Richard Bacon
Main Page: Richard Bacon (Conservative - South Norfolk)Housing and Planning Bill (Fifth sitting)
Richard Bacon Excerpts
Dr Blackman-Woods
My hon. Friend makes an excellent point, which we will probably return to a number of times in Committee if the Chair permits us: to what degree do the measures add additionality to the whole system of housing supply? In particular, will they enable people who currently cannot buy their own home to do so? That is far from clear, on the basis of the evidence before us—particularly from Shelter. Of course, if the Minister has alternative evidence, we would all be happy to consider it during our deliberations.
I know that the Minister took exception to the fact that Shelter’s research used the median house price as the likely value of a starter home. Interestingly, Shelter explains in its report why it did that. The first reason is that starter homes are new houses, so they are usually more expensive than existing houses. Also, as we heard from the Minister, starter homes are expected to be of good quality and well proportioned, which might make them a little more expensive.
As Shelter pointed out to the Committee, however, the Land Registry index of house prices that it used in its research actually produces lower values than other similar indexes. The Land Registry’s median house price was £198,000 in England and £375,000 in London. Those figures are lower than the average house prices for first-time buyers that I think the Government used, because the latest stats from the Office for National Statistics indicate that the median house price is £211,000 in England and £385,000 in London. As a result, criticism of the Shelter research does not seem legitimate to us, because its figures were lower in any case.
If the Minister wants to bring forward alternative evidence, we will look at it. If he is determined to use the official prices for first-time buyers as a starting point for assessing the policy, that, too, is fine by us. However, that poses the question of why the starter homes will be even less affordable than the Shelter research has identified. The amendment seeks to restore some reality to the discussions about the affordability of starter homes and the actual consequences of the policy for real people in their local areas. The Secretary of State for Communities and Local Government, the right hon. Member for Tunbridge Wells (Greg Clark), said in August that,
“all too often young people find themselves exiled from the place they grew up as they are forced to move away to find a home of their own.”
One has to presume from that statement that he would like young people to be able to buy a home in their local area, with a starter home set at an amount that can be afforded locally. That is also exactly what the amendment seeks.
Specific issues arise for young people trying to access housing in rural areas. The Campaign to Protect Rural England told us that average house prices in rural areas are 22%, or £43,000—a huge amount of money—higher than in urban areas, excluding London, although median incomes are lower, at £19,900 a year, compared with £24,000 in urban areas. Such specific affordability issues should be left to rural local authorities to address in the setting of the level of threshold prices for starter homes. Even in areas with an acute shortage, local authorities want to do their best to help local people, and local young people in particular, to get on to the housing ladder.
I will be interested to hear from the Minister why the amendment is not acceptable. It is a sensible amendment that seeks to ensure that affordability is set at a level that will mean people can purchase a house in the locality in which they already live and in which they want to continue living. We also think that, given the disparities in income throughout the country and the possible disparities in house prices to be faced by local people trying to get on to the housing ladder, some measure of local accountability should be built in.
Mr Richard Bacon (South Norfolk) (Con)
Were the hon. Lady’s amendment to be made, it could mean that in an area such as her constituency, where the median income is about £20,855, the cost of constructing a dwelling would be higher than the price at which it could be sold—set in law. Does she think that people who construct houses would do so at a loss, or would she expect her local authority to make up the difference?
Dr Blackman-Woods
If the hon. Gentleman had read the whole amendment, he would have seen that it says that affordability, and therefore the threshold level, is to be determined by the local authority. Either one believes in devolution and giving responsibility to local authorities—I thought that the Government did—or one does not.
Dr Blackman-Woods
I will give way in a moment, once I have answered the hon. Gentleman’s previous intervention. We must expect local authorities to act responsibly and set a level that would cover construction costs for the new home but nevertheless be affordable for local people. That is the purpose of the amendment. It would give local authorities a responsible role in the setting of thresholds, rather than requiring them simply to apply a national one that might not be suitable to their locality.
Mr Bacon
I did read to the end of the amendment, and it refers to the “median local household income”, so that is the criterion that would determine the matter, not the good wishes of the local authority. The local authority would have to have regard to the median local household income. My question—and the hon. Lady did not answer it—was this: if it is not possible to construct a dwelling at a price that reflects a multiple of the median local household income that a lender would lend, would she expect someone to construct a house at a loss, or would she expect someone else, such as a local authority, to make up the difference, or would she expect them to build nothing?
Dr Blackman-Woods
I think that I have already addressed those points. It is clear that the amendment would allow local authorities to set the threshold at a level affordable to people on average incomes. If starter homes are not to be available to people with incomes that are the average for the locality, what is the point of them? I would have thought that they were intended to help exactly the people with such incomes.
The point of the amendment is that the threshold will need a degree of local input. We are trying to improve the Bill and make starter homes accessible to as many people as possible, taking on board the difficulties of people across the country, given that house prices vary from area to area. Giving local authorities input into what is affordable is a sensible measure.
Amendment 67 relates to
“restrictions on resales and letting at open market value relating to first time buyer starter homes”.
Why has the Minister rejected the outcome of his own consultation exercise? Why should the discounts not be applied in perpetuity? As we know, the Government plan for a starter home is that it could be resold or let at open market value five years after the initial sale. The purpose of the amendment is to probe the Government as to why they rejected the view that restrictions should continue.
Several of those who gave evidence highlighted problems with the issue of perpetuity as a key element that will affect the potential success or failure of the policy. The question of the length of time for which the discount will be applied needs to be asked. As I mentioned, the Government’s own consultation reflected the view that there should be an ongoing basis for starter homes and their discount. The majority of respondents elected for an in-perpetuity discount: 75% of local authorities; 100% of lenders; and 50% of developers. The Government’s consultation states:
“Respondents on this issue highlighted a number of areas where the implementation of the policy needs careful consideration.”
Dr Blackman-Woods
My hon. Friend has put our case precisely and succinctly in an excellent intervention. That is exactly the point we are making; it is about not crowding out other types of development. Again, I come back to the responsibility we should be giving the local authority to provide for all people in housing need. There is a really big question that the Minister has to answer: do the provisions in these clauses override the national planning policy framework, under which local authorities clearly have to carry out a detailed assessment of housing need in their area and plan to meet that need? With this proposal they will presumably have to meet a target for starter homes, even where they might not be needed. Perhaps the Minister will address that when he comments on the amendments.
Amendment 64 is clear that other types of property that are considered appropriate by the local authority to provide on a first-time basis should also fall within the remit of starter homes. That seems reasonable, and the London Mayor has argued for that. Perhaps other rent-to-buy options could come under the definition of starter homes. What is critical is trying to meet the needs of young people and others who are trying to get on to the housing ladder for the first time, to ensure that they have the widest opportunities to do that.
I will move swiftly on to amendment 68. Our argument is that it is vital that the building of starter homes does not prevent other kinds of affordable housing being built. This is a probing amendment to ask the Minister what would happen if a local authority considered providing starter homes that would prevent other types of affordable housing being built. Some areas might have homes at a level that is already readily available for first-time buyers, but do not have enough affordable housing to rent or buy-to-rent products. What role is there for the local authority to say, “Actually, we do not need starter homes up to a value of £250,000 on this development. What we need are more equity share schemes, or hostels, or something like that”?
Is there any room for flexibility, or is this a diktat from central Government that says, “Thou shalt have starter homes on every single development, whether or not they are needed in that locality or on that site”?
Mr Bacon
The hon. Lady asked what was the role of the local authority. I would like to make a suggestion. We heard evidence that there is nothing in law to prevent a local authority that wants to from acquiring land and building homes of its choice. There is nothing in law to prevent a local authority from acquiring land and then using it to establish, promote and expand mutual housing co-operatives. I hope that the hon. Lady, as a member of the Labour party, would support that. Those are outwith the bounds of the Bill and would provide the in-perpetuity protection for affordable rents of the kind she seeks. It is open to local authorities to do that now if they wish. Indeed, it was the Conservative leader of Westminster City Council, Philippa Roe, who gave evidence that they were looking into that very seriously.
Dr Blackman-Woods
We are all in favour of more co-op housing—I am sure that we will debate amendments on that later. The hon. Gentleman has in a way made my point for me. What we will see through the operation of the starter home policy is a lack of resources going to the local authority because CIL will not apply to them. Many local authorities across the country will not struggle to purchase land in the current climate, but even if land is available there might not be co-ops locally with the sort of money to invest in those sites that would ensure that they can cover both the infrastructure and the new build costs.
The hon. Gentleman described a situation that might exist in some areas, but it does not exist in all areas across the country. Nevertheless, it is exactly the type of example that could be given in support of the amendment, because if a local authority thinks that it would be much better to have co-op housing rather than starter homes on a particular site, why should the Government prevent them from providing that housing? As currently drafted, this legislation would require local authorities to provide co-op housing in addition to starter homes, even though there may be no money available for that co-op housing.
It is the practicality that matters. One of the responsibilities that we have, as the Members scrutinising this legislation, is to see whether it could work in practice. My concern is that without an amendment such as amendment 68, which would allow local authorities to consider providing other sorts of affordable housing, we might get to a situation in which starter homes simply crowd out every other form of development. I look forward, in five years’ time, to seeing figures that might demonstrate that we have been overly concerned. That would be a good thing, showing that we were too concerned and that starter homes do not crowd out other forms of affordable housing. Nevertheless, I am expressing the concern, which was put to the Committee by many organisations, that starter homes will do precisely that.
Indeed, that is the specific point addressed by amendment 69. As with previous amendments, it would enable councils to ask for planning gain measures that would provide a range of affordable homes other than starter homes. If we accept the evidence, which was put forward by Shelter, the Joseph Rowntree Foundation and other organisations, that starter homes are not an option for many people on average incomes, surely local authorities must be able to provide other forms of affordable housing if starter homes are not going to be available to most people in their area, and particularly if they are going to be put on the market at too high a price.
We know that a lack of social and affordable housing will have huge consequences for homelessness, which we will no doubt discuss later, because it is a serious point. Under this Government we have seen a 33% increase —that is huge—in homelessness and a 58% increase in rough sleeping. We can all see that with our own eyes. That points to a need to have lots of different forms of genuinely affordable housing, and not just starter homes.