Lord Jackson of Peterborough
Main Page: Lord Jackson of Peterborough (Conservative - Life peer)Housing and Planning Bill (Second sitting)
Lord Jackson of Peterborough Excerpts
Mr Stewart Jackson (Peterborough) (Con)
Q 107 I remember my question. Mr Fletcher, first, may I thank you and the British Property Federation for your helpful—and brief—brief on the Bill? Can I challenge you about the demonstrable evidence that supports your assertion? I think you said that the starter homes policy will kill off build to rent. Where is the evidential basis that that will happen? If you have a multi-tenure site in a good location with good transport links and otherwise reasonably good infrastructure, why would investors not wish to invest in long-term residential letting? I do not understand how the introduction of starter homes will drastically affect that or make it unviable as a business proposition.
Ian Fletcher: The build-to-rent sector mainly seeks to build at scale, so it will be building 100-plus units and the investors, who include most of the big pension fund companies and investors from abroad—we represent most of them—are adamant that they will not invest in broken blocks; they want to keep control of their products. Many of them are introducing new concepts to the private rented sector in the UK in terms of branding and so on, and once you lose control of a part of your development you cannot get that back and you do not know where it will go. An individual may buy a starter home and sell it after five years into the buy-to-let market, so you cannot keep control of that development.
Mr Jackson
Q 108 Are you asking us to believe the premise that they are happier with a residential development of, say, 45% pure social rented housing and the other 55% being build to rent?
Ian Fletcher: Their ideal scenario, which is just being implemented as supplementary planning guidance in London, would be that the affordable offer would be discounted market rent. That works well in terms of being managed as a whole.
Mr Jackson
So affordable rent.
Ian Fletcher: Discounted market rent: it is an intermediate rent rather than the lower, social rents.
Mr Jackson
Q 109 What is the quantum difference between that and a starter home, which is a discounted, effectively intermediate property?
Ian Fletcher: It is the issue I iterated, which is the ability to control and manage the thing as a whole.
Mr Jackson
Q 110 What do you mean by “manage”?
Ian Fletcher: If you have a block of flats, that has to be managed on a daily basis. It will have a concierge and the common parts will be kept by the manager of the property. The feel of the property can be managed only as a whole, as the members wish.
Mr Jackson
Q 111 The legislation covers urban extensions and new build in the planning envelope of small towns. It is not just about flats in central London.
Ian Fletcher: Clearly on a large, strategic land site—I can think of a particular member that has two or three such sites in the south-east—having some starter homes in one corner and a build-to-rent development in the other is no problem.
The Minister for Housing and Planning (Brandon Lewis)
Q 112 Mr Fletcher, I assume that you are talking about developments such as the multi-family housing we see elsewhere in the world. I understand the point you are making. In that situation, I assume that the developers, knowing that they have to do their bit for the community as negotiated on affordable housing, would look to do what we see elsewhere: if they can make a case for an apartment block, for example, they might provide affordable housing or starter homes on a different site but in that area with the local authority.
Ian Fletcher: Absolutely, Minister. I said in my first remarks, I think, that I was talking specifically about the on-site requirement. I have no qualms about the other part of the Bill, which is about the duty of local authorities to provide starter homes.
Mr Jackson
Q 113 On paragraph 14 of your briefing—I am sure members have copies—about automatic planning permission, you make the case that this should move on from simply residential housing to multi-use sites, including leisure, retail, industrial, etc. How would that work? Surely that would be an overly permissive regime—to have that in the Bill and extend what is essentially a welcome proposal to drive the number of houses up to a free-for-all, having every economic activity on a brownfield site?
Ian Fletcher: That part of our brief is trying to express a concern that the permission that is granted in advance on the brownfield sites will drive a lot of those sites into housing use. That is, therefore, a concern in terms of ensuring that we have a balanced economy. We have evidence that illustrates that about 50%, I think, of local authorities and local plans are out of date with respect to things such as industrial uses. The local authorities that are particularly out of date are some of the places you would most expect to have expansion of industrial use places, such as the Thames valley and the northern powerhouse. We are just expressing a concern that this policy might drive more brownfield land into housing use at the expense of other uses.
Mr Jackson
Q 114 But this Bill addresses those issues in terms of the discretion that the Secretary of State has for intervening directly in adopted development plans.
Ian Fletcher: And we very much support that.
Helen Hayes (Dulwich and West Norwood) (Lab)
Q 115 Just returning to section 106, at the moment that section makes a very important contribution to delivering social housing for rent, school places, high-quality green space, GP practices and so on. With the starter home obligation, to what extent do you think house builders will still be happy to make those contributions to creating successful communities where you are delivering new homes?
Andrew Whitaker: I think those contributions have to be proportionate to the development and, therefore, excluding an element from the community infrastructure levy does not exclude them from site-specific section 106 requirements. Overall, developers will continue to pay planning obligations towards social infrastructure, even with the starter home obligation. On brownfield sites of around 100% starter homes, I think we then struggle a little to see the overall contribution to the cumulative impact of development, which is of course supposed to be addressed by the community infrastructure levy. That takes some sites out of their fair contribution towards that and we have some concerns about that. The problem is, you have to do something to make those sites viable for residential development with their 20% discount and that is one of the few things you can do to ensure that those sites are still viable.
Ian Fletcher: I am sympathetic to the points that Andrew was making. I would just add that we have a comprehensive spending review coming up, and if those brownfield sites are going to work and are going to be great places to live, there needs to be some way of supporting that social infrastructure. If it is not coming from the developer then it has to come from other sources.
Dr Blackman-Woods
Q 148 Have you thought of any exemptions there might be applied to the policy?
Campbell Robb: More discretion is absolutely key. I suspect, as the Committee has shown, that as starter homes come in, which they obviously will, we need to monitor who is actually getting them. Are they genuinely reaching the people you want them to, so that constituencies do benefit? Is the level of debt being accrued and the ability to repay being positively looked at, to ensure that people genuinely can afford the home and that it is giving them the leg up that they want rather than a burden they do not want? Those two things would certainly be helpful. The point about section 106 and the consideration of how mandatory it is would be a very important thing to look at.
Mr Jackson
Q 149 Without labouring the point, my impression of the map you produced was a line from the Bristol channel to the Wash. I am mindful of the fact that one in three of the Committee are from London, but this analysis is rather centred on London and the south-east. Surely it depends very much on factors such as the differentials between the market prices of homes and affordable homes. My constituency is quite competitive in that respect, not least because until recently Peterborough had the second worst increase in house prices. There are lots of factors.
Would you concede that, in respect of your specific areas of expertise, starter homes have never been designed to tackle the housing difficulties of your client group in particular: very challenged vulnerable younger people from dysfunctional families and so on? Given the totality of the Bill, and the extra funding that would be released from some of its measures, it does not circumscribe the capacity of the local association to provide specialist supported housing for people with mental health problems, extra care for older people or moving-on accommodation for young people. That can still be done, which is obviously something you would welcome.
Jon Sparkes: You are correct, in that it is not a policy which is designed to support people at the lower end. We can argue about the level of discount as much as we like, but it does benefit the people that it is designed to benefit.
While you say that it does not stop anybody from doing anything? I think it is pretty clear that where there is going to be development investment in housing, it will follow this policy. This will give a level of priority and will take away from the incentive and willingness to do precisely those things that you describe.
Mr Jackson
Following on from the points made by Mr Griffiths and Ms Kennedy, is there not an argument that says it would use the market mechanism to potentially dampen down the overheated housing market in the south-east and London, and allocate housing to working people in areas that hitherto have not been viable, such as the east midlands, the north-west or Yorkshire and Humberside? That surely must be a good thing because it will drive economic activity, not least in the construction industry.
Jon Sparkes: Again, where it benefits people, it is absolutely a good thing, but when we are talking about people on minimum wage or on zero-hours contracts—people way below the average earnings that we are talking about—then absolutely it does not benefit them. The trickle-down effect, if ever proven, is just so far away from those people that it does nothing to bring them into the housing market.
Mr Jackson
Q 150 But you would not disagree with the idea that in the areas where economic activity, growth and prosperity are most needed, where hitherto you have had de-industrialisation and a poor housing market—I remember the pathfinders programme and so on—the starter home programme may potentially assist in that regeneration.
Campbell Robb: We were very welcoming of the original proposals around starter homes because the use of brownfield is obviously, as you heard in previous evidence, potentially very positive. There is great potential there for regenerating in different areas. Our concern continues to be that it is a replacement. If it was in addition to, rather than a replacement—which it is—then you could do that. In essence, using brownfield to create homes needs to go hand in hand, as you will well know, with jobs being created. People want to buy in places they can settle, where there are good schools and where they know that they can get reasonably close to their jobs. If that all pans out, then that is very positive for the group of people who benefit from it.
The Chair
Keeping an eye on the clock, may I ask for both questions and answers to be crisp and to the point, please?
Mr Jackson
Q 185 First of all, Mr Pinder, I think you are slightly gilding the lily in quoting Prestbury, because Prestbury is probably in the top 3% in the north-west, if not in England, as a super-output area for wealth. You could easily have said Widnes, Warrington, Winsford, Crewe, Chester or various other places. It illustrates the point that Ms Kennedy was making. There are obviously social and demographic variations even within one region.
Can I just address the issue of pay-to-stay? Because we ran out of time, we were not really able to challenge David Orr to the extent that we would have liked. The evidence that was given earlier seemed to suggest that housing associations were not expeditiously collecting data on the household income of their tenants. Is it not incumbent on you to have been doing that from day one? You are trying to allocate very scarce public housing resources. Why is it only now that you are saying, “We are not going to have the capacity,” or, “It is too bureaucratic to collect data on the income of our tenants”? You should have been doing that some time ago.
Tim Pinder: We certainly do for new tenants. The point you are rightly making is that, at the point at which we allocate a new property, to ensure that we are discharging our charitable responsibilities appropriately, we absolutely do check. In our case, having inherited 5,000 tenants from a local authority, if they are still our tenants now we have no record of their earnings.
We are in a very strange situation where we have really no right to know the earnings of existing tenants, but we have for new tenants. From the Information Commissioner point of view we should restrict the amount of information we hold on tenants to that which we ought to collect.
Mr Jackson
Q 186 But the legislation says that they have a retained right to buy. Am I correct in saying that?
Tim Pinder: Yes.
Mr Jackson
Q 187 Surely their financial bona fides are pertinent to an application for retained right to buy, if they wish to purchase a property?
Tim Pinder: What we find in practice is that a huge proportion of right-to-buy applications are funded by family members rather than by the applicant or tenant themselves. I am not so sure that helps us in the processing of right to buy. That remains a big challenge for us. If we do not have those data, how do we get them? There has been talk that Her Majesty’s Revenue and Customs will make those data available to us. How easily accessible they are is another matter.
Mr Jackson
Q 188 So the Government are doing you a favour in prompting you to collect information better, to use the resources at your disposal better. Would you agree?
Tim Pinder: I am not so sure it helps, no.
Peter Dowd
Q 189 With your permission, Mr Gray, I will use Mr Patchitt as a case study, to tease out an issue. Many of the houses under your control, Mr Patchitt, are in my constituency. I have some figures here. You say that you have 53,000 homes. Is that correct?
Mark Patchitt: Yes.
Mr Jackson
Q 221 Going back to Mr Cox, I think we could spend all day discussing residential estate investment trusts. We will not do that, but I am sure that the Treasury has heard your comments. On the database, would you say that clauses 23, 24, 30 and 31 would be useful, in that as they are prescriptive in giving the powers to collate the data they will eventually drive out rogue landlords and, in particular, improve enforcement in the short term, which is an issue you have raised? Enforcement levels are poor.
David Cox: We can hope, and we have seen in the sales sector, that the banning orders have been effective. There is not a huge number on the list, and when it was given to Powys Council it bid £170,000, I think, to try to regulate the entire sales industry in the UK. That is not really feasible, but it is certainly doing the best it can. Hopefully, a banning order list will provide more clarity and certainty, particularly for tenants and landlords when they are considering which letting agent they should go with—if they are using one. It will mean that, to a large extent, local authorities will know who the people are and where they are, and they will be able to keep tabs on them. We want to ensure that the list is public so that agents are aware, when they look to recruit and to expand into new areas, of who to employ and who not to.
Mr Jackson
Q 222 If they give their correct names, which anecdotally is an issue.
My second and final point is that you have obviously read the whole Bill. Some evidence was given to us earlier by the British Property Federation about the build to rent fund, and about the fact that institutional investors, for some reason that was not clear to me—perhaps I am a bit obtuse—are not interested in putting their money into build to rent when there are starter homes on the large-scale site, whether they be flats or houses. Are you in a position to make a value judgment about that assertion?
David Cox: I am afraid I have not heard any evidence to that effect. At the moment, although there are several in the pipeline, only one build to rent scheme is functioning in the UK: the old Olympic park, which is now Get Living London. It works very well, and it has three-year tenancies as the standard, but it has caused problems for people trying to exit the tenancy, potentially to buy a property of their own or move overseas.
We want to see more institutional investment. Going back to the housing shortage, the large pension funds and other financial investment vehicles have the ability and resources to build the housing we need. They are much more likely to be at the more professional end of the sector. All of Get Living London’s staff are fully qualified through the only regulated qualifications in the sector. Therefore, they have the desire and the reputation. Large companies cannot have their brands tarnished by poor property management. Therefore, they will be at the more professional end of the sector. They give tenants higher-quality properties and higher-quality service. We want to see much more of that.
David Smith: We have actually made proposals to the Treasury to try to get smaller landlords to be more interested in a “build to rent to sell” model. We are effectively trying to move shared ownership from just the social sector into the private sector. We have suggested that the Treasury could expand the Help to Buy scheme to tenants who wish to buy their own homes, and possibly offer a capital gains tax reduction to landlords who reinvest that money in a new property. We are trying to kick-start a new concept of private landlords seeking to buy property to rent it to tenants, with the aim of selling it to those tenants and then buying other new property in a continuous cycle.
Our view is that it is important to do everything. So many homes are required that simply throwing all our eggs into one particular sector is not going to work. We almost have to take a scattergun approach—although that is an unfashionable thing to do—and promote as many possible ideas as we can, provided they do not cost a vast sum of money, to get as many properties as possible. Once we have tried a lot of things, we can start to core it down to the ones that are the most effective.
Peter Dowd
Q 223 I suppose the point about regulation relates to rogue landlords. As a health and care professional, I pay an annual fee for my regulation, and if I practise inappropriately I am challenged. Is there any reason why that ought not to happen in relation to landlords, for example, with application to rogue landlords?
David Cox: Absolutely not. We have been campaigning for it for 20 years, and we are the closest there is to a regulatory body in the lettings industry. We do our best to regulate our members, and we would like to see a statutory footing for that. We are, of course, talking about people’s homes. For landlords, it is probably the largest investment they will make, beyond the house in which they live.