Lord Beecham
Main Page: Lord Beecham (Labour - Life peer)
Lord Shipley (LD)
My Lords, I shall speak to Amendment 5. I declare my vice-presidency of the Local Government Association, since we are starting Report. In Committee we had a very lengthy discussion on starter homes; on whether the 20% discount should exist in perpetuity rather than for five years; on whether cash sales should be permitted; and on the impact of Section 106 agreements and the consequent adverse impact on the number of affordable homes for rent. We argued that starter homes should not be the central policy proposal in the Bill since homes of all tenures are needed, particularly for rent. Since then, the Government have conceded that an age limit of 23 and above should be imposed to prevent richer parents buying starter homes for students. They have also conceded that the five-year limit on resale should be extended to eight years with a taper.
Amendment 5, to which my name is attached, proposes that the 20% discount should apply in perpetuity. The other amendment in this group, Amendment 1, which has just been moved by the noble Lord, Lord Best, would increase the length of time for which a starter home should be held from five to 20 years, again with a taper. Either is much preferable to the Government’s current position. Amendment 5 seeks to keep a starter home as a starter home in perpetuity. Amendment 1 would deliver a similar outcome in practice, since a starter home would remain a starter home for very much longer than the Government propose. It would also be potentially easier to implement in administrative terms. We should note that the Government’s two changes will not stop cash sales for those who are over 23. Nor will they prevent rich parents buying homes on behalf of children and then securing a cash bonus when the home is sold.
The context today is important. People expect fairness from our legislation, and that fairness dictates that housing policy should not be about only the 200,000 owner-occupiers who could gain from a cash windfall; it should also be about people on low and middle incomes who cannot afford to buy a home even with a 20% discount, who should be helped to secure a home for rent—and not just in the private sector.
There are two amendments in this group, Amendments 1 and 5—but if the noble Lord, Lord Best, wishes to test the opinion of the House, I believe that he should be supported.
Lord Beecham (Lab)
My Lords, I shall also speak to both amendments, having signed both—which I suppose is by way of an each-way bet. I hope that the odds turn out to be favourable.
Many noble Lords will have received a letter from the Minister of 7 April in relation to starter homes, and I shall return to that later. But I also wrote to her on 4 April with a number of queries and I received a reply some four days later. That reply raises some interesting further questions. I asked about the Government’s definition of affordability in this context and whether it would be determined in relation to average house prices in a given area, subject to the proposed caps, or whether, and in what way, the definition would be linked to income. The reply was that since starter homes would be purchased by first-time buyers under 40, the Government would expect them to be below the average house price for the area and to be offered at a genuine minimum 20% discount, but that,
“the discount may be greater in some locations”.
I do not recall that this latter possibility has been raised before. Can the Minister exemplify the locations in which a greater discount might be offered and indicate who will determine it and upon what criteria?
The Government are apparently working with the industry and valuation professionals,
“to ensure an agreed, transparent valuation process is agreed”,
to demonstrate that the discounted sale price is indeed at least 20% less than the market value. In her letter to Members in general, the Minister quoted the Office for National Statistics price statistics, showing that the new-build average was £291,000 in England—slightly more than the average for all dwellings—while for first-time buyers it was £181,000 excluding London. She expects that the actual starter prices will be lower than the average, even before the 20% discount.
But this of course assumes that developers will not take advantage of the scheme to increase the cost of new homes to buyers, who will be cushioned by the scheme from such increases by the operation of the discount. This is not an industry noted for its philanthropic propensities. At the very least, we must expect developers to build at prices which will, after the discount, meet the current level of new-home prices—that is, at 25% more than the discounted price. What, after all, will be the vaunted “local open market value”? It surely cannot be a simple average, which is what the Minister appears to assume.
I also asked about the size of the deposit that buyers will have to find, to which the enlightening response was that,
“this will be determined by individual lenders”,
with whom the Government are apparently in discussion. As with so many of the concerns about this Bill, Parliament is being asked to establish this scheme with absolutely minimal or indeed no information about how it will work in practice.
Similar concerns apply to my third question about the reviewing of price caps and the geographical areas to which they will apply. This will, like so much else, be kept under review, with local authorities being consulted and with a power to prescribe different rates for different areas—but with no advance timetable.
I asked what standards in relation to building density, space, energy efficiency and special needs—for example, for disabled people—would be required and by whom they will be determined. The opaque answer was that starter homes,
“will be subject to the normal planning considerations and building regulations”,
to be agreed—an interesting word—at local level. So, despite the significant public contribution and the tax-free gains to be made by the first-time buyers, the Government are doing nothing to address these concerns. In fairness, they refer to councils’ ability to require higher levels of accessibility and to apply the nationally described space standards, and they have published,
“an initial set of design exemplars”—
but these will be optional.
In reply to a question about enforcing the prohibition on lettings, the Minister indicated that discussions are in train with the industry, lenders and local government which might involve a requirement on a starter-home owner to provide evidence of personal occupation—for example, in the form of council tax or utility bills. I should have thought that this would not be too difficult to evade and very difficult and costly to oversee effectively.
On tenure, I asked what consideration would be given to the provision of a mix, including affordable social rented housing, for which there is huge demand, as the noble Lords, Lord Best and Lord Shipley, have already said. The reply was less than comforting, stating that planning authorities will,
“need to apply their plan policies, including those on affordable housing, in light of the legal starter homes requirement”.
It went on to affirm:
“We would expect them to seek other forms of affordable housing, like social rented housing, where it would be viable”.
But this formulation begs the questions of what “seeking” means in terms of any power to require such a provision and what is meant by “viability”.
Some other questions are responded to after a fashion in the Minister’s more general letter. Thus, in response to questions raised by me and my noble friend Lord Campbell-Savours, she stated that an individual who had inherited property might still be considered a first-time buyer—a very convenient provision for the fortunate few. And yet another consultation is to take place on how to enforce the requirement to occupy the starter home—a question raised by the noble Lord, Lord Greaves.
It is impossible not to conclude in relation to these and other matters that we are being invited to buy not just a legislative pig in a poke but a veritable herd of such animals. This makes it all the more necessary to improve the Bill, as most of the amendments in the relevant groups that we shall discuss today seek to do. In particular, there is the major question which is the subject of Amendments 1 and 5, which would require a tapered repayment of the discount on sale, in the case of Amendment 1, or, as in Amendment 5, that the discount should last in perpetuity, thus avoiding a double bonus to first-time buyers by way of tax-free gains from both the discount and the inevitable rise in value over time—without even the need for offshore financial organisations to be involved.
Lord Porter of Spalding (Con)
My Lords, as this is the first time I have spoken on Report, I remind the House of my declaration of interests. It is long and exhaustive, and I do not propose to read it out again. Noble Lords should refer to previous copies of Hansard or to the register, where it is all recorded.
I support my noble friend Lord True on the age restriction. I would not go through the wrong Lobby on this minor issue, which is going to go to the other end of the building and hopefully someone will look at it, but the age restriction based on the arguments that were exercised in this House excludes some people who may well be able to purchase a starter home if they are not university students. To exclude people who are not university students because we are worried about avaricious parents of university students seems perverse. I hope the Government will try to work out a way in which we can get a restriction on people getting into schemes that does not preclude those youngsters—probably in couples, with trades behind them—who could earn enough money, subject to being able to get access to a deposit, for 80% of the value of the scheme where they would not for 100%. That aspect requires a bit more work.
In response to my noble friend Lord Best’s comments about properties for the elderly being excluded from this measure, quite clearly there would be an expectation that we would not be putting starter homes on elderly-unit accommodation. However, that is not to say that a developer, if the financial circumstances warranted it, should not be expected to pay a commuted sum to offset the cost of starter homes on an alternative site. Some more work needs to be done on this to ensure that we are not allowing some developers to get off without it while we are imposing it on others.
Lord Beecham
My Lords, the Opposition support the Government’s amendment here. I guess that a line has to be drawn somewhere with regard to age, and the Government are probably right to have drawn it where they have.
I also support the amendment in the name of the noble Lord, Lord Lansley. I hope the Government will take it back in a positive sense because he makes a strong argument for extending the principle to these different forms of ownership—they are quite compatible with the Government’s intentions, after all—and meeting the particular needs that he has so clearly identified. I hope the Minister will feel able to say that she will take that back positively and perhaps return later on Report if she cannot accept it today. It would be ideal if she could accept it today but I guess that she may not have that freedom. Still, a positive response would be very welcome.
I sympathise again with the amendment moved by the noble Lord, Lord Best. I am not sure whether that needs to be in the Bill so long as it is on the record that it is the Government’s intention that the thrust of the amendment would be realised in practice. If the Minister were able to give that assurance, that might avoid the need to amend the legislation. That is a matter for her judgment, but it might be a way forward.
Baroness Williams of Trafford
On the government amendment regarding the minimum age of 23, I take the points made by my two noble friends. The under-23s are of course aspirants too, and in certain parts of the country this policy might really help them. But as the noble Lord, Lord Beecham, says, we have to draw the line somewhere and, given that 96% of 23 to 40 year-olds will benefit, that is where we have chosen to draw it.
I thank my noble friend Lord Lansley for his Amendment 4. As noble Lords will know, we are committed to delivering the 135,000 shared-ownership and 10,000 rent-to-buy products. Each has its place, and these products can and do complement each other. They can be considered by councils as part of their wider affordable-housing requirements for their area, and the starter homes clauses will not prevent these developments coming forward. We will be touching on this later on Report.
However, trying to blend them would create complexity and lose the distinctive characteristics of each, and it could put at risk our starter homes manifesto commitment. For example, if a young person entered a right-to-buy arrangement, at what point in their occupation of the property would they be committed to purchase? After how many years of occupation would they be entitled to sell at an increased market value? That could be difficult to justify when we need to deliver as many new homes as possible.
Still, we recognise that there may be different routes to purchase, and over time there may be different opportunities to consider how these will fit within the overall starter home model. Much of the detail on the model will sit in secondary legislation, and the definition of purchase in the Bill is broad enough to allow different purchase mechanisms to be used. As the starter home model rolls out, we will keep it under review.
I also thank the noble Lords, Lord Best and Lord Beecham, and the noble Baronesses, Lady Andrews—who is not in her place—and Lady Bakewell, for Amendment 10. Our consultation on the starter homes regulations sets out potential flexibility on the on-site starter homes requirement. We recognise that some developments, including age-restricted schemes, do not easily lend themselves to an on-site provision, and we do not want to render those schemes unviable or undeliverable.
Lord Beecham
My Lords, the amendments in this group deal with the need to broaden the concept that the Government are promoting to ensure that a range of different needs are met, and in particular that affordable homes for rent should be included in the policy as it develops—literally—on the ground. That is the thrust of the amendments to which I and my noble friend Lord Kennedy have added our names, and to which those who tabled them have already spoken.
I can recall a time when the Labour Government’s requirement for regional housing strategies to be prepared was vigorously opposed by the Conservative Party on the grounds that it was an interference with the local decision-making powers of individual authorities. It was a view that overlooked the need to regard the provision of housing as more than just the concern of an individual authority because, of course, some were finding it impossible to make provision for their communities simply because of the dictates of geography. The classic case was that of Stevenage Borough Council, which was literally unable to build within its boundaries and was prevented by its neighbouring authorities from making any further provision for its residents.
Now we have a situation where the Government are apparently to determine what counts as a starter home and are taking, in the views that have quite correctly been put to your Lordships’ this afternoon, a much narrower view than is acceptable, in particular in relation to looking purely at the supply of starter homes for purchase when that cannot meet all the current needs and those that are likely to arise in many parts of the country.
I hope, therefore, that the noble Baroness will feel able to accept the thrust of the amendments. I do not know which of them will be put to the House; I suspect that it will be Amendment 8, tabled by the noble Lord, Lord Kerslake. Although it does not refer explicitly to the provision of affordable rented houses, it places the responsibility where it should lie, which is on the local authority. There is an implicit indication that local housing need will have to reflect the need for rented homes as well as owner-occupied properties.
This does not in any way vitiate the Government’s approach. It will not and does not seek to prevent the building of homes for sale in this context, but it recognises that more than one need must be met. I hope that the Government will look sympathetically at this proposal—and if the noble Lord chooses to test the opinion of the House, the Opposition will certainly support him.
Lord True
My Lords, I, too, should declare an interest as a member of the Leaders’ Committee of London Councils. I should make it clear that London Councils is sympathetic to the amendments in the group, although I do not speak on its behalf.
I hope very much that my noble friend, in summing up, will show the same understanding she had in Committee for the issues raised in the amendments. There is certainly a concern about the hierarchy of need and the difficulty in some areas of providing affordable housing, and the potential problems, particularly in high-income areas in my case, of starter homes squeezing out. I know that it is not the intention of my noble friend Lord Kerslake, or anybody else, but I do not want to see us getting to the point where we make it less likely that a government initiative, which was a manifesto initiative, and has been supported, will be implemented across the board. It is an extremely difficult balance to strike.
I am seeking something that is not necessarily on the face of the Bill but which shows a real display of understanding by the Government of some of the tensions and difficulties. I think that I heard in Committee—and I am sure that I will hear again today—about the difficulties of providing for the gamut of different types of housing needs in an area. That will certainly include affordable for rent, starter homes where we can do them, and other things of a different nature. So I would be nervous of putting something in the Bill that might inhibit or be used to inhibit—it could be the basis of legal challenge, or whatever—the delivery of starter homes, but I hope that my noble friend will show very much that she has heard and understands the spirit of the amendments.
Lord Beecham
On behalf of the Opposition, I congratulate the noble Lord on apparently achieving his objective of persuading the Government to be reasonable. We very much welcome the indication that that will be the case. I hope this is a trailer for what might happen when we discuss right to buy and its impact in rural areas. It is a parallel situation. There are particular needs in those areas which have to be reflected in the legislation and the changes the Government envisage. I will not ask the Minister to commit herself today to that point, but we look forward to a sympathetic response on similar lines when we get to it. I am sure the House will join me in thanking the noble Lords, Lord Cameron and Lord Best, for pursuing this case so assiduously and with what is apparently a very satisfactory outcome—although we will read the small print when it arrives.
Baroness Bakewell of Hardington Mandeville
I, too, thank the noble Lords, Lord Cameron and Lord Best, for having negotiated what looks like an agreement we can all sign up to, but I will be looking forward to the detail at Third Reading. I gave a long and detailed speech in Committee on this subject. Your Lordships will be pleased to know that I am not going to do the same today, but I still feel very passionately about rural exception sites and protecting rural communities, so I will be looking closely at what comes forward at Third Reading.
Lord Beecham
My Lords, I have a good deal of sympathy with what the noble Lord has just said. In particular, I very much commend his implicit view that we should not really be talking about individual developments or about just catering for a particular group of people but should be concerned with communities with a range of interests, ages and people of different backgrounds—not simply a group, important though it is, seeking to purchase homes for the first time.
It also seems to me that this part of the Bill cannot be read just on its own terms, as if it is unrelated to some of the material that follows. In the planning section of the Bill, there is of course the issue of PIP—permission in principle—and the Government’s ability to effectively prescribe what is to happen on brownfield and other sites. The two things seem linked to me, and the suggestion in these amendments is one that the Government should consider very carefully. We have heard a good deal about local aspects—the Minister herself was saying just a few minutes ago that the Bill would make provision for local people—but what is meant by local in this context? For example, you could have sites in London, in hard-pressed boroughs with their own housing needs, which would no doubt become available for starter homes, potentially at the expense of people from that particular borough, unless the Government are able to say that they could be limited to the residents of that borough—which I think is a bit unlikely, although it would be interesting to see whether the Government would contemplate that.
We have of course seen considerable changes in the make-up of communities in inner London and in other cities, and the danger seems to me to be that without Section 106 agreements, and without looking rather carefully at who might benefit from the desirable provision of starter homes, and from where they might be coming, we could simply be importing people into the area at the expense of those already living there. Perhaps the Minister could indicate whether such a consideration has been taken on board and the extent to which it might be reflected in the implementation of this part of the Bill. Otherwise, the concerns expressed by the noble Lord, Lord Foster, will resonate even more profoundly. There has to be a way of securing a balance in all these aspects, and at the moment there does not seem to be, within the Bill, an adequate provision to achieve that purpose.
I hope that the Minister will respond constructively rather than—if I may say so, with all due respect—complacently. I do not mean she would be complacent in her own right, as it were, but that it would reflect complacency in the Government about the impact of what they are providing here, unintended though it may be.
Baroness Williams of Trafford
My Lords, I thank the noble Lord, Lord Foster, and the noble Baroness, Lady Bakewell, for the amendments and the noble Lord, Lord Beecham, for speaking to them. I need to be clear right from the outset that there is nothing in Clauses 3 and 4 that prevents the use of Section 106 with starter home developments, and local authorities will still be able to seek on-site Section 106 infrastructure contributions. Section 106 agreements are crucial for securing the supporting infrastructure. Indeed, our starter home requirement will be secured on sites using Section 106 agreements. We are working with the sector on draft model Section 106 clauses to help local authorities and applicants with the process. As such, we expect authorities to continue to have regard to the need to secure Section 106 agreements on starter home developments, as they would do on any other development.
The noble Lord, Lord Foster, asked about the new burden assessment. I can assure the House that the new burdens on local authorities arising from starter home duties, such as that of providing monitoring information, will be considered in the usual way that new burdens are.
Planning decisions for all developments, including those that contain starter homes, will still need to be made in accordance with local planning policy, subject to the starter homes requirement and other material considerations. Infrastructure considerations will clearly need to be issued.
Yes, we are going to reaffirm in national planning policy that affordable housing contributions should not be sought for starter homes and that we need to exempt starter homes from community infrastructure levy contributions. I make it absolutely clear that this will align with existing practice on affordable housing and that local authorities will continue to be able to seek site-specific infrastructure improvements, if they are necessary to make the development acceptable in planning terms. They will also continue to be able to seek additional on-site affordable housing, including housing for social rent and shared ownership, where it is viable to do so.
I have listened carefully to the debate and hope that the reassurance that local authorities will continue to be able to use Section 106 agreements to secure infrastructure on sites means there is no need to divide your Lordships’ House and that the amendment will be withdrawn.