Housing and Planning Bill (Second sitting)

Seema Kennedy Excerpts

Tuesday 10th November 2015 Public Bill Committees

[Helen Hayes]

Q 135 You both lead charities that seek to support homeless people. Will the starter homes benefit any of the clients you seek to help week in, week out?

Jon Sparkes: No. The clients we work with—about 8,000 clients a year—are living in shelters or sofa-surfing, and some of them are rough sleeping. There will not be a benefit to them from this. As Campbell said, that does not mean that it is not a good thing for the people it does help, but it will not help the clients we work with.

Campbell Robb: From our analysis, it genuinely will not help most people who are on an average wage. It should be the aspiration, I think, of any home ownership policy to open that up. That is where we see the problems with it. It would not help many of our clients.

[Seema Kennedy (South Ribble) (Con)]

Q 136 Mr Sparkes, I am looking at paragraph 14b of your submission, in which you say:

“Outside of the North of England, Starter Homes will be unaffordable to the majority of households on wages below the median”.

What is the north of England, first of all, in geographical terms? How many people comprise the north of England? I am interested in how you came to that.

Jon Sparkes: I have to say, we lifted that item completely from Shelter’s research, so I will pass it to Campbell.

Campbell Robb: I do not know off the top of my head what the north of England is in terms of the analysis, but I will happily send the detailed geography to the Committee. In terms of incomes and numbers of people, we took Government statistics on average wages and national income and used that analysis against what the cost of starter homes would be, on average, what an average deposit would be and what a normal deposit would be. That is the analysis data.

[Seema Kennedy]

Q 137 I appreciate that you are going to submit it. It seems to me, as somebody who represents a northern constituency, that the north is a term that is sometimes bandied around. Do you accept that it is quite a lot of people?

Campbell Robb: Yes.

[Seema Kennedy]

Q 138 And comprising a large geographical space, with massive variations between one area and another?

Campbell Robb: Absolutely, but the analysis we did across the whole country was based on national Government statistics on average wages. I am sure we can do a bigger breakdown, if that would be helpful.

[Seema Kennedy]

Q 139 I would appreciate that. Do you accept, though, that when you say that outside the north of England they will be unaffordable—we do not accept that—therefore they will be affordable in large parts of the north of England?

Campbell Robb: Potentially, yes, because the average income is lower and the cost of housing as we go further is generally cheaper—not always, but consistently; whereas the south-east, as you know, dominated by London, is far more expensive, but there are pockets around the country, in England and in Scotland, where house prices are out of control as well.

[Seema Kennedy]

Q 140 On that London point, we heard from the Deputy Mayor for housing this morning and he said that first-time buyers’ house prices were £290,000.

Campbell Robb: That sounds about right.

[Seema Kennedy]

Q 141 You accept that that is right? It is well below the cap.

Campbell Robb: £290,000 is the average. It depends on the type of property. That could be a one-bedroom property.

[Seema Kennedy]

Q 142 This is for a first-time buyer.

Campbell Robb: Indeed. The mix of starter homes includes family homes as well, so there is a price range. We are not sure yet; we are still waiting to hear what range of types of starter homes will come forward from builders and from the Government, because there will be a range of variations.

[Andrew Griffiths (Burton) (Con)]

Q 143 Mr Robb, may I come back to you on that? I am sure you would not want to leave the Committee with the wrong impression.

Campbell Robb: Absolutely not.

--- Later in debate ---

[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.

[Seema Kennedy]

Q 177 Mr Patchitt, you said that when your housing association took the decision to vote for the voluntary agreement, you consulted your tenants and your customers.

Mark Patchitt: We did, yes.

[Seema Kennedy]

Q 178 Could you expand a little on how you did that? Do you think that they were interested in the proposals of the Bill overall and this idea of starter homes and expanding?

Mark Patchitt: We consulted them specifically about the voluntary right-to-buy offer. That was all that we consulted them on. We consulted our board and our residents at the same time. That was on the basis that if they voted no, there would potentially be a statutory right to buy, and if they voted yes that would be in favour of the voluntary right. They saw the benefits of the voluntary deal over a statutory deal in preserving some of the flexibilities that we had hoped for, and it was very much on the basis that they wanted one-to-one replacement. They did not want to see a net loss of affordable homes in Riverside, and they thought that was the best way of achieving that.

[Seema Kennedy]

Q 179 Can I ask the other panellists whether they went through a similar process? I am sure that you did on your boards, but was there any of that sort of consultation with the actual people living in the homes?

Tim Pinder: We did not, no.

Sue Chalkley: No, we did not.

David Montague: Nor did we. We consulted our board, which includes residents, and we have a resident board.

[Seema Kennedy]

Q 180 You have representatives on the board. Mr Pinder, you are based in Macclesfield, and you have cited the example of Wilmslow. Where else do you have homes?

Tim Pinder: We have homes in some very affluent parts of the borough, in places such as Alderley Edge, Wilmslow, Knutsford and Bollington. I think that is interesting because quite often the housing debate is characterised by a kind of north-south divide, which is far too crude.

[Seema Kennedy]

Q 181 That is why I asked, because I know the area well. You gave the example of Wilmslow for a family on £40,000. How far would that go? Would you get a house in Warrington or in Macclesfield itself?

Tim Pinder: Macclesfield is lower value than those areas, and even within some of those towns with a reputation for being incredibly affluent, there are lower value properties and lower value areas. It is quite a complex mix.

[Seema Kennedy]

Q 182 Would you accept that the example that you gave of a family spending 56% of their income is an outlier?

Tim Pinder: I would not say that it is an outlier. There are more properties in that field than there are lower value ones. I would say that that is more typical than not.

[Seema Kennedy]

Q 183 Perhaps that is because of that stock transfer from Macclesfield Borough Council, but surely in the rest of Cheshire there are definite examples where this sort of percentage would not be paid.

Tim Pinder: Absolutely. I would agree with that.

[Helen Hayes]

Q 184 I wanted to ask your views on the pay-to-stay measures in the Bill. I would be interested in your views on what you think the impact of pay-to-stay will be on your organisation, administratively and in terms of your capacity, on your tenants and your relationship with them, and also on the wider communities that you manage as housing associations.

David Montague: I will start by saying that we welcome any flexibility on the way that we set our rents. As charities, we will always use that flexibility carefully and prudently. We would prefer to see that flexibility extended across all of our stock, particularly given that we are not sure what will happen to rents in five years’ time. We think that the best people to set rents are the boards of charitable housing associations. We broadly welcome any flexibility that we are given.

On this specific measure, we think that pay-to-stay, for those who can afford to, will equal right to buy. It will encourage people to exercise their right to buy. They will have a choice of either seeing their rent doubled or accepting a discount of up to £100,000 to buy their home. It is a big incentive to buy their home. The difficulty is that if someone is living in a one-bedroom flat in Westminster and they cannot exercise their right to buy, then they could be stuck. That is why we welcome the flexibility that we are being offered through the voluntary deal, which will mean that the discount is portable —people can take it to a more affordable area. We are concerned about the administrative complexity of pay-to-stay. It is going to be a bit of a burden, and we are not yet convinced that the income we will receive will outweigh the cost of collection. It will require co-operation between us and statutory agencies in a way that has not happened before.

We would like to see some of the detail as well. We are not sure whether the same rules apply to a single person on £40,000 as to a couple on £40,000. There is a danger if it does that we could be drawing more people into the benefit system as a result of this policy.

Sue Chalkley: If it was a simple system to administer, we think that pay-to-stay might help to offset some of the rent reductions that we are facing. However, there are rural considerations with this initiative as well, in that many of the schemes that we have built for rural communities have been built with an undertaking that we will hold them as affordable housing in perpetuity. This could trump that deal with the rural community and cause a lack of confidence going forward, so that is a concern.

The other issue from the point of view of a rural community is that many families have seasonal part-time work and they have a portfolio of jobs, so it will be potentially quite complex to decide what the income is and how the rent is calculated on that. On top of that, there is plenty of evidence to show that living costs in rural communities are between 10% and 20% higher than they are in urban communities. Should the taper be in some way tapered to reflect the difference between rural and urban communities? We really just call for this to be fully rural-proofed.

Tim Pinder: We welcome pay-to-stay. I said before that our association had taken its view on right to buy because of its charitable status. On the same basis, pay-to-stay makes sense to us as a charity because to maximise our charitable assets, they should be going to the people in greatest need. We actually welcome it as a principle. I think, again, there is a bit of a potential conflict here with the Government’s intention to have us reclassified as private bodies, because they are talking about a legislative provision rather than a voluntary arrangement.

Some of our concerns are around the proposed level. For us, it is £30,000 outside London. From April 2015, a couple on the living wage would be at that £30,000 mark, so in our view £30,000 does not feel like the right level to reflect a high income household. Some of the details around how this would work in practice also give us some concern. If you are £1 above the £30,000 limit, does that immediately mean that you will move to market rent? If so, you are suddenly faced with an extra £3,000 rent per annum, which seems to fly in the face of the whole concept of “work must pay” and people bettering themselves in a way that does not have a financial disincentive. We very much welcome the principle. We would very much like, perhaps through the National Housing Federation, to work with the Department for Communities and Local Government to look at how that would pan out in practice.