Housing and Planning Bill

Lord Beecham Excerpts

Tuesday 1st March 2016 Lords Chamber

[Lord Stoneham of Droxford (LD)]

My Lords, we have had a long debate. Though I am reluctant to detain the Committee for too long, I want to speak in favour of these amendments, particularly Amendments 48A, 50B and 50D, to which I put my name. I again draw the Committee’s attention to my interest as chair of Housing & Care 21.

We have to ask the Government: are we in this together on housing? The need to build more homes is something we all agree on but I contest the point made by the noble Lord, Lord Young. I accept that a commitment has been made in the Conservative Party manifesto; I respect that, although I do not think it is right and I have some suspicions as to how that figure was snatched out of the ether and arrived at. The question is whether we will build more homes than we would have without this extra policy initiative.

I think the Government have—certainly the Conservative Party has—a problem with social housing and affordable housing for rent. That is why we have had a setback. We had a problem in the early years of the coalition in getting the Government to put more money into social housing investment. It happened only when the Chancellor became worried about the state of the economy, as far as I could see. At that point, we at last saw some initiatives that encouraged the building of social housing.

As has been admitted in this debate, we have now gone backwards. If we were really setting out to build more houses we would be building more for private ownership and more for social housing. We had begun to make progress on that at the end of the coalition Government—not enough, I accept, but we had made some. Frankly, we are now going to hit the buffers because of all the initiatives and impetuses behind starter homes and the promotion of home ownership. As the noble Lord, Lord Kerslake, said, starter homes will be at the expense of other forms of housing, and that will include social housing. The consequence is that we will build fewer houses than if we had really been in this together and planned to increase home ownership while maintaining a balance by being committed to social housing as well. As a consequence, there will be problems in terms of the design of homes and the communities we build, which will be lopsided and unbalanced. Future generations will come to regret that.

It has been made quite clear by the noble Lord, Lord Best, that there are other areas of need which the Government seem to be ignoring. We know that the retired population is increasing and we want to have more rightsizing. What initiatives will the Government use to encourage that process? Only this week, we have seen initiatives from the National Health Service, which recognises the importance of housing in health policy. I do not see where the Government will get the extra housing for the retired population.

It remains the case that homelessness is getting worse. I am sad to admit that it increased during the last years of the coalition. Which of these initiatives address that? Local communities should surely be given the flexibility to address some of those problems rather than go down a route that puts all the emphasis on home ownership. The other consequence will be that the people in real need will be driven into the private rented sector, which will compound our problem with the housing benefit bill because we will be paying out more.

I would also like to draw attention to the rural area, which the noble Lord, Lord Cameron, covered in his remarks. I cannot think of a more critical area where community needs have to be very carefully planned and provided for if we are going to have balanced communities which feed into the social life of those communities. We have to give more attention to providing affordable homes to local people—we need to make that distinction. As he says—and this is another argument that we are not actually going to increase the number of homes that are going to be built—I know that landlords in my area will be very reluctant to give up their land at a reduced price if they think that in the future people will have the opportunity to make a profit out of that, rather than what they thought, that these homes were going to be used for local people in perpetuity for their social needs and those of the communities in which they live.

Everybody agrees that there is a problem with supply. If we are going to build more homes that actually meet the demand we have, we need more diversity, mix and balance. As well as helping private ownership, we have to give more attention to social housing. If we do not, we will have all the problems I have mentioned in terms of increasing pressure on homelessness and the encouragement to older people to rightsize being diminished, and therefore we will end up with a worse and unbalanced housing situation, when there was a real opportunity for all of us to be in this together.

[Lord Beecham (Lab)]

My Lords, we are all familiar with the concept of the starter homes project, which the Government launched with a great fanfare. It will, as we are now very familiar with, provide 200,000 affordable homes—I think that is the Government’s target—for first-time buyers aged under 40 who will benefit from a discount of 20%, which will not be repayable on a subsequent sale after five years. That is the basic concept.

Of course, the only criterion for obtaining the assistance and the discount to buy these starter homes will be age, not income. In London, for example, this could lead effectively to a handout on resale of more than £100,000 to the buyers of starter homes bought for the capped price of £450,000 after the discount—an untaxed £100,000 gain for the fortunate under-40s who secure a starter home. The Government fund all this with £2.3 billion, which represents just a part, as I mentioned before, of the housing benefit savings from the imposition of the 1% increase on social housing rents. The damage that that does to the social housing stock is, of course, studiously ignored.

Section 106 currently delivers half of all new affordable homes. Shelter describes it as being,

“especially vital to the delivery of new social rented homes, as grant funding for these homes was removed in the last Parliament”—

by, I remind your Lordships, a coalition Government—

“and funding for Affordable Rent ends in 2018”.

Of course, in the mean time we will have cuts to social rents, limiting housing associations’ ability to build new homes. Shelter research found, as we have heard, that starter homes are unaffordable to people on low incomes in 98% of the country and unaffordable to those on middle incomes in 58% of the country.

The claim is that affordable homes will thereby become available for purchase but clearly affordability is an elastic concept. The coalition Government drove up council rents, deeming an affordable rent in that context to be 80% of private sector rent levels. But given the chronic housing shortage and the boom in buy to let, which dramatically drove up prices and rents in the private sector, that definition of affordability is fundamentally flawed. Affordability must surely relate to what the would-be owner-occupier or tenant can reasonably be expected to pay, having regard to his or her income, not an artificial comparison to the market rate.

Prices, as we know, will be capped at £450,000 in London and £250,000 elsewhere after the 20% discount, representing, in effect, full market prices for these new properties of £562,500 in London and £312,500 elsewhere. However, the Government claim that the average price of starter homes for first-time buyers would, after the discount, be £291,000 in London and £169,000 elsewhere. Even at those levels—which are highly questionable, especially for London—starter homes will not be affordable for a huge number of people. In fact, the Government’s figures appear to be based on the average cost of houses bought by first-time buyers, not the average price of new houses, which would be higher.

--- Later in debate ---

[Lord Kennedy of Southwark]

My Lords, I thank all noble Lords who have spoken in this debate today. The noble Lord, Lord Shipley, made some very important points about us all being in policy silos. That has been demonstrated by the discussions we have had in the debate this evening.

The noble Lord, Lord Best, and others, talked about the NPPF guidance, the starter home obligations and the resultant conflict which needs to be addressed very seriously by the Government. There is clearly a conflict and that cannot be right, and it will not be sustainable. The noble Lord, Lord Young of Cookham, referred to what is happening in Chichester. I had a look at the article he referred to. It went on to say that from 30% affordable housing it moved to 50% starter homes, no affordable housing, no nomination rights and no local connections—not all good news, I suggest.

The noble Lord, Lord Kerslake, spoke about the overriding nature of the starter-home proposals in relation to other housing tenures and how this will replace much-needed social rented housing. There are real issues there about what will happen in future years, as we heard earlier. The noble Earl, Lord Listowel, talked about people living in poor housing accommodation. I must say that that reminded me of my parents’ excitement when they got the letter from Southwark Council saying that we were going to be rehoused. I was about nine years old and we lived in some quite poor, damp, unsuitable property. We moved to a clean, warm, dry, safe—and, I must say, large—council flat. I am the eldest of four children. I had my own bedroom and no longer had to share with my brother. We were both delighted and the lives of the whole family improved just by moving to that new property.

The noble Lord, Lord Stoneham of Droxford, raised the important point about rising homelessness and also the increasing housing benefit bill with more homes being in the private rented sector. My noble friend Lady Royall of Blaisdon highlighted the importance of good social housing as part of a proper mix and the particular challenge in rural areas, as did the noble Lord, Lord Cameron of Dillington. My noble friend Lady Hollis of Heigham set out with her usual skill how a successful local policy on housing, properly planned and delivered, can have enormous benefits and deliver the stable communities and economic benefits that we all want to see.

This has been an interesting and useful debate, and I hope that the Minister can take back to the department our deep concern at these proposals. I hope that she will reflect fully on this debate but also on the other debates we have had today. With that, I beg leave to withdraw the amendment.

[Lord Beecham]

My Lords, I wonder, having regard to other affordable issues such as affordable transport for members of the staff, whether it might be possible just to refer over the next two minutes to some information from Savills which may be relevant to our further discussions. I gather that a penny or two has dropped with the Minister.

In one of its many contributions to the debate, Savills said that as it currently stands, the biggest concern is that the starter homes policy could distort a new-home sale market without significantly increasing the number of new homes delivered overall. It explained that there was a risk that starter homes could cannibalise help-to-buy sales as well as existing open-market sales aimed at first-time buyers. Furthermore, Savills states that the classification of starter homes as a form of affordable housing under planning rules, and the duty on local authorities to promote the supply of starter homes, is likely to result in fewer homes being delivered for what is currently classified as an affordable tenure. It therefore expects to see fewer homes delivered for affordable rent.

Given the lack of detail released, it is not clear what the interaction would be between shared ownership and starter homes. Perhaps as we go forward into subsequent debates about this proposal, the Minister could give a clear indication of the detail behind these schemes. It appears that there is a clear overlap between parts of the market likely to be served by Help to Buy, starter homes and shared ownership, particularly in London. We have not heard anything as yet about Help to Buy, and the relationship of this new scheme to that and the possible impact on Help to Buy. There seems to be some thinking that the two might merge. That is a matter that perhaps the Minister might consider, either in writing or in subsequent debate.

[Lord Kennedy of Southwark]

I thank my noble friend. I was getting a bit nervous there; I thought he was going to intervene on me, but we are a good double act. Having said that, I think it has been a very good debate this evening. I hope that the Minister will look at this issue very carefully because it will almost certainly come back on Report. I beg leave to withdraw the amendment.