Housing and Planning Bill (First sitting)

Matthew Pennycook Excerpts

Tuesday 10th November 2015 Public Bill Committees

[Helen Hayes]

Q 6 Finally, are you concerned that starter home development will be free from the community infrastructure levy and section 106 contributions?

Richard Blakeway: As we understand it, so-called exemption sites are free from the community infrastructure levy. Our expectation, however—our strategic land assessment has done a tremendous amount of work to identify brownfield opportunities—is that there are probably not many exemption sites in London where that would apply. Where it applies otherwise—clearly, starter homes should apply to all significant sites—affordable housing is already exempt from CIL, and it is just another affordable housing product.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

Q 7 May I press you on the impact of the starter homes clauses on more innovative models of affordable and intermediate housing? I am thinking, for example, of Pocket housing, which the Mayor has been very supportive of, and where eligibility is secured in perpetuity through a section 106 agreement. Do you think those clauses will have an impact on those types of models and their ability to expand across the capital?

Richard Blakeway: I emphasise the point again that starter homes are not a substitute for affordable housing and are not intended to be a substitute for all intermediate products. We would like to see both working alongside each other, and we would like to see products such as Pocket. The GLA is delivering a long-term investment partnership. I am sure Pocket would say that many of the people it helps to house are within the general expectation for starter homes—they are below the age of 40, for example, and within the price bracket to which the house-price cap applies. It is very important that starter homes work in London. They are a really important addition to help people achieve their aspiration to own a home, but they have to work alongside other intermediate products.

[Matthew Pennycook]

Q 8 As the Bill stands, have you been assured that they are an addition and will not simply squeeze out other affordable housing in the capital?

Richard Blakeway: A number of the key points will be articulated in the regulations. What is on the face of the Bill at the moment means that starter homes can certainly work alongside other intermediate products in the capital. The key bit will be what is in the regulations. One of the key issues is the quota of starter homes that will be required, which will be articulated in the regulations. There has been speculation that it will be 20%, but we are waiting to see the regulations. It is important that they work alongside each other. Just to pick up on your point, we have a number of intermediate products where the investment is locked in in perpetuity, and we would like to see that continue.

[Mr Bacon]

Q 9 Mr Blakeway, what possibilities are there for the provision of serviced plots within the GLA area for people who wish to build their own home, either individually or in what the Self-build and Custom Housebuilding Act 2015 calls “associations of individuals”, who come together to build their own houses?

Richard Blakeway: We think there is a real role for both custom build and self-build. On the identification of plots, we are working closely with local authorities to compile a list of potential sites. In addition, the GLA is acting as one of the Department for Communities and Local Government’s vanguards and establishing a register of people with an interest. We are seeing a phenomenal rate of interest in London: more than 600 people have signed the register in the past three months. People often look at London and say that custom build and self-build cannot work in the capital, but we do not believe that is the case. We think it has a role to play in the capital—particularly in outer London. We also think that custom build, in particular, has a role to play among conventional house builders and housing associations. There is absolutely no reason why you cannot reserve a proportion of plots for custom build on a large regeneration scheme or development site.

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[Matthew Pennycook]

Q 35 I would like to return to part 4. There is nothing on the face of the Bill that would ensure the proceeds from the sale of high-value council homes—or payments to the Secretary of State, in cases where local authorities do not want to make those sales—will be kept in the local area. Miss Roe, you told the Evening Standard in July that as a result of this policy:

“What we will see is a reduction in the number of social housing units in London and more units built outside.”

There are concerns in rural areas, too, that we will not see that link. Let me ask all the witnesses—what would you like to see, or what would need to be amended in the Bill, to give you certainty that the proceeds will be kept locally, to meet housing need in the area from which the proceeds have been taken?

Philippa Roe: First, I was misquoted in that article—that was not quite what I said, although it has been used and used.

As Richard Blakeway said, we understand that London is going to generate far and away the largest proceeds from this measure, given the value of our housing stock. The Government need to find a solution to funding right-to-buy sales outside London, and there is an acceptance that some of the proceeds will have to go outside London. However, there needs to be a mechanism within the regulations for keeping most of that money in London, because it is London that has the biggest housing crisis. It seems sensible to use that money to create housing where it is most needed, so I am hoping that we can find a balance.

[Matthew Pennycook]

Q 36 You say there is an acceptance that some of the proceeds will leave the capital. Do you think, therefore, that the amendment tabled by the hon. Member for Richmond Park (Zac Goldsmith) to keep the proceeds within London is unrealistic?

Philippa Roe: I would like him to see it succeed. Whether the Government will accept that, given the financial pressures they will face with right-to-buy sales outside London, I do not know. It is worth trying, but I am not sure whether he will succeed.

[Mr Bacon]

Q 37 Councillor Glanville, you said that you want to build, in your authority, affordable housing on land that you own. You emphasised the importance of exemptions. Are you promoting housing co-operatives as a way of delivering affordable housing? Perhaps the other witnesses could answer for their own authorities.

Phil Glanville: To answer that question, we have quite a few housing co-operatives within the borough already. They tend to be managing existing stock that they have been bequeathed through CPOs in the past and through the squatting movement in the ’70s and ’80s. As far as I am aware, they are not currently seeking to develop. We are focusing on working with housing association partners and our own new build programme that will deliver 3,000 homes over 10 years, 52% of which will be truly affordable. The rental properties there will be council rented homes on our land, making best use of our assets. We are bringing forward 18 sites. In fact, the borough is the largest house builder of any kind within Hackney, including building homes for sale, which is important as we are not against building homes for sale or for low-cost home ownership; we just do not think that the Bill will help with that process in boroughs such as Hackney.

We are also doing regeneration with our partners. We are tripling the density of an estate called Woodberry Down in the north of the borough, where we are building 5,500 homes over the next 20 years. We have no lack of ambition to develop such homes within the borough. With some of the freedoms that Councillor Roe mentioned around the HRA, we could do a lot more.

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[Dr Blackman-Woods]

Q 58 I was struck by your opening remarks, where you all talked about having infrastructure to support housing development and building housing in communities. I wonder whether you think the Bill should do more to address the need for infrastructure and what you think about the provisions that could exempt some starter home sites from paying CIL. Would you like to see that amended?

Sir Steve Bullock: One of the things that will be important is that the Bill does not get in the way—this will largely be around the exemptions—of some of the big and complex schemes that we are doing. Those are, in effect, sweating land that is already there and intensifying the development. Some of that takes time and there are risks that we need to avoid. If the number of leaseholders on a development goes up and you are planning a comprehensive regeneration, you can make it unviable. It is those kinds of things. Crucially, working across Departments will be important. I am not sure whether the Bill can help that, but we need to be sure that it does not hinder that.

Martin Tett: I will comment on the generality. I mentioned the importance of infrastructure at the beginning. When I go to public meetings, it is the big topic raised by local communities whenever a development is talked about, and it is obviously significant when you have a major development of many hundred houses. There is also the cumulative impact of lots of small infill developments. People tend to ignore the impact of 10 or 15 houses, but if you have lots of them, particularly where large houses are being redeveloped in rural areas, you can cumulatively have a significant impact. People see the difference in their commute, their journeys and so on. There is a large impact in the south-east, which is already densely populated and seeing significant housing growth. The need to address the issue of adequate contributions towards local infrastructure is fundamental.

Philippa Roe: Some parts of the Bill are still being ironed out and discussed, such as those relating to who has which powers between the Mayor and the London boroughs. It is absolutely vital that any housing development regeneration is driven by the boroughs, because they have a far better understanding of the infrastructure impacts in their local areas. I just cannot see how a top-down approach, given how diverse the 33 boroughs are, can work in that holistic approach.

Phil Glanville: The 20% discount for starter homes is probably not enough to be offset in terms of the community infrastructure requirements. There is an element that some of that is local decision making. We decided to exempt the Woodberry Down regeneration from CIL, because of the challenges of the infrastructure: building the new schools, delivering the employment opportunities and delivering the public realm. You need flexibility at a local level to make some of those decisions, but I am not sure that the 20% discount warrants a full exemption.

[Matthew Pennycook]

Q 59 There is broad agreement that we need to increase supply, but as you said, Councillor Glanville, affordability is key. There is no statutory definition of affordability, and the Bill gives the impression that the working definition is 80% of market rent. Do you think there is an opportunity here to define what we mean by affordable?

Philippa Roe: No, I think that would be too prescriptive. The definition of affordable is up to 80% of market. That is absolutely crucial because it will be different in different boroughs. Each borough has different needs. For example, in Westminster about a quarter of housing stock is social housing; about 1% or 1.5% is affordable for that next tier of low to middle-income workers, and the rest is very expensive, either to rent or to buy.

Our real gap is that intermediate. Our businesses are telling us that that is a real gap. All the supermarket shelf-stackers, people working in our restaurants and theatres and so on, need homes where they can commute at a reasonable cost and time. That is Westminster and we are quite different from perhaps an outer London borough or Tower Hamlets or, indeed, some of the boroughs round the table. As long as we have the flexibility of up to 80%, given as the definition of affordable, then each borough can do it appropriately for their area.

[The Chair]

Without being impolite to the other witnesses, I fear that we have come to 10.45 am, which is the end of our allotted time for the session. Thank you very much to all four of our witnesses for their extremely useful and interesting evidence. I ask the next panel to come to the floor.

If there is anything members of this panel want to say and have not had an opportunity to say, we welcome written evidence at a later stage.

Examination of Witnesses

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[The Chair]

Q 60 This is the final session of the morning, running to 11.25 am, when I will cut us off quickly. I welcome our final panel, Mr Orr and Ms Butters. Will you kindly introduce yourselves for the sake of the record?

David Orr: I am David Orr, chief executive of the National Housing Federation.

Sinéad Butters: I am Sinéad Butters, chief executive of the Aspire Group, but today I am chair of PlaceShapers and represent the views of 116 local community-based housing associations across the country.

[Matthew Pennycook]

Q 61 Mr Orr, regarding the voluntary agreement that you came to with Government over the right to buy, many housing associations voted no, many were unable to convene their boards and come to a decision, yet clause 58 of the Bill brings them within the remit of a compliance mechanism under the home ownership criteria. What options do those housing associations have, given that this will be a statutory measure imposed on them?

David Orr: That is an interestingly framed question. The offer that we put to our members and then to Government was a voluntary deal on the right to buy that would cover the whole sector. Everyone who voted, even the small number who voted no, understood that what we were crafting was an offer that included the whole sector. Indeed, quite a number of the individual responses that we got from people who said no none the less said, “We understand that if the overall result is yes, we will be involved.”

[Matthew Pennycook]

Q 62 And those that did not have time to reply?

David Orr: In overall terms, that was a relatively small number. We have continued to have conversations with those organisations, as we have with all of our members. People had the opportunity to take part in that vote; they expressed their views; many of those who voted yes had reservations that they described to us; some of those who voted no said that they could see some value in it. None of this was easy and straightforward. We have continued to be in regular contact with all of our members about the implications. We will be working with Government and others on a piece of work to craft more of the detail that follows from the deal.

[Matthew Pennycook]

Q 63 Following on from that, there are lots of areas of the Bill where we await further regulations and statutory instruments. What would be the sector’s reaction if the Government did not deliver on commitments given under that voluntary deal?

David Orr: I have been asked this question on a number of occasions and my answer is always the same: this is a voluntary deal. If the Government, for whatever reason, fail to meet the commitments that they have agreed to under the deal, the deal falls. If we fail to meet the commitments that we have agreed to under the voluntary deal, the deal falls. I have no expectation that that is going to happen—I think that the core principles that we wrote into the deal will be the basis on which it operates, but if not the deal will fall.

[Helen Hayes]

Q 64 Some of the housing associations that recently appeared before the Select Committee on Communities and Local Government indicated that they thought the likely impact of this Bill would be fewer homes delivered by housing associations for social and other forms of affordable rent. I wanted to ask both of you, first, what you think the net impact of the Bill will be on housing associations’ delivery of social and other affordable forms of homes for rent and, secondly, whether you fear developers deserting housing associations in favour of delivering starter homes themselves?

Sinéad Butters: Our members have raised significant concerns about the potential erosion of social rented housing as a result of a combination of impacts. That combination includes the pay-to-stay option, the starter homes initiative and, depending on what is replaced under right to buy, the erosion of social housing under right to buy. What I would like to make absolutely clear is that our members collaborated with the Government on the home ownership options and see home ownership as one part of something—it is not “either/or”, it is an “and” for our members.

The impact on the future for social rented housing prompts the question, where will the poorest live? If there is nowhere for poor people to live in future, one might imagine that poverty is decreasing, yet I do not see that. It is a very real question. We would ask for the flexibility to have local solutions in the areas where we work closely with local authorities to determine what is needed in that area, including a range of social rented housing, home ownership options, market rent and sale. Our members would embrace the opportunity to work locally to make sure that what the community needs is what the community gets.

David Orr: The Bill itself is a relatively small part of a combined package. If we are going to build a whole lot of new homes we need land first and foremost. Anything that this Bill can do to help to release land for new home building would be helpful. Like Sinéad, I have anxieties about the competing priorities in the space where section 106 presently operates. It has been a useful mechanism for delivering affordable homes for rent and for shared ownership, and a useful mechanism for volume developers to front-end the cash for their developments. If all these things are squeezed out by starter homes, the impact is likely to be a reduction in the overall supply. If we are able, as Sinéad has said, to have an environment where we see significant growth in new home building across all tenures—some for market sale, market rent, social rent, shared ownership, starter homes—that is where we need to be. We need to have this mixed-tenure package. The new homes that we build need to be across all tenures.

With regard specifically to the ability to provide social rent, I think that the Government have made it clear that they do not consider social rent to be their top priority. It remains the top priority for housing associations. The spending review will obviously be an important component, depending on what money, if any, is available to support that. Right to buy, certainly in some markets, has the potential to liberate assets that would then be turned to cash and could be used to build social rented homes. That will vary according to the different markets in different parts of the country. There is a range of factors that will influence this, but I am anxious about starter homes appearing in the section 106 space and crowding everything else out.

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[Matthew Pennycook]

Q 88 Mr Orr, you have clearly given an indication that you would like to see more freedoms around rents. Clause 73 specifies further reductions in regulations to come. What specific freedoms will the National Housing Federation be pressing for?

David Orr: We have said for a long time that housing associations must have much greater freedoms to manage their own assets. We have to change the present disposals consent by which a housing association requires the consent of the regulator to dispose of any building or any asset. I just gave the example of the sale of a £1,000 equity share in a property, which at the moment requires a valuation of the property and a specific disposal consent. That is just completely absurd. We need to remove all that kind of unnecessary bureaucracy, which basically leaves the regulator with a determining say in how an independent social enterprise uses or disposes of the assets that it owns. There are a number of other things which follow from the ONS determination which need to be looked at again, and also the circumstances in which the regulator might be able to intervene at board level. We need to be much clearer about what those relationships are.

[Matthew Pennycook]

Q 89 And specifics on allocations?

David Orr: I think that we need to have a different approach to nominations and allocations, which is much more about local negotiations between housing associations and local authorities, and then contractual relationships which are potentially subject to change. Housing associations do not want to move away from the business of providing housing for people who are in the greatest housing need, and working with local authority partners to deliver it. However, they do want to be in a position where they can say that if they are charging a rent which is 70% of the market value, they do not think it is appropriate to allocate that to someone who is in the greatest housing need far away from the jobs market, and who will become more trapped in benefit dependency by being offered that product. We need to have greater variation in those local discussions.

[The Chair]

Finally, very briefly, I call Brandon Lewis.