Housing and Home Ownership

Neil O'Brien Excerpts

Tuesday 16th October 2018 Westminster Hall

[Neil O'Brien (Harborough) (Con)]

I beg to move,

That this House has considered housing and home ownership.

It is a pleasure to serve under your chairmanship, Mr Pritchard. I recently published an 80-page report for the think-tank Onward. Members will be relieved to hear that I do not intend to read it out today, but I want to talk about some of the themes in it.

This is a short debate, so I want to ask the Minister just two questions. First, will he update us on his thoughts about how we can increase home ownership by rebalancing things between the private rented sector and home ownership? Building more homes is a necessary, but not sufficient, condition of reversing the decline in home ownership. Over the past decade, the private sector has built about 165,000 extra houses every year, but home ownership fell because the private rented sector has expanded by 195,000 homes every year. Multiple property ownership has been squeezing out home ownership for individuals. Private landlords are not doing anything wrong, but we have to ask ourselves as a country whether we want so much of our housing stock to flow into renting, rather than owning.

To rebalance things back towards ownership, we could do a number of things. We could introduce a capital gains tax break for those who want to sell their rented property to their existing tenants. For future rented properties, we could change the tax treatment to encourage people to put their investments into stocks, shares and businesses, rather than just into bidding up the price of housing. Rebalancing in that way could make a big difference. To give a sense of the magnitude, I should say that if we had kept the ratio of privately owned to privately rented homes the same between 2000 and 2015, 2.2 million more homes would be in ownership. That would make a huge difference—at least as big a difference as we could make by increasing the rate at which we build homes.

We know that tax can be effective. The changes brought in by the then Chancellor in 2015 saw the first substantial increase in home ownership for a decade in the following year. I hope that the Minister and his colleagues at the Treasury are thinking about ownership. If we only think about the supply side of the market in challenging the housing problem, we are effectively fighting with one hand tied behind our backs.

The second thing I would like the Minister to update us on is his and the Government’s overall vision for what, where and how we build. The ultimate constraint on how much we build is public consent. If we want to build more, we need to tackle the underlying reasons why people oppose so much of what is built today. For me, there are three underlying reasons. First, too often we build in the wrong places and we lose the green spaces that people value the most. Secondly, we build without the required infrastructure. Thirdly, there are too few benefits for existing residents.

How can we solve those problems? That requires different things in different places. It means building more in the centres of our great cities—densifying them and regenerating more land. Outside our cities, it means more stand-alone, planned new communities and fewer tacked-on developments stuck on the edges of all our existing villages and towns. Everywhere, it means sharing more of the benefits of development with existing residents so that they can see those benefits.

Let me unpack that a little bit. There is lots of room in our great cities for growth. Glasgow, Newcastle, Liverpool, Middlesbrough, Sunderland, Hull and Dundee all had a smaller population in 2016 than they did in 1981. Other cities such as Manchester and Birmingham were only about 6% bigger. There is lots of room to grow in our great cities, and there are lots of reasons to densify the centres of those cities: it is greener; it means less congestion; it means more people walk to work, which in turn is healthier; and infrastructure costs are lower. There are lots of ways to make it happen. To put ideas in the Minister’s head, we could change objectively assessed need to favour inner-city development, to take into account the potential for cities to densify. We could further liberalise building upwards and amend change of use to allow empty shops to be turned into homes.

We could devolve further powers over transport beyond the mayoral combined authority areas. Mayoral authorities such as in London have powers over public transport and the buses. That means they could have denser development, because they can ensure good public transport to it. We could review sightlines in London and build upwards. We could do what the think-tank Create Streets recommends and review regulations so that we can once again build those tall, dense terraces that are so beloved by the population. We can do a lot more in our cities, but we will continue to want to build outside our cities, including in rural areas.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I thank the hon. Gentleman for bringing this debate to the House. His suggestions are good. Does he think that housing provision for people with disabilities should be improved as well? At a sitting of the Select Committee of which I am a member last week, I argued that the Government should implement approved document M4(2). It sounds a bit wordy, but that is about making new homes accessible and adaptable by default. Does he agree with doing that? That measure includes provisions for a wheelchair standard for new homes.

[Neil O'Brien]

The hon. Lady has a very interesting idea, but I am not familiar with that measure. I will have to go away and look at it.

Outside of the cities, we generally build right up to existing developments. I see that in my constituency.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

I thank my hon. Friend for giving way and bringing this crucial debate to the House. Does he agree that unless we radically reform our local planning system, we will never get the planning applications through and the houses built that we need? We need to build in huge numbers—more than the Government are proposing at the moment.

[Neil O'Brien]

I utterly agree; I was about to make that very point. At the moment, we infill bits on the edges of every village and town. We are effectively building in the places that annoy people the most, so we do not build enough homes, as my hon. Friend said. When we do that, we cannot keep up with the infrastructure needs of these places, because it is physically impossible. Perhaps the primary school is on too small a plot or we cannot widen a road that has become a rat run because there is not enough money to meet infrastructure needs.

Previously, we did things very differently. There was the new towns programme: those new towns now house more than 2 million people very successfully. They are fast-growing places. Mrs Thatcher created docklands in London and Liverpool, and the model was roughly the same for both. A development corporation would buy land cheap at existing low values. It would assemble the land, install the infrastructure and sell on that land for uplifted values, therefore paying for itself. That model has been used successfully all over the world.

[Priti Patel (Witham) (Con)]

I congratulate my hon. Friend who, as ever, is making a very persuasive case. His Onwards report is very good, and he is contributing to what I would call the battle of ideas. He mentioned Margaret Thatcher, who was at the forefront of that. The Centre for Policy Studies published a paper on “help to own” on Monday. We want to be in this space to address some of the big challenges we are facing on planning, taxation and infrastructure, but we also need to try to persuade other parts of the Government—including the Treasury and our dear colleague in the Ministry of Housing, Communities and Local Government—to address some of the bigger issues of intergenerational fairness. A whole generation is locked out of home ownership, and we want to help them get back on the ladder so that we can become that property-owning democracy again.

[Neil O'Brien]

My right hon. Friend makes an extremely profound and important point.

A lot of councils are now getting back into the business of building new places. They are being forced to, because if they do not want to mess up every village and town in their area, they need to build new stand-alone places. We need to ensure that they have the tools and expertise they need to make that work.

[Scott Mann (North Cornwall) (Con)]

My hon. Friend has brought a very important debate to the House. When we build around existing settlements, we tend to have inflated land values before things have even started. Having new settlements will allow us to capture some of that value to provide some of the infrastructure. Does he agree?

[Neil O'Brien]

My hon. Friend is absolutely right. I agree in the strongest possible terms, and will come to that point in a second.

Where there have been good new planned settlements, such as Poundbury or Nansledan, they have often been because of a visionary landowner in the area, but we cannot always rely on that. Sometimes, other good ideas have gone wrong because developers have wiggled out of their commitments or planners have failed to get control over the land. How do we make sure that we always build good new places? I would love to see Homes England become a supporting masterplanner for local authorities. I would love us to build on the housing infrastructure fund, which is a brilliant initiative. I would love more central encouragement, which is already coming from the Minister, for good vernacular design.

As ever, the other thing we need is money. That brings me to the third of the reasons why people oppose development—because there is not enough benefit for existing residents. As my hon. Friend the Member for North Cornwall (Scott Mann) mentioned, when planning permission is granted, there is typically a big increase in the value of land, but too little of that flows to existing residents. The Centre for Progressive Policy estimates only about a quarter of the value goes to the local community.

[Andrew Lewer (Northampton South) (Con)]

My hon. Friend mentioned money. Many of the councillors in Northampton welcomed the lifting of the borrowing cap on the housing revenue account. Does he share my hope—this reflects the comments made by my right hon. Friend the Member for Witham (Priti Patel)—that that will be used for shared ownership or owned properties, as well as just for social housing?

[Neil O'Brien]

I do. That is perhaps for the Minister to answer rather than me, but I absolutely agree that it would be a good thing to do with the extra borrowing power.

How do we capture more of the benefit for the community? We could reform section 106 and the community infrastructure levy and take off the various limits that apply. We could create transparency by creating a register of all land options so that we know what people are paying for land and we stop viability being used as an excuse not to pay for vital infrastructure. We could change the national planning policy framework so that sites do not get put through the strategic housing land availability assessment unless they can pay for their own infrastructure. We could give local authorities the fiscal firepower to assemble land and be their own developers and masterplanners. We could reform land compensation and the Land Compensation Act 1961 to reverse the changes made by unelected judges in the 1970s. A group of organisations, including Shelter, Onward and the Campaign to Protect Rural England, recently came together to call for just that.

As well as more benefits for the local community generally, we also need to see more specific benefit for those most affected by development—those who are right next to it. What about offering cheap homes for sale to the neighbours of new construction sites? At the moment, there is too little other than disruption for the neighbours. In Farndon Fields in my constituency, a developer refused to route construction traffic through neighbouring fields and has instead insisted, using the viability argument, on forcing them down tiny suburban streets. My constituents now have to put up with huge HGVs going down these tiny streets where their children are playing, for several years. No wonder we oppose so much development, when it happens like that. No wonder we do not build enough homes. We have a system that seems geared to maximise opposition.

The only way to build more homes is to deal with the underlying reasons why we oppose so much development today. Those problems can be fixed, and I know our new, energetic Minister is setting about fixing them with aplomb, but we need to think radically about the way we build and start a new conversation about the balance of renting and owning.