Housing and Planning Bill

Lord Young of Cookham Excerpts

Thursday 3rd March 2016 Lords Chamber

Given we are where we are with starter homes, in my view this is a massively better way of delivering them. It is fairer, a more distinct offer and could genuinely address a need that might be out there. I want to ask the Minister why we have not done a proper options appraisal on the option of 20 years tapered over the period, or indeed in perpetuity. It would help the Committee if noble Lords could see a proper cost-benefit appraisal of these alternatives.

[Lord Young of Cookham (Con)]

My Lords, before I speak briefly on Amendment 39A, I want to touch on the point that both the noble Lord, Lord Kerslake, and the noble Lord, Lord Best, raised about the issue of dead weight. This is something that has dogged housing policy for a very long time. There is dead weight in the right to buy in that many local authority tenants might have purchased without the discount. There is dead weight in transferable, portable discounts. In both these cases, Administrations of all colours have taken the view that the overall benefits of the policy of promoting home ownership and diversity of tenure have justified a bit of dead weight. In the earlier debate a number of suggestions were put forward to minimise the risk of dead weight in that, in so far as this product is oversubscribed, there is a way of prioritising. In his speech, the noble Lord, Lord Best, mentioned a number of ways of doing this. The noble Baroness, Lady Hollis, mentioned one. There was one in an amendment and I mentioned others. If there is an excess of demand, one can tackle the issue of dead weight by prioritising it to those for whom the dead weight issue is not there because they would not be able to afford it without it. Or they are moving out of social housing and therefore freeing up a tenancy. I take the point about dead weight but there may be ways through. It is something that has been there for a long time.

I turn to Amendment 39A, in the name of my noble friend Lord Lansley, who is in Brussels today. During the debate on Chapter 1 on Tuesday, a number of noble Lords suggested that we should have had this debate on definition first before we had the debate on Clause 1. I note with some satisfaction that we have now moved from line 11 on page 1 to line 12—so progress is being made. My noble friend Lord Lansley was seeking to stretch the definition of starter homes to include Rent to Buy. In her winding-up speech, my noble friend the Minister referred to the definition of the starter home. She said that Clause 2 talks about the criterion for a starter home and then went on to define it. When pressed for a slightly tighter definition, she said:

“That is fine. I just thought I would set that out now. I know we will be talking about it later”—[Official Report, 1/3/16; col. 766]—

in response to what my noble friend Lord Lansley said about Clause 2.

At the moment we have a product—Rent to Buy—which is a hybrid, in that it sits between affordable renting and affordable home ownership. It is a product aimed at those who are renting but who cannot afford a deposit. In return for paying a lower rent, they are allowed to purchase their home after a set number of years. Under the current definition of a starter home, the insertion of the word “purchase” means that they would be excluded in that they have not—

[Baroness Hollis of Heigham (Lab)]

The noble Lord, Lord Young, said that in return for paying a slightly lower rent, they would effectively acquire an equity stake. Does he not mean a slightly higher rent as part of the Rent to Buy process?

[Lord Young of Cookham]

I am reading from the briefing from Rentplus:

“The affordable rent to buy tenure addresses this, enabling tenants to save more through paying lower rents and allowing them to purchase their home after a set number of years”.

In other words, the money is put on one side to enable them to buy the product at a later date. That is from Rentplus, and I am very happy to let the noble Baroness have the briefing. It was debated in another place and, in response to a question, the Minister replied:

“Higher income tenants in a Rent to Buy scheme will not face increased rent under proposals for pay to stay. This is because the rent they pay is an intermediate rent”—

this may answer the noble Baroness’s question—

“which is excluded from social rent policy”.

The purpose of the amendment is to see whether this product—and there may be other products, such as shared ownership—will qualify as starter homes under the definition. Or, if it does not qualify under the current definition, whether the definition could be looked at so that products that promote home ownership will be included in the starter homes definition. We had a bit of this debate on Clause 1. I hope it will not be so narrowly drawn that a number of worthwhile products, such a Rent to Buy, will be able to score as starter homes. Again, just looking at the brief from Rentplus:

“Affordable rent to buy is a new ‘hybrid’ housing tenure, sitting between affordable rent and intermediate housing. The tenure enables working households to save for a deposit whilst renting at an affordable rate (80% of market rent …) allowing tenants to purchase their home after a set number of years”.

I hope that explains to the noble Baroness what the product is. I am surprised that, given her interest in housing, she may not have come across this particular product.

I very much hope that, in her response, my noble friend can give some comfort to those aspiring home owners who cannot access a deposit which is necessary for starter homes but who are seeking to enter home ownership through a different route.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I will speak to Amendment 46. I support all the amendments in this group and the comments that were made by the noble Lords, Lord Kerslake and Lord Best. I support the Government’s aim to provide more homes for those who cannot currently afford them, but fear that the time-limited discount of 20% will be seen as unfair by those not able to access it, and will be unlikely to increase the housing supply in the future.

I do not support the discount remaining in place for the limited period of five years. This is a very sizeable discount, as other noble Lords have explained, and it should be enjoyed by others looking to gain access to the housing market in the future. This is a discount which should be available in perpetuity so that the same home can be within the reach of others, despite the inevitable rise that inflation will cause to the price of the property over its lifetime. Have the Government thought about what will happen if a purchaser fails? Who will get the discount if that initial purchaser defaults? Perhaps there is a bit of a perverse incentive for a lender to repossess after year 4.

Why should the first purchaser receive the discount, live in the dwelling for five years and then sell it, keep the discount and the uplift in the value of the house due to inflation and not pass that discount on to the next person? This discount is to be funded from local taxpayers, via the sale of high-value council homes. I feel certain that those taxpayers would wish their hard-earned money to be used wisely and to be recycled wherever possible.

--- Later in debate ---

I hope that the Government will look favourably on our message in these two amendments. We all want to create many more affordable homes in rural areas, if we possibly can. Our point is that exception sites are an important source of such homes. They have an invaluable and proven track record, so please let us not do anything to upset that record. I beg to move.

[Lord Young of Cookham]

My Lords, it will come as no surprise to my noble friend when I indicate that I have some support for these two amendments. What we are basically seeing is two worthwhile government initiatives coming into contact. On the one hand, there is the rural exception sites policy and on the other hand the starter homes initiative. I quite understand why the Government take the view that they do not want to deprive rural communities of the benefits of starter homes. However, the interface between the two policies is quite difficult. If I did not conceive the rural exceptions policy, I was certainly one of its midwives when it was brought forward in the 1980s. To use an analogy used earlier by the noble Lord, Lord Best, the real risk about this is that the cream will disappear in the form of the sites becoming available.

I know from my own experience of representing a rural constituency in the other place that there were villages where a benign local landowner made land available under the rural exception site policy, in the confidence that the homes provided would be available in perpetuity, as the noble Lord, Lord Cameron, has just said, and at affordable rents. If the landowner feared that those homes would disappear into the market, I am not sure that those sites would ever have been made available.

The features of the rural exception site policy were that, first, you have to do a survey to establish a local need for affordable homes for rent. Secondly, those homes have to be available in perpetuity—normally, for rent through a housing association. In some cases, they are for sale but with a lock such that the discount has to remain there in perpetuity. The starter homes initiative is different in that 80% of market value will still be beyond the reach of many local people, who would have been able to afford an affordable rent under the rural exceptions policy. Also, under the starter homes initiative, after the first time the second purchaser need have no local connections at all.

I understand that the Government are aware of the sensitivities on this. The briefing that we got says that their proposals included,

“using rural exception sites to deliver starter homes in rural areas”,

and allowing,

“the flexibility to require a local connection test on these sites”.

That is an important concession and, as we heard in earlier debates, it is not a requirement for the starter homes initiative anywhere else. None the less, some extra flexibility is required by either giving discretion to the local authority, as in Amendment 50C, or exempting sites below a certain level from the requirement to have starter homes.

When my noble friend replies to these amendments, I hope she can indicate that the Government are aware of the risk of losing the additional supply which the rural exception sites can provide and of the sensitivities in local areas to the change in the occupancy of these sites via the starter homes initiative, which were well represented by the noble Lord, Lord Cameron. I hope that there can be some flexibility in response to these two amendments.

[Lord Deben]

My Lords, as another of those involved in getting this policy in the first place, I remember the battle to try to get townspeople to understand the particularity of the problem in the countryside. Just in case—although I look at your Lordships and realise that all will have understood it—I want to repeat the fact that many of our villages, and some would say most of them, are in danger of becoming middle-class, middle-aged and middle-income groups, with hardly an opportunity for anyone else at all. This is a serious social problem. It also creates a community unable to sustain itself. Communities are about all sorts of different people doing different kinds of things and contributing in different ways.

In my former, very rural, constituency, one of the biggest difficulties is that, because there is a large number of older people and a need for a large number of carers, the social mix having been altered because people buy up houses in the countryside, it is more difficult to get carers in those circumstances than it often is in the towns. This never used to be true, but it is true now and it is to do with the social mix that has now been reduced for so much of rural England.

There is a bigger issue here, which hangs round this individual concern for the protection of exception sites. When we had the argument originally—this really is history—we managed to convince people that, because of the planning system itself, we had created a particular kind of shortage in the countryside. Every little house that used to be the house of a farmworker is, once it comes to market, an ideal, bijou residence for the part-time—very often for someone who will retire there. I am not suggesting that second homes are necessarily a bad thing, merely that such houses are so attractive that the price means that they are well out of reach of people living on agricultural wages or the lower wages in the countryside. I do not think that this is something that is bad just for that section of the community—it is bad for the whole community. It creates an artificial community of the kind that many of us deplore in the towns, and it is becoming more and more true of large areas of the countryside. I therefore think that this is a social problem for all of us.

The one way that we managed to get people to be able to gift and to sell at an agricultural land price, or something of that kind, was, as my noble friend Lord Young and the noble Lord, Lord Cameron, said, because they were convinced that we meant it when we said that it was in perpetuity, for local people, and that it would not be changed. It was not only a concept but something that we felt we had committed ourselves to. I am concerned, as are others, that once you undermine people’s trust—and I think that the present circumstances without the amendments does undermine that trust—there will be no more land provided in that way. I put it to my noble friend that, if the land does not come forward because we were hoping to have some extra starter homes, what we will have done is to reduce the number of homes all over, not just starter homes but other opportunities.