Housebuilders

Lord Turnbull Excerpts

Thursday 11th January 2018 Lords Chamber

[Lord Turnbull (CB)]

My Lords, I declare an interest as chair of a study by some housing associations into the future of their sector. I do not need to repeat the lengthy charge-sheet against the major housebuilders, which my noble friend Lord Best and others have set out already, I just want to return to one point, the terms for leasehold houses. These do not meet the principles of treating customers fairly now being enforced in financial services. The Government have set out proposals to outlaw these, but I ask the Minister what the Government are going to do to enforce redress for leaseholds already sold on unfair terms. Redress was provided for PPI: the detriment in these cases may be very much greater.

However, in a housing debate we should remember the adage that those who live in glass houses should not throw stones. Many of the problems in the housing sector have been shaped by government policy. Whatever their faults, private housebuilders are building around 130,000 units per annum, getting on towards the pre-2008 peak. So the collapse in total housebuilding is principally the result of shutting down all social housebuilding, with the exception of 20,000 to 30,000 dwellings built by housing associations. In 1978 local authorities built 75,000 dwellings. This fell to close to zero around the turn of the century and has now recovered to the heady heights of about 2,000. Owner-occupation has fallen from 69% to 62%. It will not recover quickly, however hard the Government try to ramp it up. New regulations rightly require banks to be much more prudent in their mortgage lending. Salaries of young people entering the workforce are growing slowly and they will emerge from higher education with a liability to pay 9% of their earnings over £25,000. Saving for a deposit while they pay huge rents is virtually impossible.

A greater priority than the performance of housebuilders, in my view, is to transform the rental sector. With social housebuilding largely closed down, it is the private rental sector which is taking the strain. Since 2000, private renting has doubled as a proportion of all dwellings from 10% to 20%. There are now 2.8 million more privately rented properties but this has not come about by positive choice—quite the opposite. Owner-occupation has become more expensive and less affordable, and social housing has contracted. Nor has it come about because the economics are more favourable; again, it is precisely the opposite. Buying with a mortgage took on average around 20% of weekly income, including benefits, whereas private rents absorbed 42%. The most acute problems are suffered by the poorest families. Their number in temporary accommodation, where housing standards are frankly a national disgrace, is growing. Many families are being evicted even though they are not in rent arrears, simply because landlords are refusing to renew tenancies.

Putting an “H” back into the name of the department will not be enough. We need a renewed effort to expand affordable properties for rent and, as others have noted, this will almost certainly mean relaxing the constraints on housing revenue accounts to bring them into line with other forms of borrowing. We also need to be honest with ourselves about the green belt. Much of it is essential to the beauty of our landscape but a good deal of it is not. We should remember that nearly all of us live in houses that are on what were once fields. Why should this change in land use be frozen where it was in 1948? While a debate criticising major housebuilders may give us a warm glow of righteousness, we should not let this blind us to the even-greater problems elsewhere in the housing market.