Housing Supply

Meg Hillier Excerpts

Thursday 13th July 2017 Westminster Hall

[John Redwood]

I entirely agree, and I mentioned security for families at the beginning. That is a point well made.

We need to ask what we can do. House prices in many parts of the country, most especially in London and the south-east, are extremely high, and it is very difficult even for someone on average earnings, let alone below-average earnings, to raise a sufficiently large deposit, meet the requirements to raise the loan and meet the interest payments on it. One driver of these very high house prices is undoubtedly the big imbalance between demand and supply in housing. I know the Government accept that and are trying to work on the supply side. If more houses can be produced, all other things beings equal, that should help ease the house price pressures.

There is also the question of demand. I think all of us wish to be generous to refugees and to invite in people of talent who can make a good contribution to our community. There is everything to be said for allowing companies investing here to bring in their executives and so forth, but Government Members feel there has to be some control on overall numbers. When we are being generous, as we should be, we have to take into account the strains being put on the housing market, which may mean that the people coming here cannot get the quality and price of housing that we would regard as important for the lifestyles we wish for all the people in our country.

We need to look at the number of people who need housing vis-à-vis migration, as well as supply. I know the Government are considering that and will be freer on it in due course, once we come to debate in the House of Commons a UK migration policy that meets demands for decency and labour mobility for business, but that also understands the stresses placed on housing and other services if we have very large numbers. Those stresses run the risk of us not being able to offer people the standards we think are appropriate for anyone settled here in our country.

The Government have attempted to tackle the housing problem by driving the construction of more homes and to tackle the issue of affordability by working particularly with first-time buyers on how to get the first deposit and raise sufficient money to buy what are expensive properties. I welcome the Government’s initiatives. They are all well-intended, and some have been doing good things. My main purpose today is to raise two questions. Can the initiatives that already exist be beefed up and better advertised, so that we get more people to use them? It is still slower than we would like. Secondly, are there new initiatives we should add to them, given the general imperative to get on with solving the housing scarcity problem in general and the shortage of affordable housing to buy in particular?

Through the help to buy ISA, the Government are offering a £3,000 top-up to someone who can save £12,000 for a deposit on a house. Although £15,000 is a lot of money for someone on a low income who is trying to save, it is not a lot of money for a house deposit. I wonder whether, through the Minister, the Chancellor might think a little more about those figures. The more help that can be offered, the faster someone can get a deposit and the better that is for their ability to access the housing market.

The Help to Buy equity loan scheme is admirable, but it is limited to new homes only, and I wonder why. Most people buy a second-hand home. By definition, the stock of those homes is massively bigger than the new supply in any given year. I know it would be a lot more expensive if we opened up the scheme to a wider range of houses, but it would also be a lot more useful, because many people buy a second-hand home as their first home. Indeed, for some, the pleasure of buying a first home is in buying a second-hand home that is not in great shape, so that they can put their stamp on it. It may be a way to have a more affordable home, because they may wish to spend their own time and effort on improving the house, rather than spending money to get others in to improve it for them. It might be worth looking at whether we can provide more of a bridge for people who want to buy second-hand homes.

The affordable housing fund was set up to generate more construction of affordable housing. Again, that is a great initiative. I would like the Minister to give us more up-to-date information on how many homes that scheme might achieve and what the approved build rate under it is. One issue with the affordable housing fund is the cost of building the properties and the quality of their construction. I am all in favour of really good-quality construction, and modern homes are built to a much higher standard in many ways than older homes. However, one way to match the need for higher quality and affordable cost may well be to build on the initiatives of the house building industry, by having more construction in the factory before things are brought to site. None of us wish to recreate the old prefabs. They were a necessary and welcome development in the immediate post-war crisis, when so much of our cities had been devastated by bombing, but they are not the kind of thing we want to build today. People want elegant, well-insulated homes that meet all modern standards.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The right hon. Gentleman talks about prefabs and the old style. In my constituency the Peabody housing trust developed as a millennium product pre-built buildings on Murray Grove. People are still living there now, and very happily so. There is a modern way of developing that could be cheaper. Does he think the Government should consider that?

[John Redwood]

I agree. There is not a public-private sector divide, in my view; it is something the private sector is beginning to adopt and needs to look at just as much as the public sector. If done well, it can improve the quality. Indeed, some of the most expensive properties that individuals can buy are modular German or Swedish houses, which are imported in kit form and put up in a week or two on a suitable piece of concrete, on a nice plot of land, at quite a high price, with extremely elegant finishes.

The reason we can both drive quality up and drive cost down is that in the factory environment we can engineer and produce the larger parts of the house to high specifications and low tolerances, so that they are very accurate. When the houses are then on site, they are in good order and we do not need all the site labour. We do not have problems when it rains, because it is all being done in a controlled environment, where dust and dirt can be controlled and there are not the wrong wet or dry conditions. We can have perfect conditions for manufacturing to a high quality. The more we can achieve in the factory, and the less we have to do on site, the more we speed up the build time. Months can be taken out of the build time, and if we take out time, we take out cost.

I hope that more can be done. Persimmon, for example, is producing very high-quality homes for private sector buyers. Its Space4 factory does quite a lot of prefabrication work for a number of homes in its range. I hope there will be more initiatives. I mention that to the Government because, through their affordable housing fund, they have the money and they are the customer, as well as the final customer for the property. They can therefore use that intelligently, as a buyer, to drive the process in the way I have suggested, so that we get quality up and cost down—a double benefit.

The Government have a rent to buy scheme. I would like to hear more about that and whether it can be made more generous. The idea is lower rent when someone takes on the tenancy, to give them more scope to save for a deposit. They then have the right to move in and switch from renting to buying. That is an excellent idea.

I think that the Government could do more on their own estate and on brownfields in general. That is partly a planning issue and partly an investment or encouragement issue. By Government, I mean local as well as national, because the two need to work in partnership, which often requires national Government to lead the way. A large number of properties, particularly in our towns and cities, are in use but are in decline, or the buildings may be empty because their use has terminated. Given the pace of change in retail, there will be redundant retail space, and given the pace of change in office employment and some industrial employment, there will be redundant older buildings. Older warehouses and industrial plants have been elegantly converted into homes, for example in docklands. When those buildings are down on their luck or become free, we must ensure that the public sector does all it can to make permits and proposals available so that people can transform them.

Perhaps the Government could look at a scheme to back individuals who want to transform a property of their own—a sort of modern homesteading scheme for which they can be given support if they want to take on a poor property—or if a group of people want to take on a larger property and convert it. We could have more action to deal with dereliction, which is often close to valuable real estate in some of our leading cities, but we need to back that with an initiative. It should not always be large companies that eventually get around to doing that and taking all the property; there may be an opportunity for individuals, smaller businesses, co-operative arrangements or whatever to take on property problems and turn them into opportunities.

On brownfield sites and in urban redevelopment there is generally scope for central and local government to have a bigger vision—some are good at that, but some are rather slow—and to use it to identify suitable sites for more affordable housing for sale.

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[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate all Members for their measured tone in this debate, which is so important to our constituents. I declare an interest as a London homeowner and as a private landlord.

We need to see this debate in the context of the overall shortage of homes, particularly in my city and my borough, where home ownership is a desire for many but a pipe dream for nearly everybody. As my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) and others highlighted, the multiplier effect is now so high that even people on a very good income in London cannot afford to buy a property; I was interested to hear from my hon. Friend the Member for York Central (Rachael Maskell) that the situation is the same in York.

The right hon. Member for Wokingham (John Redwood) made a point about recycling and right-to-buy receipts. The situation is very difficult in areas such as Hackney. We have a shortage of land to recycle, and land is expensive. Since the ’80s, we have lost 10,000 homes to right to buy, yet the waiting list for social housing now stands at 12,100—the highest figure in 12 years. Up to 500 new people are applying to be added to that waiting list every month; if I have time, I will give some of their stories.

In my borough, more people rent privately than own their own homes—not because they do not want to own their own homes, but because they have no option. However, given rent levels in the private rented sector, it is amazing that they can afford to do so. A typical two-bedroom property costs £420 a week, while a four-bedroom property costs £683 a week. Those were the median values of London rents in January this year, according to data from the Valuation Office Agency. People are squandering money on private rented accommodation, unable even to think about putting aside a deposit, even if on their income they could afford to get on the housing ladder.

We need to examine the fact that so many people now need social housing because they cannot get on the ladder. The knock-on effect of this cost shunting is immense. Hidden homelessness is growing massively in my constituency: in many households, one family live in the bedroom while another live in the living room. Does the Minister have access to any figures on that?

This is one of the new big scandals. When I started out as a young councillor, I used to visit families in bed and breakfasts. There was then a cross-party consensus, driven by the Labour Government, to get rid of the practice of putting people in bed-and-breakfast accommodation. We are now seeing a huge cost in homelessness. My local newspaper, the Hackney Gazette, which comes under the umbrella of Archant, has done a good investigation on how much is being spent on homeless families. Hackney Council alone—just one London borough council—spent £35 million last calendar year to house homeless families in temporary accommodation, where they spend three to four years on average.

I used to say to people, “If you qualify as in need of housing, you might be in a hostel for six months, but hang in there and you’ll get something,” but increasingly they are now there for not just a year, but 18 months. I have known mothers come out of hospital with their newborn baby and go into a single room in a hostel with their other half and their toddler, alongside many other people with different vulnerabilities. That is not acceptable, as I am sure the Minister agrees. We want practical answers from him about how the Government will tackle the problem.

This comes down to the supply of housing. It is important that we build that supply to ensure that there are homes in the right places, as the right hon. Member for Wokingham said. Average prices in Hackney have risen by 85% over the last five years. The average price for a semi-detached property is now £920,000, while the average price for a flat is more than £500,000. Another important aspect of the problem is that many people are trapped in flats because they cannot afford to borrow the additional money they need to move into a house. As my hon. Friend the Member for Ealing Central and Acton (Dr Huq) said, that is how we lose key public sector workers: they may need an extra bedroom or want a different lifestyle, and they do not really have the option in Hackney.

Earlier this year, the Public Accounts Committee produced a report called “Housing: State of the Nation”, which was driven by our concern about the Government’s programme to release enough public land to build 100,000 homes over the last Parliament. That programme has improved thanks to the Committee’s scrutiny, but I warn the Minister that our report is part one of a series—not too long a series, I hope, if he listens to our concerns and takes on board our serious points. The report highlights the human costs of the homelessness problem: 120,000 children in England are living in temporary accommodation today. That is not only a cost to the public sector, but a human cost for those concerned and their communities. The consequences to individuals and to the taxpayer are immense. Having families moving around, changing schools and health providers, adds cost and stress to the system.

More affordable housing for ownership is vital, but so is ensuring that affordable housing for rent really is affordable. Even for working people, it can be very difficult to afford a council rent in Hackney, particularly if they are on minimum wage or are not working full time. Housing benefit is taking the strain, along with the private sector. Some £21 billion a year is spent on housing benefit. As a new Minister in his Department, I am sure the Minister is aware of that figure. I hope that over the summer recess, when Parliament is not there to subject him to detailed scrutiny—don’t worry, we’ll be back—he will take the time to think about how that £21 billion could be better recycled and spent to serve those in need of social rented housing, as well as those who want to buy.

Let me touch on some potential solutions for the Minister. Community land trusts are a really good opportunity to maintain the value of land for the benefit of the community in perpetuity. Public land is often sold off to the highest bidder, because that is how Departments balance their books, but if the Minister can get a double dividend, surely that is worth pursuing: decent homes for people that are affordable to buy or rent and that bring money into the public sector.

Planning clearly needs to be revisited, and so does shared ownership, because so many people are trapped in it. In fact, there was a shared ownership property for sale in my constituency for more than £1 million. When I pressed the housing association on it, it said, “It’s okay: four sharers on incomes of £70,000 each could buy it.” That is ludicrous. It is not what the whole model should be about.

We need to look at new models of ownership. Speaking as a Labour and Co-operative MP, I think we should be looking at co-operative ownership. That would require some legal changes, but I do not think that the House would resist such changes if they were proposed by the Minister. I am aware that the Government are worried about losing votes, but I think there would be strong cross-party consensus on this issue.

Finally, we need to raise the borrowing cap for councils, so that they can be more innovative in how they provide housing. My borough is doing a good job. It has 3,000 homes for building in the pipeline, of which 1,500 are for council housing at affordable rent, but the other half are for sale at high prices to subsidise the rest. Would it not be better to give the council the capacity to put that housing out there at a lower price?

I ask the Minister for answers on some specific points. Will he update us on the progress of the voluntary right to buy for housing association homes and particularly on the impact on councils, such as Hackney, with high-value council homes, which, under the original proposals, were expected to backfill the discount for those housing association sales? We are anxious to know what is happening, because we do not want to lose more of our affordable homes in an area of such high housing need. Will he also update us on the release of public land for new homes, which the Public Accounts Committee has scrutinised in detail? Will he give us the assessment of double households—hidden households—that I asked for? Have the Government really got a grip on that? I do not blame the Minister if not, because he is new to his brief, but it is vital that he gets a grip of it, because it gives an idea of the latent demand as well as the social cost.

My hon. Friend the Member for Mitcham and Morden highlighted overseas absentee purchasers. Will the Minister consider holding serious discussions with the Treasury about taxing those overseas purchasers for buying properties that sit empty next door to the very hidden households that I represent? It is a complete injustice that in a city as rich as London, people are living in massively overcrowded conditions, unable to get on the housing ladder and unable to move from their small flat to a bigger home, while just down the road whole blocks are sold off overseas over a weekend and are never lived in.

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[Tony Lloyd]

The hon. Gentleman brings me on to an important point. One thing that we must begin to recognise is that we do not actually have a housing market; we have many different segments of housing, all of which have different features. Of course we must recognise the needs of vulnerable people and older people—older people are not necessarily vulnerable, but they have different housing needs. Those needs must be recognised in a long-term housing strategy, and we must ensure that provision is across the piece.

I have the current figures on new starts. In their 2015 manifesto, the Government committed to building some 200,000 starter homes over the Parliament, which is 40,000 a year. Quite frankly, the figures are so dismal and so insignificant that we are failing not simply to hit the statistical targets, but failing real families and real people.

[Meg Hillier]

I hesitate to repeat myself, but, as my hon. Friend just said, the Government are building 40,000 starter homes, and I remind Members that the waiting list for housing in Hackney is 12,000. That is just one London borough. That demonstrates the stark gap between demand and supply.

[Tony Lloyd]

My hon. Friend is absolutely right. We have got to have a radical shift in how we deliver things.

In the few moments I have at my disposal, I want to talk about some of the things we have to do. I applaud a number of comments made by Members from all parts of the Chamber. London is probably a special case, but there certainly has to be an examination of the capacity for people to move speculatively into the London housing market. They might not simply be overseas investors; in some areas it might be about recognising that institutional investors, or even private investors, have a detrimental impact on the capacity to house our population. A real issue has been raised about London in particular and the position of people on low pay in public services. We want them to work in our inner-city schools, but frankly they cannot afford to pay the rents or mortgages considered to be the norm.

When we still have the concept that a £450,000 property is affordable, we are living in the realms of fantasy. The traditional lending ratio that building societies offer is 4.5:1. By definition, that means that someone needs a family income of £100,000 for that affordable property. Most of us would not regard that as being the income of the people we want to target affordable housing towards.