Housing and Planning Bill (Seventeenth sitting)

Debate between Roberta Blackman-Woods and Matthew Pennycook

Thursday 10th December 2015 Public Bill Committees

[Dr Blackman-Woods]

I am saying that the problem is particularly acute in London, but housing stress and difficulty getting on the housing ladder not only affect people in London. It happens in a lot of our cities, and it happens in rural areas, too. There is a particularly acute situation in London, which I will talk about in a moment or two.

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

I thought I would give my hon. Friend a useful illustration from my constituency. Overseas buyers regularly turn up at City airport, get the docklands light railway over to Greenwich and buy off-plan—not buy to let but off-plan, and sometimes in cash—just to hold the property as an asset, rather than seeking to rent it out.

[Dr Blackman-Woods]

I am very grateful to my hon. Friend for that extremely helpful intervention highlighting some of the difficulties in London, which enables me to respond further to the intervention of the hon. Member for Peterborough. The autumn statement included some measures that might affect buy to let. We do not know what the full outcome of those measures will be, but they do not address the issue of overseas investors buying up properties to keep them empty.

Housing and Planning Bill (Fifteenth sitting)

Debate between Roberta Blackman-Woods and Matthew Pennycook

Tuesday 8th December 2015 Public Bill Committees

[Dr Blackman-Woods]

The clause will enable some housing developments to be determined under the national infrastructure planning regime, if they are part of a larger mixed development that includes infrastructure. On the face of it, we have no objection to that in principle, but we are concerned about how the process for granting approval is going to work in practice. It brings me back to the discussions we were having this morning about whether there are going to be three or four ways in which applications for housing can be determined. We have come to an additional way, so perhaps we are now on the fifth way for applicants to get planning permission for new housing.

A number of organisations, including the National Infrastructure Planning Association, have written to the Committee to say that there is a need for greater clarity in the Government’s guidance. It is very welcome that we received the briefing note for the guidance relating to clause 107 before we came on to debate it. I do not know who is responsible for that, but they should be commended, because it is clearly much better that we get the documents that are relevant to a clause before we debate it, rather than afterwards, which has typically been the case with the Bill so far.

The briefing note states that the clause will

“minimise regulation and provide maximum flexibility”

and that

“more detailed issues relating to the inclusion of housing will be covered in guidance.”

It goes on to tell us about some of those issues, which include

“the types of infrastructure that housing could be included with; the two circumstances in which housing… might be built…; the location of housing in relation to the infrastructure; the assessment of housing proposals; and how the housing element of any nationally significant infrastructure project will be treated at each stage of the nationally significant infrastructure planning process and the considerations that will need to be taken into account by developers.”

I was reassured when I read that. I thought, “Good. We’re not exactly clear what the process will be and we’re not entirely sure what sorts of infrastructure projects it will relate to, but all we have to do is be patient and wait for the guidance, which will tell us all those things.” Unfortunately, the draft guidance does not do that job.

Taking the point about the infrastructure to which housing can be attached, the guidance just says:

“The Government does not propose to place limits on the categories of infrastructure project that may include housing.”

We are technically none the wiser and just have to assume that it could be any sort of infrastructure in almost any circumstances. Paragraph 20 outlines some of the restrictions that will be placed on the building of housing in certain areas and provides four examples, but it is unclear whether they are examples or the totality. The restrictions include

“sites protected under the Birds and Habitats Directives and/or designated as Sites of Special Scientific Interest;”

That is a good thing. Also included are:

“land designated as Green Belt, Local Green Space, an Area of Outstanding Natural Beauty, Heritage Coast or within a National Park (or the Broads Authority);”—

again, we very much welcome that—

“designated heritage assets; and locations at risk of flooding or coastal erosion.”

Is that a definitive list or are they examples? The guidance is not clear whether they are the sorts of things that local authorities should take into account or whether they are the only things. Given the potentially extensive application of the clause, it is important that we get that information.

I will not detain the Committee any further on the guidance except to say to the Minister that I have been through it and cannot see where it sets out in detail how housing applications will be considered at each stage of the national infrastructure process. Will they have a particular designation, or will they just be considered as part of the overall scheme? Some clarification from the Minister would be extremely helpful.

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

It is a pleasure to serve under your chairmanship once again, Mr Gray. I will be relatively brief, but I speak to raise concerns about clause 107 with a particular example from my constituency in mind. The Mayor of London and Transport for London are consulting on a nationally significant infrastructure project, the Silvertown tunnel, which is a road tunnel linking the Greenwich peninsula to Silvertown Way north of the river. It is a locally contentious proposal for a variety of reasons, but primarily due to its impact on the local road network and already dire air quality.

Like my hon. Friend the Member for City of Durham, I see nothing wrong with the principle of allowing housing to be built and this mechanism to be used if it is functionally linked to the infrastructure project under consideration. However, I have particular concerns about new subsection (4B)(b) which states:

“‘Related housing development’ means development which… is on the same site as, or is next to or close”.

I hope that the Minister can reassure me on this. I am concerned that in an infrastructure project such as that road tunnel, where I can see no housing that is functionally linked, this clause could allow for housing to be built in a different part of the borough, bypassing local accountability and any community influence, simply because there is a nationally significant infrastructure project in the vicinity and we have no idea what that means. I press the Minister to reassure me about what

“or is next to or close to”

might mean and whether any guidance will be forthcoming, or, if not, whether he will consider clarifying that part of the Bill. It is important that the housing that might be delivered through this mechanism is functionally, or more directly, linked to the infrastructure we are discussing than it might otherwise be.

--- Later in debate ---

[Dr Blackman-Woods]

Well, is not that interesting? We obviously have a convert to the cause in the Prime Minister, who will clearly join us in our efforts to get the pursuit of happiness built into the planning system. Let us hope he will send a quick text to the Minister so that we can get agreement on the amendment, because an excellent outcome to our deliberations would be to ensure that we got a planning system with some vision for the future built around sustainability principles, with wellbeing at its centre.

The amendment specifically asks the Minister to ensure that: urban development corporations have land value capture attached to them; there is community ownership of land and long-term stewardship of assets; there are mixed tenure homes affordable for ordinary people; there is a strong local jobs offer in the garden city; and there is high-quality, imaginative design and generous green space, linked to a wider natural environment, including a mix of public and private networks of well managed, high-quality gardens, tree-lined streets and open spaces.

The Opposition think it is extremely good that Ebbsfleet is being put forward as a garden city. The Labour party thought about that and put down the foundations for it about a decade ago. It is great to see that coming to fruition, but calling something a garden city does not make it a garden city. If it is going to be a garden city, it has to have high-quality gardens, tree-lined streets and open spaces, as well as

“opportunities for residents to grow their own food, including generous allotments”,

a strong cultural offer, and

“recreational and shopping facilities in walkable neighbourhoods”.

I do not think that we have touched on this so far in our deliberations, but if we are to produce and build truly sustainable communities, we have to think about how we encourage people to walk or cycle, or how we connect them through good, publicly accessible transport systems.

We need built into the legislation the principles of what will make up a garden city such as Ebbsfleet or any future developments that will come under UDCs. Otherwise, I am not sure—the Minister might know another way—how it will deliver a garden city as opposed to a UDC that will simply deliver new homes. Those new homes are very welcome—we are not against them—but we are concerned about the fact that there is nothing to ensure that a garden city emerges in any way at all.

The Minister seems to think I do not get out enough, so I just want to reassure him that I do sometimes go to see new developments and I did go to see Ebbsfleet. The developers are very keen to have good infrastructure underpinning that development. However, the urban development corporation that underpins Ebbsfleet does not require them to do any of this. That does not seem satisfactory. It is called a garden city, yet there is nothing that makes it a garden city.

If I have missed something in what the Minister is bringing forward for these new development corporations, I apologise and he can correct me, but as I read what is in clauses 109 and 110, I cannot see anything that aims to put into the Bill that these urban development corporations must address issues of sustainability. We want, for example, to see really good-quality houses built, but we also want to see zero-carbon homes. That is what was meant—I quote the Government expressly—when they said their aim for Ebbsfleet and garden cities generally was to provide

“high quality, attractive and sustainably constructed housing”.

How can the Minister be sure that that will be achieved without having something in the Bill about how these development corporations must address issues of sustainability?

Opposition Members feel strongly about this issue. We have argued long and hard for a new generation of garden cities. Many organisations, including the Campaign to Protect Rural England, have written to the Minister and to the Committee urging them to take on board what is in the amendment and to put more in the Bill so that we can ensure that we have the sort of development we want to see—an attractive environment with workable housing and social facilities, an amazing, visionary new place to live, an amazing regeneration of an area that we can all be proud of.

[Matthew Pennycook]

I support the amendment. We all welcome development and new homes, but I strongly agree that garden cities and corporations, when they are bringing development forward, need to put sustainability and place making at the heart of their plans. That has a particular resonance with something that I am very passionate about, which is climate change and energy efficiency.

New subsection (2B)(e) would ensure that, in building new homes, UDCs would have to ensure that those homes and that development

“contribute to mitigation and adaptation to climate change in line with the objectives of the Climate Change Act 2008”.

We know that homes are central to the UK meeting its climate change targets and that meeting our EU obligations of 15% renewables by 2020 looks ever more precarious; a leaked letter from the Secretary of State only a few weeks back showed that. Homes have a crucial role to play.

The context at the moment for delivering sustainable homes is not great. The Government have scrapped the zero-carbon homes policy that was starting to bear fruit in many areas. The London Mayor has taken a different view and sought to put some of the provisions of that policy back in place through the London plan, and I welcome that. The context for bringing forward environmentally sustainable, high-quality homes has become more precarious and the amendment would go some way, in relation to UDCs, to making sure that sustainable homes are at the heart of what is built. That is important.

It goes back to the debate we had earlier. The hon. Members for Peterborough and for South Norfolk, and others, bemoaned the socialist architecture of the 1950s—I would call it brutalist, though they may not draw such a distinction—when homes and places for people to live were built that have not fared well over the decades. We have an obligation because the cost of retrofitting homes that fall below environmentally sustainable standards far outweighs that of the measures we need to put in place. We want to build homes that last for generations and are fit for people to live in. For that reason I support the amendment.

Housing and Planning Bill (Twelfth sitting)

Debate between Roberta Blackman-Woods and Matthew Pennycook

Thursday 3rd December 2015 Public Bill Committees

[Dr Blackman-Woods]

My hon. Friend makes an interesting point.

I would direct all members of the Committee to the detailed briefing we received from Tower Hamlets Council. I should have said before that it is just one example of the many briefings we have received demonstrating the impact that these measures will have on housing stock and tenants. It is worth Members reading that evidence, because it shows that many people, in many areas of London, will be plunged immediately into poverty levels of income if the scheme is applied as currently outlined. Indeed, that will happen not only in London but in any area with fairly high market rents, which means most of our cities. It also means some of our more rural areas, because there is such a dearth of social housing that there is real pressure on housing stock, so market rents are quite high. It is important, therefore, that we take time to look at the impact of these measures.

We have also had an important briefing from the Joseph Rowntree Foundation, which says:

“The threshold at which ‘high income’ is reached will be…important.”

It also says that its research shows

“that this proposed threshold may be too blunt to accurately reflect the differing needs of households. Each year, we ask members of the public to help us define a Minimum Income Standard, showing how much money people need, so that they can buy things that members of the public think that everyone in the UK should be able to afford. The results of this exercise for 2015 show that a couple with two children would need to earn at least £20,000 each to achieve a basic standard of living.”

Yet here we have people earning much less than that having a lot more of their income taken up by housing costs. The foundation says that the measure will plunge more people into poverty.

[Matthew Pennycook]

Does my hon. Friend agree that equivalised resources are a thorny issue that the Government have encountered before with child benefit and the household benefit cap level? A blunt gross household income threshold does not take into account the needs of different-sized families.

[Dr Blackman-Woods]

I absolutely agree. The Joseph Rowntree Foundation emphases the point about not having a cliff edge and notes that schemes can be carefully tapered. That has happened to a degree with universal credit, so a model that could be applied is already in place. The other point it makes strongly is:

“The threshold for ‘pay-to-stay’ requires sensitive definition, and a taper for rent increases should be included to avoid work disincentives.”

To counter the point made by Conservative Members earlier, there could be huge work disincentives if we do not get the thresholds and tapers correct. Otherwise, if someone were to move from a social rent of £90 a week to a market rent of £200 a week and get only a marginal increase in their income, they would have to think twice about taking on additional hours or a promotion at work. It is therefore important that the detail of the scheme is right.

Housing and Planning Bill (Thirteenth sitting)

Debate between Roberta Blackman-Woods and Matthew Pennycook

Thursday 3rd December 2015 Public Bill Committees

[Dr Blackman-Woods]

My hon. Friend makes an interesting point, which I hope we will discuss when we come to subsequent amendments in the group because all of them are about trying to get information from the Minister about how the scheme will work in practice for local authorities. In particular, the councils are coming forward to us to say that they are extremely concerned about the making of some arbitrary estimate—and we must understand that that is what it is, at the moment, because the Government have not given us any information on how it will be arrived at.

Milton Keynes Council, for example, has written:

“We are concerned that the Bill seeks to establish a process for taking a sum of money from councils based on a national estimate that will unlikely reflect actual local conditions. Councils, like housing associations, should be able to retain the additional income generated from these rents to build new homes.”

That is exactly the point that my hon. Friend the Member for Erith and Thamesmead was making. The council added:

“This would have far greater benefits for local communities than the money going to the Treasury.”

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

My hon. Friend is making an important point. Does she agree with me about the earlier point made by the hon. Member for South Norfolk? It might be a good one, in the sense that housing associations may be able to use their funds to do more innovative things to meet housing need, but that option will not be available to local authorities because they are being treated differently.

--- Later in debate ---

[Dr Blackman-Woods]

Absolutely; my hon. Friend makes an excellent point. If the Government were genuinely committed to increasing the number of affordable housing units in this country and increasing housing supply across all tenures, they would take the opportunity to use this income to provide additional housing, rather than squirreling it away in the Treasury—we know not where; we know not for what purpose.

[Matthew Pennycook]

We do know where, in the sense that the Government are very clear in the impact assessment that one outcome that they want is a contribution to deficit reduction. I can understand that, because they are not making a great job of it. I can understand why they would want to squirrel the money away, but does my hon. Friend not agree that, given the level of housing need and the housing crisis, it is important that all the funds, if they are to be taken away, should be directed at meeting housing need, not filling the coffers in the Treasury?

[The Chair]

I call Roberta Blackman-Woods to respond within the terms of the amendments.

Housing and Planning Bill (Eleventh sitting)

Debate between Roberta Blackman-Woods and Matthew Pennycook

Tuesday 1st December 2015 Public Bill Committees

[Dr Blackman-Woods]

Labour Members think that clauses 62 to 72 contain some of the worst aspects of the Bill. We are certainly interested to hear from the Minister whether he thinks it is localist to insist that local authorities sell off their high-value council housing in order to pay for the right-to-buy scheme, which, as a number of Committee members will know, is seen out in the real world largely as the forced sale of council housing. We seek in this amendment and others to require the Government to ensure that no more demands than absolutely necessary are placed on local authorities to fund the right to buy.

We have many concerns about how such homes will be replaced, and about how the Government will estimate the income that they will require local authorities to pay. I wondered last year, when the Government produced a consultation paper on transparency in social housing assets value, what they had in mind. It seemed not a bad thing on the face of it to have some information about the value of assets in the social housing sector.

However, when the consultation paper was issued and when the Government published their response in November 2014, it was not immediately apparent what they had in mind, because a number of local authorities that responded said, “Yes, we think it’s a fairly good idea that we get some information about the value of our assets. We already do this partly,” or “We already do this sometimes, internally; why do the Government want us to do this so immediately—by April 2015—without giving us adequate time to put a proper valuation system in place? Indeed, why is it restricted to authorities that have a housing revenue account?” I could go on. As I said, people were not necessarily against having some say that would put a valuation on council stock, but it was not apparent to a lot of people who were responding to the consultation why that information would be needed in the way that it was requested by the Government or in the particular timeframe.

I raised that at the beginning because it means that, somewhere along the line, for one reason or another, the Government thought about the value of local authority stock and, perhaps, what it could be used for. It is interesting that a number of the comments that came forward eventually into the Conservative party manifesto said that, under the consultation—and, indeed, more widely—it was seeking to question the efficiency of the use of council stock. This high-value housing was being used to support and house poor families, which perhaps was not an efficient use of council housing stock. I am paraphrasing, and trying to describe the intention to the Committee. If Government Members want to correct me on that supposition, I am happy to take interventions, but outside that supposition I am not sure what is meant by “efficiency”.

What came forward from the Conservative party manifesto was that there would be a question about whether using high-value housing stock with a social rent attached to it to house people who were desperately in need of affordable social housing was the most efficient use. The Conservative view was that the housing could be sold off to fund a right to buy; that, regardless of whether it was going to be sold or not, a levy would then be attached to it; that local authorities, regardless of whether they were able, or wished, to sell the property and remove it from the housing stock, would have to do so; and that the estimate of income would be applied. That is one of the things we find most difficult about the clause. That is why we have tabled amendments that would limit the circumstances when it could be applied but would ensure that, in addition to the cost of selling the stock, there would be an indication that the stock would be replaced in a similar way and in a similar area, so as not to remove from the stock of housing available to local authorities much needed social rented property, which is vital to house the most vulnerable in our communities.

We know that, under clause 62, the Secretary of State may make a determination that requires local authorities to make payment to the Exchequer based on an estimate of how much high-value housing the local authority expects to become vacant in the upcoming financial year. That is what we are seeking to address with our amendment. We already know that the Minister has no definite information about the number of high-value housing units that will become vacant in the coming years. We know that because we do not know how much high-value housing there is. It is difficult to determine how much high-value housing will become vacant if we do not know how much high-value housing there is in the first place. We do not know a great deal about either of those things.

We do think that the numbers of vacant properties that come forward will be much more limited than the Minister has perhaps estimated. That means that payments to the Secretary of State may in fact be higher than the total grant paid in that year to private registered providers in respect of right-to-buy discounts.

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

I asked my local authority for an estimate of how many expensive council homes would become vacant each year, and the estimate that it gave me was 19. That puts the matter in context. If they are not available in a borough such as mine in inner London, in parts of which the land and house prices are rising very rapidly, it will be a case of being forced to fall back on a more direct levy on local authorities.

[Dr Blackman-Woods]

My hon. Friend makes a vital point and helps to emphasise what Opposition Members are saying, which is that we have grave concerns about how the estimate will work in practice. It could bear no relation to reality whatever. I would have thought that it was very important for the Minister to have a much clearer idea of the number of homes that will become vacant and the amount of money that will be attached to them. In fact, we seem to be hearing—my hon. Friend has just made this point very well—that the numbers of vacant properties coming forward that are deemed to be of high value, however that is to be determined, are in fact limited.

Savills, the property adviser, estimates that the Government are likely to raise only £3.2 billion a year from 5,500 council home sales. Savills says that that is well below the projection made by the Conservative party of £4.5 billion in receipts a year from 15,000 sales. As we can see, that is quite a discrepancy in terms not only of the numbers of homes that will become available under the clause, but of the amount of money that will be raised.

Amendment 157 is designed to ensure that local authorities do not lose out and, ultimately, to ensure that the powers given to the Secretary of State in clause 62 are not used as a power of general taxation. We feel that that might be the case if the estimate bears no relation to reality—a levy might simply be placed on local authorities that have council housing stock. We are deeply concerned about what the measure might mean, and not only in terms of loss of stock if local authorities do sell the homes. We think that, whether they decide to sell the homes or not, they will not raise the amount of money that the Government thinks they should and therefore that a levy will be applied to them. That could be instead of selling the homes, but it is more likely that it would be in addition to that.

Housing and Planning Bill (Fourth sitting)

Debate between Roberta Blackman-Woods and Matthew Pennycook

Thursday 19th November 2015 Public Bill Committees

[Dr Blackman-Woods]

I accept that the hon. Gentleman is at least seeking to address the question that I was asking. The key issue is not whether it was a manifesto commitment, but what is underpinning it. However, I dispute his contention that the Government are delivering in the Bill and elsewhere the housing that we need across all tenures. Patently they are not, because only about half the number of homes that we need are being delivered. The numbers for social rent are also derisory.

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

There are clearly two issues here; one is whether starter homes will cannibalise other forms of affordable housing, and the other issue is a narrow one that picks up on a comment just made by the hon. Member for Wimbledon, which is whether the Government can meet their own target of 200,000 starter homes during this Parliament. Nothing I have seen in the evidence that we have had from witnesses suggests that. I am sure that, away from the Committee, the Department is scrambling to figure out how, given the above-average costs of the sites that we are talking about and the obligations already in the national planning policy framework, we will get anywhere near 200,000 homes a year. It is a question of supply and the impact on affordable housing. Does she agree that there is little in the Bill to prove that the Government will get anywhere near that 200,000 target?

Housing and Planning Bill (Fifth sitting)

Debate between Roberta Blackman-Woods and Matthew Pennycook

Thursday 19th November 2015 Public Bill Committees

[Dr Blackman-Woods]

Yes, but those are the figures that the Government put on the face of the Bill, so those are the amounts that we want to refer to. I expect that in many areas developers will seek to build starter homes up to the level of the cap, but the hon. Gentleman is of course right that in some areas they might not. We will look at the evidence in a couple of years’ time to see how many homes are being built below the level of the cap.

Shelter is throwing out a serious challenge to the Government. Its analysis shows that the starter home programme will not help the majority of people on the new minimum wage, and in many areas in England it will not help people on average earnings either. Shelter considered how the policy will affect different household types in each local authority area in England, and on a range of different salaries, to assess whether they would be able to afford a starter home. It concluded that starter homes for families earning average wages will be unaffordable in more than half—58%—of local authorities across the country in 2020. Perhaps that addresses the point made by the hon. Member for Peterborough. Families on the new minimum wage, which the Government call the national living wage, will be able to afford a starter home in only 2% of authorities. Single people on low or average wages can more or less forget it, as they will be unable to afford a starter home in the majority of local authority areas.

London, the south-east and the east contain the largest number of areas in which affordable starter homes could be built under the scheme because of the high demand, yet they are the least affordable. Shelter concludes that starter homes will primarily help those on higher than average incomes and couples without children. That might be the Government’s intention. However, if they intend to help those earning more than the average income and couples without children, they should make that clear. That begs the question, which we were considering earlier: how are all the other categories of people supposed to get on to the housing ladder?

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

My hon. Friend makes a very good point. Surely the aim of the Bill is to increase the pool of home ownership to enable people who are otherwise unable to buy on the open market to afford a home. I have asked the Minister repeatedly—I hope he can touch on this point—what assessment or analysis has been done to suggest that the Bill will enable people, in the numbers he hopes to see, to afford homes that they would otherwise be unable to buy on the open market. My fear is that the Bill will hand equity to people in other areas who are already able to buy.

[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.

--- Later in debate ---

[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.”

[Matthew Pennycook]

This is an important point, because it is bound up with how the product is financed, about which I am still concerned. The reversion of starter homes to full market rate after five years will interact with how the product is financed potentially in a way that is detrimental to the Government’s aims. There are problems with determining the underlying market price and how the reversion after five years might distort the market. Does my hon. Friend agree that there is a risk that lenders will not support the scheme in its current form? The Government could allow a degree of leeway and set the five-year reversion as a minimum, rather than a hard and fast rule.

[Dr Blackman-Woods]

Again, my hon. Friend makes an interesting point, which I will come to in a few moments. Developers and lenders have submitted a substantial amount of written evidence suggesting that the five-year rule may be a problem. I do not know to what extent the Minister has met mortgage providers to see whether their concerns can be overcome, but perhaps he will tell us in his response. I also do not know whether the Department has done any modelling. It would be quite interesting to find out what will happen to such homes in five years’ time, or whether there is an intention to find out what happened, such as whether people stayed in them for a long time or sold them, and if so who bought them. We can discuss that in a moment.

As the Government acknowledged in their response to the consultation, many respondents were in favour of the restrictions attached to starter homes lasting in perpetuity. We did not hear in the evidence session, and have not heard since, any reason from the Government as to why they chose to ignore the outcome of their own consultation. A huge amount of people want the discount to last beyond the five-year period. The amendment seeks to ensure that the discount is retained, so that it is not just the lucky few who already have their deposits saved who are able to benefit from the scheme.

After five years, the house will be sellable at the full market rate. The full value of—I will not call it a subsidy —the planning gain forgone then goes to the initial buyer. That is a direct transfer of assets from the state in terms of money forgone to those individuals. It is possible to make an argument in favour of such transfers, but it begs a question about whether such transfers should relate only to those individuals or whether they should be there on an ongoing basis for anyone who buys that property.

Returning to the Government’s expressed aim for the policy, namely the equality of opportunity for people to get on the property ladder, why should the discount on such homes be limited? On Tuesday, the Minister spoke of the tens of thousands of people who have registered an interest in the scheme. What about those for whom saving a sufficient deposit might take more than a few years? Will enough homes with the 20% discount exist?

The Minister expressed concern that keeping the restrictions in perpetuity would lead to a slowdown in building. Will he say more about that, because I was not exactly clear about what he meant? He said:

“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…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.”––[Official Report, Housing and Planning Public Bill Committee, 17 November 2015; c. 125, Q277.]

We understand that, but he would be helped in his objective to get that large number of houses delivered if those sold stayed as starter homes, because we would then have new ones as well as those already in existence. Surely that would be better, because that would widen the net of home ownership even further. By keeping a discount attached to such a home into the future, other first-time buyers could benefit from access to that property in addition to other new homes coming on to the market. That would create a larger pool of starter homes available at discount rather than what could be a small flow, despite the Minister’s aspirations, under the current policy.

A number of housing organisations have identified possible problems with the specific delivery of the policy, with restrictions that apply for only five years. They argue that developers might want to create differentiation between their market product and starter homes. Without a longer restriction, there is little motivation for buyers to purchase the market homes, which could lead to starter homes being sharply downgraded in design and specification to create greater differentiation. Similarly, lenders do not know how to value a product that changes in value so quickly, so they could struggle to provide mortgages to potential buyers.

Those problems have been brought to the Committee by both developers and lenders, and there does not appear to be anything in the Bill to ensure that starter homes are of a similar quality to other homes in the same development. It would be helpful and give developers reassurance if the Bill made clear to developers that starter homes must be of the same quality and similar design to other homes in such developments and that they would not be subject to downgrade in terms of quality of supply or building. Has any negotiation taken place with lenders so that they know how to value the mortgage product?

Some have also suggested that if the Minister thinks perpetuity is too long—he might think that—is he willing to consider putting in place a discount for some time beyond five years but less than perpetuity, such as 10 or 25 years? That would give more flexibility in the system. Again, perhaps local authorities or the local community could have a role in saying what timeframe they think is necessary for restrictions on starter homes to remain, bearing in mind the local market conditions. If there is a ready supply of starter homes, they might think that five years is enough, but if there is no such supply or if the homes are not coming though quickly enough, perhaps they would decide that restrictions need to be kept for, let us say, a 25-year period. To allow room for negotiation would encourage competition and greater innovation and the section 106 process could be used to ensure that building standards in developments remain high.

As I said, we must remember that the 20% discount offered represents a loss to areas in alternative expenditure, and not an insignificant one. A 20% discount on the average price of a first-time buyer home in England in 2014 would be worth about £42,000. As Shelter has told us, if the planned 200,000 starter homes are sold over time at the average price of a first-time buyer home, the discount would be £8.4 billion. That is a lot of money lost to infrastructure or other types of affordable housing.

--- Later in debate ---

[Dr Blackman-Woods]

I think that we understand that this is a manifesto commitment to increase the number of people who can access home ownership. We totally agree with that. We all want those who can to buy their own property, and we want to help people access home ownership. However, in doing so, we must ensure that those who cannot buy their own home, for whatever reason, are not crowded out of the market, and that those who would provide homes for people in such circumstances can still provide those homes. The evidence before us suggests that we are failing to deliver affordable —genuinely affordable—social rented homes for the people who need them, as well as failing to deliver homes in other tenures. It is as well as, not instead of.

[Matthew Pennycook]

My hon. Friend has got to the nub of the issue. Because of how starter homes will operate —the Bill leaves the negotiations to the local planning authority and the developer—what will happen in many cases, particularly in London and in my constituency, is that where the target level of starter homes, for example 20%, is the total amount of affordable housing on the site, the infrastructure might still be built but it will just drive down the level of other affordable housing in the negotiation. That is the real concern. It should not be an either/or.

[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”?

Housing and Planning Bill (Second sitting)

Debate between Roberta Blackman-Woods and Matthew Pennycook

Tuesday 10th November 2015 Public Bill Committees

[Matthew Pennycook]

Q 175 With the same 10-year entitled spending?

Tim Pinder: Yes. However, where I take slight issue with the definition of like for like is that the area that we work in has some incredibly high-value properties and high-value areas. I was just looking yesterday at some land in Prestbury, where we have properties that will be attractive under the right-to-buy provisions. We are looking at £1 million-plus per acre. Now, there is no way that we can compete in the market to purchase land and build new in that village. We would be able to replace for every home sold in Prestbury, but it would not necessarily be replaced in Prestbury. That is the disadvantage.

[Dr Blackman-Woods]

Q 176 In areas of low-value housing, do you accept that it might not be possible to do a one-for-one replacement in the area because it would cost perhaps two or three times as much to replace the home that has been sold than the value of the home itself?

Mark Patchitt: It is going to be a challenge. We expect the average sale price of our right-to-buy properties to be about £82,000 or £84,000. That is probably less than it will cost to replace it, like for like, with a rented property. On your previous point about like-for-like properties and where you build them, it is important that there is some flexibility about where we build so that we can get the maximum efficiency in how we are building so that we can do the deals on the land now and try to get the land to replace these properties. We will have to look at whether we can replace exactly for all the affordable rented sales, but certainly we would expect to be able to replace affordable accommodation one for one.

Housing and Planning Bill (First sitting)

Debate between Roberta Blackman-Woods and Matthew Pennycook

Tuesday 10th November 2015 Public Bill Committees

[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.