Housing and Planning Bill (Third sitting)

Maria Caulfield Excerpts

Tuesday 17th November 2015 Public Bill Committees

[Helen Hayes]

Q 274 South Cambridgeshire District Council told us yesterday that it was up against its borrowing cap on the HRA, which meant that the receipts from homes sold under the right to buy would not yield sufficient funds to replace those homes. I hope that you will look at the evidence session, because I do not think that the evidence from four councils from all political persuasions, which was very powerful yesterday, should be ignored.

I want to ask about the issue that was raised in the earliest evidence session this morning about the lack of quality standards for the delivery of affordable homes and for urban development corporations. How confident are you that those measures will see genuinely high-quality development going forward?

Brandon Lewis: Actually, if you look at some of the papers put out by the NHBC over the last few months you will see that—don’t get me wrong, as Housing Minister I get people coming to me, and when I visit sites I see issues out there, and I am not pretending for a minute that people buying new homes do not have issues from time to time; we have all done it, and I have done it as well—the reality is that, from a general point of view, we build some of the highest-quality homes in the world at the moment. That is good, but it does not mean we cannot look to go further. I make the point quite regularly that I think we should be looking to ensure quality of build and quality of design—design is important not just in terms of what homes look like but also in terms of master planning.

On starter homes and affordable homes, I put together a design panel earlier this year that is still in place. Starter homes are a very good example of where quality is important to us, which we made very clear by having some of the most renowned architects involved in that— Terry Farrell, Quinlan Terry and others. It has put forward design templates, so that we can say to people that if they buy a starter home, it will be at least as good as homes designed by some of the best architects this country has to offer. If a local developer with the local authority comes up with something that is better or more appropriate for them, then I believe in trusting local people to make local decisions. But starter homes will be at least as good as the best architects that we have can design.

[Maria Caulfield (Lewes) (Con)]

Q 275 I am pleased to hear that the starter homes are a mix of the affordable housing element. I wondered if the Minister could confirm—we did not hear it in the evidence in either session really—that for those on a low income, being able to afford a mortgage is crucial because mortgage monthly payments are significantly lower than rental monthly payments in the private sector. Could the Minister shed any light on that? Encouraging people to be able to own their own home would help those with low monthly incomes.

Brandon Lewis: Absolutely. I have seen plenty of examples of people who have made that case to us over the past few years—they are in the private rented sector and are paying a certain amount in rent, but when they work out what the equivalent mortgage cost on that home would be, it is roughly half. Usually it is at least 30% less than their rental costs, but more often than not it is 40% to 50% less. The challenge had always been around getting a deposit together to buy that home. That is what the Help to Buy scheme was about, as it allows people to buy their home with a 5% deposit.

I come back to a point I made earlier about starter homes: if you are able to buy a starter home, particularly in the kind of price range I outlined, which you see partly in East Anglia and certainly outside London—the evidence session with Shelter was quite enlightening in pointing out that this debate is about more than just London—and if you can get a 20% discount on market value, that makes it affordable again. It makes it a real possibility for someone—especially people in the private rented sector but potentially in the affordable rented sector and the social housing sector, as well, with right to buy—to look at it as a chance to own their own home. I come back to the fact that we were very clear: we were elected on a mandate to deliver home ownership to an extra 1.3 million people. We are very aware of the fact that 86% of that population want a chance to own their own home and we will do everything we can to support them in reaching that ambition.

[Maria Caulfield]

Q 276 To return to the point about delivering one-for-one in the right to buy sector, I asked in a previous evidence session about housing associations looking at other models of house building—not just traditional house building but perhaps things like modular house building—but we did not really get an answer from the housing associations. What are your thoughts about alternative ways of building? Also, on pay to stay, we have heard that housing associations are worried about the 1% cut in council housing rent yet they could not say why they are not implementing the pay to stay measures that are already in place for those who earn £60,000 a year or more. That would bring them some income, so why are they not doing that to fund new house building?

Brandon Lewis: There are a few points in there. On build-out rates and different types of building, I absolutely agree. The reality is that, generally, we still build homes in the way we did 20 years ago—sorry, 100 years ago—which means it takes, on average, 20 weeks to build a house, if the weather holds out. Modern technology means you can build a house much quicker. I have seen two two-bedroom semi-detached homes built in a day. Modular homes can be built in a couple of weeks. They are high quality and have very high energy efficiency. I highlight that, because they do not need any more regulation on zero-carbon homes—those kinds of homes deliver that. That really speeds up the rate of delivery.

The National Housing Federation, on behalf of its members, has been talking to us with some very ambitious plans for going further. We are already seeing organisations—Sanctuary, L&Q, Gemini and others—looking to be quite exciting with what they are building. They already build a mix of tenures, with market properties to sell as well as affordable private rented sector and social sector properties as well. They are looking more and more at that kind of modern technology. If we can do that, we will see a dramatic sea change in the way we deliver housing, certainly in terms of the scale and speed at which we can do so. One of the biggest challenges we face—I appreciate that this is slightly outside the remit of the Bill, but it highlights my earlier point about the Bill being part of the solution—is that we still have house builders building out on sites at an average of 50 homes a year. With modern technology we could easily convert that to 200-plus homes a year. That is where we should be looking to go. There is a real opportunity there.

The extension of right to buy through housing associations will help housing associations release capital and get access to capital. That allows them to build homes that would not otherwise exist; hence David Orr’s point, which he made quite clearly, that this will drive up housing supply. Every time a home is sold, that creates an income and a generation of asset that that housing association can use to build more homes. The reinvigorated right to buy scheme was introduced in 2012. There have been three years to build homes, and at the moment we are ahead of schedule in terms of building one for every one sold. In London, it is closer to two. We can expect to see that with the extended scheme. In some parts of the country, that will mean more than one home built for every home sold.

[Matthew Pennycook]

Q 277 Minister, this is not in the Bill, but you have indicated previously that regulations will allow starter homes to switch to full market value after five years. I am struggling with that logic, and I wonder whether you can help me: at a time when you are asking for Government, across all Departments, to make greater savings, and given that the rationale is to ensure an affordable home ownership offer, what is the logic for giving people that windfall rather than ensuring that starter homes remain in perpetuity as affordable homes?

Brandon Lewis: I am happy to answer. We went through this at the Communities and Local Government Committee, so you might want to have a look at the transcript. There are schemes selling homes at a 20% discount in perpetuity—Pocket Living, a super product in London, is a good example. We are saying something slightly different for two reasons. First, this is not about building any number of starter homes—they stay in perpetuity and therefore you can slow down building, which is what happened with social housing under the previous Labour Government. We will need to build starter homes and to keep building them. We want to build 200,000 in this Parliament, but not stop there. We need to keep building them for first-time buyers going forward and to see that number grow and grow.

There is a clear logical reason for mortgage lenders, bearing in mind that we want people to be able to buy these homes. Most people buying a home will need to get a mortgage. It is not a discount if a 20% on market value discount is available but market value can never be realised.