Housing and Planning Bill (Third sitting)

Debate between Maria Caulfield and Matthew Pennycook

Tuesday 17th November 2015 Public Bill Committees

[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.