both sides of the Committee for the principle of what the Government are trying to do. I pay tribute, again, to the work that my hon. Friend the Member for South Norfolk has done. These regulations, along with the negative statutory instrument that goes with them, and those that we have already enacted in relation to the 2015 Act that my hon. Friend took through, are a big part of our policy to double our ambition in this area.

In closing, I should also mention in part the other two crucial issues: ensuring that those people who want to build custom and self-build properties can get access to finance, which is something the home builders fund will help with, and the discussions we are having with the lenders to ensure that people can acquire mortgages on these kinds of properties. Those three considerations together—making sure there is enough small service plots, making sure people can get mortgages and making sure those who want to develop these properties can get finance—are the key to unlocking this issue.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Self-build and Custom Housebuilding (Time for Compliance and Fees) Regulations 2016.