King’s Speech

Lord Best Excerpts

Thursday 9th November 2023 Lords Chamber

[Lord Best (CB)]

My Lords, I declare my various housing interests on the register, including as chair of the Devon Housing Commission, whose work informs my comments today. I welcome the Government’s proposals in the Renters (Reform) Bill and the announcement of important legislation on leasehold reform. I am sure that there will be significant work for your Lordships when these legislative measures reach us in the months ahead. But today I will concentrate on the bigger picture and the need for a longer-term national housing strategy to address a housing situation that, I believe, has taken a serious turn for the worse, even in the last few months.

I suggest that there are three areas crying out for long-term forward planning. First, we must dramatically increase the amount of new accommodation created each year; the 300,000 homes per annum target is a start. Secondly, we must have a plan for upgrading the standards and energy efficiency of outdated existing properties to address health inequalities, fuel poverty and climate change imperatives. Thirdly, in respect of building new homes and upgrading existing homes, we must target that half of the population where incomes are below the median.

My starting point for believing that the situation has become more urgent over recent months is the evidence from the temporary accommodation statistics. The numbers in this predicament have seen an alarming increase. We have the extraordinary statistic that one in 50 Londoners, and one in 23 children, are classified as homeless. But this phenomenon has spread nationwide. For example, the position in the unitary council covering Cornwall demonstrates the crisis: from having to house 200 households in temporary accommodation before Covid, the figure today is around 800. This has a drastic impact on local authority finances at a time when, as we all know, these are badly stretched. The national bill for temporary accommodation—which is often entirely unsuitable and far from friends and family—is now approaching £2 billion per annum across the country.

Of course, housing shortages, while most painful for those on the lowest incomes, also affect many people who have expected to become home owners. The number of first-time buyers has fallen by 22% this year. The cost of becoming a home buyer has doubled as a percentage of earnings, now compounded by higher interest rates. But, because of supply shortages, prices have not fallen. Overall, home ownership has declined to around 64%, from its peak of over 71%. Some 4.9 million people in the 25 to 34 age group are now living with their parents. Even where a couple have been able to purchase on their combined income, the price has often been paid in being unable to start a family.

Private renting will be the only option, but there is recent evidence that even the private rented sector is proving unable to help the next generation. Although rents are up 27% since the pandemic, the industry reports an average of 24 would-be tenants for every vacancy. For 23 of the applicants, there is nothing but disappointment if not the horrors of homelessness. The reason is that demand has risen but landlords are exiting the market. This is because of taxation arrangements rightly intended to deter speculative investors, necessary requirements for higher standards, the higher interest rates that affect the two-thirds of PRS properties that have mortgages, and much-reduced prospects of making capital gains.

I should add, drawing on the work of the Devon Housing Commission, that the decline of private renting has been exacerbated by the advantages of switching to short-term lettings of the Airbnb kind. This is hastening the loss of homes for locals to rent in almost all rural and seaside locations. Although remedies are in the pipeline, they will close the stable door only after this horse has, I fear, bolted.

This is the background to my contention that we need a long-term plan to massively increase production of new homes, while embarking on a programme of modernisation of poor-quality existing accommodation. Although these are necessary measures, they are not sufficient to ensure that the benefits reach those in the lower half of earnings. It is the not-for-profit sector—the housing associations, councils and community-led housing providers—that has the potential to step up new production and, indeed, to acquire and modernise existing substandard properties, but even this sector faces new challenges. It must invest heavily in its own existing housing stock to rectify building safety problems, to upgrade outdated council housing of yesteryear and to decarbonise homes. It is hit by both inflation, with building costs rising by more than rents, and escalating interest rates, so, regrettably, boosting this sector will not come cheap.

In conclusion, there will be valuable changes for this House to make to improve forthcoming housing legislation, but a much more ambitious, longer-term national housing strategy is required to address the underlying issues of land acquisition, planning, construction skills and so on—a road map with a timeline to chart progress over the next 25 or 30 years. Action to bring this together desperately needs to start now.