Lord Kennedy of Southwark
Main Page: Lord Kennedy of Southwark (Labour - Life peer)
Lord Shipley
My Lords, I shall start again in a moment.
I can almost hear the Minister’s reply, which may be to tell us that all this will be made clearer in regulations, but as the Minister well knows, we have no regulations. There are no draft regulations and it is essential that, before Report, we have regulations which explain clearly what the Government’s intentions are on matters such as buy to let, subletting for short periods and leaving and letting a starter home within five years. In the case of this probing amendment, we need to know whether payment for a starter home can be in cash. I hope that the Government will rule this out today.
The basic principle is that cash buyers do not need a starter home. The simplest way to address this is via a requirement that the purchaser takes out a mortgage. Indeed, a key part of the National Planning Policy Framework definition of affordable housing is an eligibility test, with its provision for those whose needs are not met by the market. However, that is not a cash buyer, whose needs can self-evidently be met by the market. Therefore confirming in the Bill that anyone buying a starter home must do so via a mortgage would restrict market abuse.
Amendment 41B would require a first-time buyer to occupy their starter home as a principal residence. Thus, starter homes must not become second homes, and buy to let should be prohibited. However, there may need to be some consideration prior to regulations being published about how a property could be let out for short periods, where, for example, a purchaser of a starter home has a six-month temporary work transfer to another place. Therefore I am very keen to know what the Government’s thinking is on this matter. In the face of the fact that the Bill lacks so very much detail—even the technical briefings lack detail to enable us to respond properly to exactly what is planned—I hope very much that the Minister will be able to clarify these matters.
Lord Kennedy of Southwark (Lab)
My Lords, this group of amendments contains some important provisions that would be welcome in the Bill and should not be left hanging in the air to be covered by regulations at some point in the future. Amendment 37B, in the name of the noble Lord, Lord Shipley, would add the words “via a mortgage”. It is extremely important that we are clear about this, because if the property was purchased in any other way, such as by a cash buyer, that would signal that the person or persons had no need to take advantage of a product with a generous discount that could be realised in a relatively short space of time.
Equally, Amendment 41B, which is also in the name of the noble Lord, Lord Shipley, makes clear that the person who buys the property should buy it to be their home. Again, I am fully supportive of that.
On government Amendment 42A, I will be interested to hear the noble Baroness, Lady Williams of Trafford, explain the reasoning behind the proposed change to the words in Clause 2(3)(c).
Amendment 43, in my name and that of my noble friend Lord Beecham, would add the criteria of “lives or works locally” to the Bill. That is aimed specifically at helping local people to take priority in getting a home in their local area rather than being forced to go somewhere else, and would help in building stable communities. I will be interested to hear the Government’s reasoning for their Amendments 44A and 44B in turn, which seem to turn on its head the requirement that individuals should be under 40. Is this because the Government have realised that in the present climate it will be very difficult for people under 40 to get a deposit together? Does the Minister envisage that this will apply to all areas of England or maybe just London in particular, where there is a problem with the affordability of housing?
Amendment 45, in my name and in the name of my noble friend Lord Beecham, would place a duty on the Secretary of State to consult the relevant local authorities and/or the Mayor of London when seeking to vary the price cap for starter homes. The requirement to consult relevant bodies when considering making this price cap change is good practice and will aid the Secretary of State in understanding the specific local circumstances that he or she should probably take into account when making such a change.
Lord Young of Cookham (Con)
My Lords, perhaps I may make a brief intervention following specifically Amendment 43, which the noble Lord just mentioned. I note with some alarm that, as we approach the third day of this stage of the Bill, we have now reached line 11 of page 1 of a 100-page Bill.
Lord Kennedy of Southwark
Does my noble friend agree that one reason for raising these points today is the wholly unsatisfactory way that the Bill has been put in front of us? We have no regulations and we will get none before the Bill is passed into law. It is a ridiculous situation and why we have raised these points.
Baroness Royall of Blaisdon (Lab)
My Lords, building on some of the things that my noble friend has said about Amendment 41B, what can be done to ensure that starter homes sold with a discount cannot immediately be sold on to second home owners or to people renting them out as holiday homes? As we know, in many areas of the country, especially rural and coastal areas, while properties are sold and people have homes, these homes are not lived in all the time. Therefore, notwithstanding that the homes have owners, the essence of these communities is hollowed out because people are not there all the time; they become real communities only at certain times of the year, and the schools, the pubs and the shops all close. Can anything be done, if we persist with this 20% discount, to ensure that communities still thrive and that people are not able to sell these properties on as second homes?
The Government, in seeking to enable people to buy these starter homes, intend that if a person is under the age of 40, as I understand it, they still qualify to buy one. I do not think that the government amendments go far enough. Is the Bill, even as amended, compliant with the Equality Act? There is discrimination, I would say, against people over the age of 40.
Lord Kennedy of Southwark
My Lords, my noble friend Lady Hollis was absolutely right when she suggested that the only restriction is age. But government Amendments 44A and 44B in this group of course seek powers to disapply even that.
Baroness Hollis of Heigham
It would be really helpful if the Minister could assure the House—we really do need this—that proposed draft regulations will be before this House before we get to Report. If not, we will have major problems in this and other areas. It is not too much to ask. The Bill started in the other place last autumn, so there has been abundant time for the Government to determine what their policy intent is behind these “anything goes” powers for the Secretary of State. We must know, otherwise some of us will seek the House’s authority to defer consideration until we have those regulations. We cannot do our job of scrutiny when so much of the information that we need is absent.
Baroness Williams of Trafford
My Lords, all I can say is that local authorities know their market, and they can use Section 106 for other types of housing on sites, whether for sale or for rent, in addition to starter homes where viability allows, as well as for infrastructure. I cannot answer more clearly than that at this time.
Lord Kennedy of Southwark
The Minister is right to say that local authorities know their market. The core problem with this Bill and its provisions, which has not been taken account of, is that of the powers being taken to the centre of the Government.
Baroness Williams of Trafford
Those powers are a specific type of power for the Secretary of State, but that does not take away from any of the other powers that local authorities might wish to use, viability allowing, when agreeing Section 106 for development in terms of other affordable homes for sale or for rent.
If I may, I wish to make a bit more progress. Our analysis has shown that in regions outside London, we expect that, on average, up to 60% of eligible households currently renting privately would be able to secure a mortgage on a starter home. Within London, we expect that up to 47% of eligible households currently renting privately would be able to secure a mortgage on a starter home. For example, 59% of eligible households currently renting privately across London would be able to secure a mortgage on a starter home in Hammersmith and Fulham.
Baroness Williams of Trafford
My Lords, first, if someone is paying 4% on a mortgage, they might not be getting the best deal on the market. Secondly, I just repeat my point that £450,000 is the cap on a starter home and £356,000 is the implied price of a new-build first-time buyer property. I do not think we are necessarily talking about the same thing.
Lord Kennedy of Southwark
But the point is that the figures she referred to are for the whole of London. The price of a property in the Elephant and Castle, around where I grew up, is £450,000 or more. This may apply on the edge of London, but not anywhere near here.
Baroness Williams of Trafford
My Lords, I recognise there are vast variations in house prices in London. We talked about Lewisham the day before yesterday, and we could talk about every borough in London today, but I am simply giving an average implied price. I accept that Westminster and Kensington and Chelsea are more expensive—I could not afford to live there—but there are places in London that are more affordable than others. This is simply an average price.
Amendment 37B would restrict who could buy a starter home to those purchasing with a mortgage only. We are allowing starter homes to be purchased only by qualifying first-time buyers under the age of 40, with limited exceptions. The noble Baroness, Lady Royall, asked whether this fits in with the Equality Act. I confirm that an equality impact assessment has been prepared for the starter homes provisions in the Bill, and this will be kept under constant review in line with the duties under the Equality Act. In addition, a further assessment is being prepared to accompany the Government’s consultation proposals for starter home regulations.
We need to prioritise our assistance to the generation of people in their 20s and 30s who have been disproportionately affected by the increasing affordability pressures over the last 30 years. My noble friend Lord Young of Cookham made the very good point that this is a very popular product and significant interest is already being generated on these homes. He was correct that this is done on a first come, first served basis. He also made the point about it being a good way of increasing mobility in the social rented sector and for those currently on waiting lists. I totally agree with that point—it is. We will be ensuring that resale letting restrictions are included in our regulations. The aim is to provide a place to live in. We are consulting on these requirements for the regulations shortly, to seek wider views and to ensure that they operate fairly and effectively.
Baroness Williams of Trafford
I can only reiterate my commitment to sharing the consultation once it has been published and to ensuring that as soon as regulations can be brought forward, they will be.
Lord Kennedy of Southwark
Can the Minister not go a bit further than that? Can she not just agree here today to go through the usual channels to explore the point that my noble friend has made about the possibility of having further process at Third Reading?
Baroness Williams of Trafford
My Lords, matters may have been resolved by Third Reading, but I will speak to officials to see what can be done to expedite the detail of the regulations as soon as possible. I can do no more than that today.
Baroness Williams of Trafford
I think I have explained that having a mortgage will not stop gaming. There are always going to be abuses of the system, but we are trying to address an age group which has been disenfranchised from the purchasing market. I hope that what I have said gives to some extent reassurance to the noble Lord and that he will feel content to withdraw his amendment.
Lord Kennedy of Southwark
Can I push the noble Baroness a little further on this? I do not think it is good enough to say that there are always going to be abuses; we need a little more than that. There will be scams and shams, so we have to make sure that we will be able to identify them and sort them out.