Lord Stoneham of Droxford
To ask Her Majesty’s Government what progress they expect to make in increasing housebuilding by May 2015.
Lord Stoneham of Droxford (LD)
My Lords, I start by declaring my interest in the register as chair of Housing 21, a housing association. I thank my noble friends Lord Borwick and Lord Oakeshott for taking part in this debate and also the noble Lord, Lord McKenzie, and my noble friend Lady Stowell. I hope what we lack in quantity we will make up in the quality of the debate. I also congratulate my noble friend Lady Stowell on her appointment as Parliamentary Under-Secretary of State for Communities and Local Government and apologise for putting her on the spot so soon after that appointment.
I tabled this debate six months ago. My main motivation was to assess the progress on housebuilding in this Parliament and to monitor the progress on the government strategy as outlined in Laying the Foundations: A Housing Strategy for England. The document was hailed by the Prime Minister and Deputy Prime Minister as a perfect example of the approach of the coalition, which took decisions that were right for the long term and not for the headlines. In the foreword, they committed that the Government,
“will unlock the housing market, get Britain building again, and give many more people the satisfaction and security that comes from stepping over their own threshold. These plans are ambitious—but we are determined to deliver on them”.
It is nearly two years since that housing strategy document was published, and it has to be said that the first year, in terms of the number of houses built, was disappointing. In 2012-13, only 108,000 houses were completed. We have to face the fact that, after the 2008 economic meltdown, which had an overheated speculative housing boom and bust at its epicentre, restoring confidence and getting finance flowing again was never going to be a quick fix. There was also the adjustment of a new social housing programme, which has taken time to bed in and get under way.
However, there are signs of life now in the housing market. The number of new homes completed in the last quarter was up 25%, housing starts were up by a third and stamp duty revenues were up. That is clearly a change from a year ago. Housing was then very much seen, certainly by those who thought we should give greater priority to it, as the best possible kick-start to the economy. Now, with signs of recovery, our main concern must be that demand does not outstrip supply. We have to refocus on the shortfall between the number of houses built and the formation of new households, which requires houses to be built at double the rate we are building them at the moment. I hope the Minister will be able to tell us what the Government’s latest forecast is for new homes this year and whether they are confident that they can build the projected 170,000 affordable homes by 2015 that they set out in their housing strategy. That will represent significant progress on the number built in the last five years of the previous Government.
With signs of recovery, and some initial concerns about house prices rising in the south-east and London, housing strategy requires a long-term focus. We must avoid the quick fix that ends in another burst housing bubble and which will only compromise the chances of more people owning their own home or renting one at an affordable rent. We must not forget the many lessons of past housing cycles, which have occurred under Governments of all persuasions, but particularly under the previous one in the so-called good times between 1999 and 2007. The number of new houses built annually during that period rose by something like 30%, from 120,000 a year to 160,000 at the peak. But prices rose by 173% and mortgage loans increased by 182%. The central problem is that housing is a cyclical industry where price inflation has been the driver of profitability in the short term and land asset appreciation has been endemic to a business model that eventually hits the buffers.
Each boom and bust has not only shaken financial confidence but has sapped capacity in the sector. Each cycle has made the inelasticities of the supply chain even less subtle. Housebuilders are rightly going to be cautious following the experience of the bust times. They are initially going to be motivated to make marginal additions on their most profitable sites. They will even have some interest in allowing prices to rise rather than in providing volume to counter the higher prices. There has been a huge reduction in capacity in the sector, and skilled workers and developers have left the scene. Already there are signs that building costs are moving up with the initial recovery.
I suggest three guidelines for the Government. First, given the very dysfunctional housing market, they will need to intervene more than they want to. Particularly as recovery takes hold, they will have to work on opening up land supply and making sure that our technical colleges provide the new skills that are going to be needed to fill the capacity shortages. They will have to monitor competition in the market with the smaller number of developers in play.
Secondly, they will have to watch like a hawk their demand-led initiatives, such as Help to Buy, to make sure that they do not simply lead to price inflation. Thirdly, although 75% of new build is in the private sector by developers, they need to balance their attention with initiatives for social and council houses and for self-build to develop the full potential of new capacity and affordable housing. Doubling building capacity must be our objective, and it will probably take another full Parliament to get there.
What is needed with these guidelines? It is all there in the housing strategy document, but the strategy now has to concentrate on easing the supply constraints in the sector. Let us look first at the private sector. Planning flexibilities have to show through to release more land to be used. We have to make sure that the new homes bonus for local authorities provides an incentive to release development land. New players have got to be encouraged into the market. The Government were right to give more support to encourage self-build, which has been a weak component of the private sector after the destructive impact of stop-go cycles. Price stability has to be an important objective for living standards. Energy bills pall into insignificance compared with the cost of housing.
We have been very lucky to have low interest rates, but we do not want people fooled into thinking that they can continue. The greatest concern is that Help to Buy will stoke up prices in the south-east, although it will probably still have a role to play in other parts of the country. Will the Government consider reverting to a regionally focused Help to Buy scheme if house prices get out of hand in London and the south-east? Will the Minister update us on the progress the Government have been making with build now, pay later, the Growing Places fund and initiatives to stimulate self-build? Is the announcement on the much needed larger developments for the new generation of garden cities now imminent?
In the social housing sector, there is still uncertainty about future funding. If it delivers the Government’s target of 170,000 affordable homes, it would demonstrate its capacity potential. The Government’s proposal to develop a guaranteed bond scheme linked to potential institutional investment has the potential to fund a further 60,000 homes. What impact on extra housing supply can now be expected from the guaranteed loans for social and private rented landlords provided in the Government’s strategy?
In the council housing sector, now that councils have control of their housing revenue accounts, is the improving economic situation not a good time to review whether council investment in housing should be included in the public borrowing limit? We need to put councils on an equal footing with housing associations. No other European country has as strict accountancy arrangements as we do. Frankly, if we want to tackle some of the problems of our own council estates, they need development, regeneration and investment. Is this not a good time for the Government to review the anomaly that exists between councils and housing associations with regard to the treatment of their investment in the public accounts? If they did, it could be a source of new funding.
Finally, with so much to do and deliver, we must question whether the Department for Communities and Local Government has the resources and leadership to do all this. The Labour Government had nine Ministers for Housing. The coalition is now on its third. Yet the position of Minister of State for housing has disappeared. Can the Minister tell us how, in the face of the many challenges and the need for the housing sector to be galvanised to increase housebuilding, we can manage without a Heseltine or a Macmillan figure to meet the strategic housing needs of the country?
Housing is not just key to improving the social fabric of the nation; it has often been at the heart of the health and the crises of the economy. Never has there been such a requirement for a strong strategic focus aimed at long-term stability. The Government have made a start but they need to prove their grasp in the next 18 months, and we need to show that we take decisions that are right for the long term and not for the headlines.
Lord Borwick (Con)
My Lords, first, I declare my interests as shown in the register, particularly the directorships and shareholdings in two housing development companies—one developing up to 2,500 new houses in Bicester and another with plans for 10,000 houses in Sussex—and ownership of a farm in Scotland that may eventually be developed for houses and rail-related warehouses.
The history of our site in Bicester may be helpful in understanding the problems that beset our planning system. Planning for this non-controversial site, supported by the local authority, took only seven years from preparation of the first application to the grant of conditions and to the ability to start on site. This planning process cost us about £4 million. If the scheme was unusual, even revolutionary, it would probably have taken longer. It certainly suggests that any ambition to build on wholly new sites before May 2015 is impossible, and pretty doubtful before 2020.
In its report dated this month, An Analysis of Unimplemented Planning Permissions for Residential Dwellings 2013, the LGA suggests that the number of unimplemented planning permissions is about 400,000. However, I believe that there are serious flaws in the analysis. At present, our site in Bicester has permission for 1,585 houses, of which roughly 200 are built and occupied. Under the LGA analysis, I understand that the site is counted correctly as unfinished, but also as totally unimplemented, when the truth is that it is partly implemented.
The LGA figure of 400,000 unimplemented planning permissions is indeed scandalous—if true, which I doubt—but it is scandalously low, not high. The NPPF requires that councils should identify five years of housing land supply, of which at least the next three should be deliverable. Five years’ supply at the normal rate of housing production would imply a figure of 1 million houses, not 400,000.
My noble friend Lord Taylor of Goss Moor has been working hard, with tremendous success, to reduce 7,000 pages of planning guidance by 90%. But the problem is that the system does not really want to change. Any shortcut or acceleration of an ancient process is a risk without a reward. The risk is that a mistake will be taken to expensive appeal or judicial review, while the reward cannot be seen. There seems to be no advantage to a town or a council in becoming bigger. The established view is that new residents produce new problems and new costs. Property taxes that would galvanise an American town to growth are seen as irrelevant in the UK.
We all know that the costs of running the Government will require growth in the economy if we are to afford them. Furthermore, there is a shortage of cheap houses for the next generation, and our whole economy is distorted by the high value of houses in the south-east.
The admirable concept of localism has been taken by many as the right to do what they want—that is, nothing—rather than to influence what is really needed. What can be done about it? Perhaps I can make a few suggestions to the Minister. If we are to achieve growth in the production of social houses—and growth in commercial house numbers, too—councils must feel that there is an advantage to their organisation and their community in passing planning permissions.
The new homes bonus is a good scheme but perhaps too small to work. It seems from the figures that the number of planning approvals has gone up, but I am always worried about whether the same definitions are being used. I suggest that the best figures are for houses built and occupied, as there is no advantage to the country in having permissions granted but not used. What would happen if the new homes bonus was trebled, but for one-third of the time of the original scheme—that is, for two years rather than six—and the bonus paid only for new homes built and occupied? Moreover, it should be free to be used by the council, not top-sliced to pay for LEPs.
Will the Minister consider urging her colleagues in the Treasury to do something about stamp duty? Many noble Lords and the Government have been urging the country to build new homes, which is great. Well, how can a tax on new homes, such as stamp duty, help that process? A possible way to slow down something is to tax it. Can we please try the reverse? A route to be studied would be to ensure that stamp duty on residential houses was paid to the local planning authority rather than to the Treasury. That would further incentivise the authority to get houses built and sold. When the Treasury became used to not receiving the income from stamp duty, perhaps after three years, then the tax could be abolished entirely. Would that not be a marvellous development?
Lord Oakeshott of Seagrove Bay (LD)
My Lords, it is a pleasure to follow the noble Lord, Lord Borwick, and to welcome him to this House. He has a distinguished business career in manufacturing but clearly speaks with great knowledge and expertise about the housing market. Abolishing stamp duty is a nice idea, but I do not know where the money is coming from. Perhaps I can say to him that the best way to raise a significant amount of money without stopping housing supply is to have the Liberal Democrat mansion tax, which goes on existing property and so does not affect supply.
I should declare my interests in the register, as did the noble Lord, particularly the fact that I am chairman of OLIM Property Ltd, which is a commercial property investment management company. I have bought about £100 million-worth of property during the past year all over the country, from Belfast to Ipswich, Preston to Leeds and Peterhead to Exeter. Although I am not operating in the housing market, I am obviously pretty close to what is happening in the local economies in those areas.
There is a simple and very serious problem that house prices are horribly and unaffordably high in this country. I go beyond the people who argue for stability, and say that prices are too high and need to come down. There are two simple reasons for this. We have built far too few houses for many years and we have also, in terms of affordability, sold off so much of the social housing stock. Two million houses were sold since Mrs Thatcher introduced the policy in 1979, of which three-quarters of a million—no less—were sold under Blair and Brown.
Under both Governments we had a failure to build, and a failure even to use what houses we have to best advantage. We are therefore left today with £23 billion of housing benefit being poured down the drain. Much of it is actually spent on the same council houses which were sold off, but the rent now goes to private landlords.
The result of this long-term lack of supply can be seen today in the ratios of earnings to house prices, which is the key measure of affordability. You do not, if you are wise, take a mortgage on the basis of this week’s special mortgage offer. Mortgage rates go up and down, but obviously what matters long-term is how your earnings compare to what you pay for the house. If I were to advise someone to rush out and buy a house on very low mortgage rates today, to be honest I would be guilty of mortgage mis-selling.
Going back to 1997, when Labour came to power, English house prices were three and a half times median annual earnings. Ten years later mortgage lending had trebled but there had been no net increase at all in house building, with the same number being built. The cost of housing index had doubled to a ratio of 7.2 at the peak of the 2007 boom. On the latest official figures, which are for April 2012, 18 months ago, it had only slipped back to 6.7 times annual earnings.
It is very likely that, with house prices rising five times faster than average earnings, that ratio is right back up past the 2007 peak. As a very good map in the Guardian last Saturday showed, the ratio is already above that peak in very many local authorities. These are mainly, although not entirely, in the southern half of the country, all the way from Somerset to Suffolk, in Devon and even one or two in Lancashire. It is not just in the centre of London. For example, housing in Welwyn Hatfield, the constituency of former housing Minister Grant Shapps, is now unaffordable. There houses cost eight times local earnings, even higher than at the peak of the boom.
I have also done some work on auction results and the housing auction market. This is a real market where real volumes change hands. The numbers are quite large, about 5,000 houses a quarter. In the last quarter, July to September 2013, the average price of a house sold at auction across the country rose by 14%. It rose by 16% in London, but still actually by 10% in other parts of the country. That statistic is more up to date than the Government’s Land Registry figures, which are on completions, and it goes further back. House prices are rising fast, and I am afraid that that is accelerating.
My noble friend Lord Stoneham asked for a long-term focus on housing. I do not know if 40 years back is long enough, but I remember buying my first home in 1972. That was in rather similar conditions to today, during the Barber boom. There had been a great relaxation of credit, and house prices had already gone up 40% or so over the previous year. I had quite a struggle to buy a house priced at £8,500 with a £7,500 mortgage. Two years later I had to come to London to be a special adviser in the 1974 Government, and mortgage rates had then gone up to 14%. Having saved up on my own to be a first-time buyer, I then had to be a second stepper with the bank of mum and dad behind me to have any chance at all.
We have had many, many experiences in this country of wild fluctuations in interest rates. Rates may be a little more stable today, but there is clearly a great deal of concern about the way they are going. That is being expressed by commentators from all sorts of backgrounds. I have here the HSBC chief UK economist’s research from last week, which argues that house price inflation will not help the UK rebalance and points out the problems of supply.
To return to what the noble Lord, Lord Borwick, was talking about regarding resistance to development, I am not personally against a bit of nimbyism, “not in my back yard”. After all, that is local democracy and people are able to argue that. What we must fight against is the attitude there often seems to be of BANANAism. I do not know if your Lordships’ know about BANANAism, but it means “build absolutely nothing anywhere near anyone”. I am afraid that that is the attitude of some people.
For a variety of reasons, we have had a serious shortage of housebuilding for many, many years. Lately, as my noble friend Lord Stoneham has said, it has been creeping up to 110,000 or 120,000 a year. It was down a couple of years ago to the lowest level in peacetime, since 1923, so, though it is picking up, supply is still far, far below what is needed even to keep house prices stable, given the growth in population, given the growth in household formation. The best estimates are that we need something like 250,000 completions every year just to keep up with increasing demand. To make any impact on the problem and keep house prices down or even make them a bit more affordable, we would clearly need to be up at 300,000 a year.
I very much hope and believe that the Liberal Democrat manifesto at the next election will have a commitment to that. However, a commitment is one thing—getting on with progress towards it now is quite another. There has been quite a bit of talk about Help to Buy and whether that—as I believe it is—is quite dangerous, given the way it has come in, with a limit of 25 times national average earnings, £600,000 a year. Like my noble friend Lord Stoneham, I think it should be limited to areas where the housing market is not so overheated as the south-east of England. It certainly does not need to be at anything like that high a level when you consider that across a lot of the country house prices, certainly for first-time buyers, are much more like £100,000 or £150,000.
We have another problem. There are two reasons house prices did not fall as much as one would have expected during the crash, and why they have gone up faster than they otherwise would have done. One is, of course, quantitative easing—£370 billion of credit pumped into the economy—which was necessary to avoid the economic patient dying of a heart attack at the time but has a lot of serious after-effects. The other is the Funding for Lending scheme. Just in passing, again, if you think this is wild left-wingery from me, the chief executive of Legal & General, no less, was describing quantitative easing as a policy devised by the rich for the rich. There is no doubt that it has helped push up prices of all sorts of assets, including housing.
The Funding for Lending scheme of the Bank of England has significantly failed to do what it is meant to do, which is to get cash to small businesses. Instead, it has led to a flood of cheap credit in the mortgage market, which is not its point. The Bank of England and the Treasury, I believe, must refocus Funding for Lending on its proper task, which is to rebuild desperately needed business job growth, not to get the house price merry-go-round going again.
When Grant Shapps was Housing Minister, he did make a sustained—and, I thought, quite logical—case for stable house prices, even though I would like to see them lower. I am afraid now that he is party chairman, he seems to be almost in denial. The Government, I am afraid—Conservative Ministers, anyway—seem to be washing their hands of the high-house-price crisis, because that is what it is, in a way reminiscent of Pontius Pilate. We cannot pump up house prices unless we are much more radical about supply. I am afraid Help to Buy without far more active help to build is a potty policy.
Lord McKenzie of Luton (Lab)
My Lords, I thank the noble Lord, Lord Stoneham, for initiating this short debate. When he introduced it he referred to the noble Baroness, Lady Stowell, and welcomed her to the Front Bench. She is now a veteran of housing debates. This must be the third in a couple of weeks, with one to come next week. I enjoyed the contribution of the noble Lord, Lord Borwick, although I did not agree with much of it. I have enjoyed the contribution of the noble Lord, Lord Oakeshott, whom I found myself closer to. I am interested that he bought his first house in 1972 with a mortgage of £7,500. So did we. I think we were both at that time members of the Labour Party, so our histories have diverged a bit.
We know that housing is moving up the political agenda, and for good reason. We have a growing housing crisis because we are building less than half the number of homes we need to keep up with demand. The truth, as others have said, is that we have not been producing enough homes under successive Governments for some time. In the past three years the number of homes built has reached its lowest level in peacetime, since the 1920s.
The recent upturn in activity is to be welcomed, but there is a long way to go. Homelessness and rough-sleeping are increasing, and the number of families in temporary accommodation is rising. People are struggling to get mortgages to get on the housing ladder and there is a rapidly growing private rented sector where too many lack security, have to pay ever increasing rates and suffer poor quality accommodation. There are nearly 5 million people on local authority waiting lists and this housing shortage is central to the cost of living crisis. It now takes the average family more than 20 years to save for a deposit, and house prices are, I think, eight times the average wage. It is no wonder that home ownership has fallen for the first time in a century, and that there are now some 8.5 million people in private rented accommodation, spending an average of 41% of their income on rent.
If home ownership is to be a realistic aspiration for working people and rents are to be affordable, we need a step change in the scale of house building in this country. This will not, of course, be achieved overnight, and on present policy certainly not by 2015. We have seen a plethora of initiatives by this Government, but they have not delivered anywhere near what is required. On home ownership we have seen First Buy, launched in 2011 and closed in March of this year, followed by Help to Buy equity loans, followed by the NewBuy Guarantee Scheme and now Help to Buy brought forward from January 2014.
However, there are real concerns about the latest Help to Buy scheme. If the Government simply increase housing demand but do not act to increase housing supply, all that will happen is that house prices will be pushed up and up. The end result is that the very people that the policy should be helping—first-time buyers—will find it even harder to get on the housing ladder. How in touch are this Government who introduce a scheme allowing taxpayer-backed mortgages for homes worth up to £600,000 when the average house price in the UK is £245,000 and the average price paid by a first-time buyer if less than £200,000?
We are not the only ones voicing concerns; the Treasury Select Committee has done so, and the IMF has warned about its impact on rising prices. These issues have particular resonance in London and we have heard from the Business Secretary, Vince Cable, about soaring house prices being dangerous and unsustainable. The new homes bonus was designed to incentivise local authorities to approve new housing developments, but has yet failed to deliver.
In its report in March this year, the NAO concluded that there is,
“little evidence that the Bonus has yet made significant changes to local authorities’ behaviour towards increasing housing supply”.
On coming to office, the Government cut the budget for new affordable housing by 60% and put the strain on increased rent levels to fund such provision. Even then its claim to deliver 170,000 new homes by 2015 includes those commissioned by the previous Administration. However, the programme has got off to a slow start, and anyway, some half of the programme is back-end loaded and is due to be delivered only in the final year.
We will doubtless hear from the Minister about the reduction in the number of affordable homes under the Labour Government; in fact, the figure usually quoted is a reduction in the number of homes rented from local authorities and housing associations over the period, and does not take account of the wider stock of affordable housing. The reduction is a direct consequence of the Right to Buy programme, touched upon by the noble Lord, Lord Oakeshott, which is a policy that this Government are seeking to make more generous. In fact, under the previous Labour Government, nearly 2 million more homes were built in England, including half a million affordable homes, with 256,000 in the last five years.
It is not difficult to conclude in all of this that the patchwork of current initiatives will simply not produce the step change in housing provision which is required. We have a job as the Opposition to criticise, challenge and support where necessary the Government of the day. However, we are now doing more so that in May 2015, given the chance, we will be in a position to start seriously to close the gap between the homes that are currently being built and the homes that we need.
Ed Miliband and Hilary Benn have asked Sir Michael Lyons, supported by a panel of experts, to lead a new housing commission whose task will be to set out a road map for how an incoming Government can help secure a big change in the number of homes being built. Some of the policy solutions to a step change must include tackling land banking and speculation by looking at giving local authorities proper compulsory purchase powers so that they can buy, assemble and grant planning permission on land that is being hoarded and is holding back development and giving councils the power to charge people escalating fees for sitting on land with planning permission.
There must be planning to establish new towns and garden cities. The UK has never delivered a large uplift in housebuilding without large-scale development such as the post-war new towns. This will entail the creation of new town development corporations as public/private bodies with the power to raise finance, undertake building and provide infrastructure. It would also necessitate financial incentives and freedoms for local authorities within the scheme and a fast-track planning process under the nationally significant infrastructure planning regime.
We know that at present some areas want to grow to meet local housing demand but do not have land within their local authority boundary to do so. Neighbouring authorities block the building of badly needed homes and the duty to co-operate has yet to prove effective. We want to establish a “right to grow” status with bids from local authorities assessed by the planning inspectorate. We also consider that there is scope to reform the housing revenue account system and we are not unsympathetic to the proposition to remove the cap. We want to give local authorities greater flexibility so that they can build more social homes. A number of local authorities are already beginning to build again within the constraints they have but we want the commission to look at the obstacles to overcome and the incentives needed to get councils and housing associations back into the business of building again. Despite various attempts to do that through Section 106, the community infrastructure levy and the new homes bonus, we consider that there remains a significant mismatch between the national and regional need for further housebuilding and the incentives which local communities have to accept new developments, especially developments such as new towns.
We need to find ways of ensuring that a larger share of windfall gains from planning permission goes to local communities. One thing is certain: if we carry on as we are, by 2020 there will be 2 million few homes in Britain. Our aspiration is to see 200,000 new homes delivered each year by the end of the next Parliament. That would be a significant improvement but there needs to be a long-term national effort to turn this around.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, I am grateful to the noble Lord, Lord Stoneham, for introducing this debate. As the noble Lord, Lord McKenzie, has just said, far from putting me on the spot, this is my third housing debate in the past two weeks. However, I am far from expert in this area and I recognise and acknowledge the great expertise of noble Lords who have spoken today. I also welcome my noble friend Lord Borwick. I have not had the pleasure of participating in a debate with him until today.
Before getting to the substance and specifics of the points raised by noble Lords, of which there are quite a lot, I shall start by speaking in general terms and move on in due course. The most important point to make at the outset is that the Government are committed to delivering long-term economic stability and economic growth. Our purpose and objective in that area have not changed. Whereas the previous Administration oversaw a housing boom and bust, we have done extensive work since coming into office to pick up the pieces. We have introduced a series of initiatives to boost housing supply, increase the provision of affordable housing and support a healthy private rented sector, and by tackling the deficit we are helping to keep down both interest rates and the number of repossessions. However, we are only at the start of a return to recovery. The housing market has turned a corner, but mortgage lending and loan-to-value ratios on new mortgage lending remain below their historic averages, while, relative to earnings, median house prices across England are at around the same level as they were in 2005.
I was pleased to hear the noble Lord, Lord McKenzie, acknowledge in his contribution that his Government did not build enough homes when they were in power. The housing supply today is at its highest since the end of the housing boom in 2008, with 334,000 new homes built in the past three years. It is worth noting that the Chartered Institute of Purchasing and Supply has said that activity in housing construction has been increasing at its fastest pace for almost a decade, and, as my noble friend Lord Stoneham has already acknowledged, starts are up by a third on last year. Indeed, the Royal Institute of Chartered Surveyors reported this week that housebuilding was picking up across the country, which is an important point since it indicates that recovery is not confined to one particular area.
We believe that we are making progress because of the policies that we have introduced and the investment that we have been able to make, and that that investment has been able to attract private sector investment as well. In the current spending round, we have invested £11 billion in housing, which has leveraged a further £15 billion from the private sector in affordable housing. In the next spending round, government and private sector investment will be in excess of £23 billion in new affordable homes, which will be supported by government guarantees of £12 billion to support homebuyers.
In response to many of the points that have been raised in the debate, if housebuilders are to build, they need to know that people will buy. Since the launch of the Help to Buy equity loan scheme in April this year, more than 15,000 reservations have been made for new-build homes. In total, we have helped nearly 30,000 people to buy or reserve a new-build property through a range of government-backed home ownership schemes, including the most recent initiative that was launched earlier this month—the Help to Buy mortgage scheme. This is aimed at people who, unlike the noble Lord, Lord Oakeshott, do not have a bank of mum and dad to rely on but still have every right to aspire to get on to the housing ladder.
The noble Lord, Lord Oakeshott, and others asked whether some of these initiatives were having the effect of creating a housing bubble. In the course of his contribution, the noble Lord referred to different economists and other experts. He will not be surprised to learn that I am about to quote from others who offer a different view. There are plenty of people who very much endorse what the Government are doing in this area. For instance, Huw van Steenis and Charles Goodhart from Morgan Stanley said recently that Help to Buy could help to stimulate far more housebuilding than many believe, while Ernst & Young stated earlier this month:
“The Government’s well-timed initiatives to revive mortgage lending have borne fruit, with prices and transactions recovering from their recent very low levels, in turn supporting the wider economy. The housing revival has given rise to concerns that the government’s interventions—including bringing forward the Mortgage Guarantee Scheme—risk stoking up a housing bubble, especially in London. In our view these worries are overdone”.
I will not repeat some of the national figures that have already been covered in noble Lords’ contributions, but many areas outside London are seeing much lower average prices today than before the housing boom in 2008. For instance, in my home town of Nottingham, in August 2007 average house prices were £103,000; they are now £86,000, which is 17% lower. In the Isle of Wight, which I know the noble Lord, Lord Oakeshott, is familiar with, the average price is 16% lower than previously. Certainly, transactions around the UK as a whole are way below what they were before the crash.
While I am on Help to Buy, I will respond to the point made by the noble Lord, Lord Stoneham, about reverting to a regionally focused Help to Buy scheme if house prices get out of hand in London and the south-east. It is far too early for me to give any response to that but I emphasise that, as the noble Lord knows, we have a proper regime with the Bank of England to monitor these schemes and ensure that they do not have a perverse outcome.
I think we all agree that owning your own house is an important part of our culture. It is a symbol of security and success, which people understandably aspire to. But increasingly, some people are opting for different choices. There is evidence that renting as a long-term option is something that people want, so we have also been improving the private rented sector so that it offers a real, positive alternative. As has already been mentioned, we are kick-starting the building of more private rented homes through our £10 billion housing guarantee programme and the £1 billion Build to Rent Fund, which means that blocks of flats or new estates will be built with the sole purpose of being for rent. Under the Build to Rent Fund, 44 projects have been shortlisted and the first scheme has been agreed at Southampton Quay. The noble Lord, Lord Stoneham, asked about targets for this scheme. It is important to emphasise that this is a demand-led scheme, not one that we would start off with a target for. We want to see how demand for it develops.
Moving from the private rented sector back to affordable housing, the noble Lord, Lord Stoneham, was right to emphasise the importance of supplying social housing alongside new private sector homes. We are building more affordable housing. As the noble Lord, Lord McKenzie, predicted, I will remind your Lordships that the previous Administration saw a reduction in the stock of social rented homes of 420,000. I am glad not to have disappointed him. He questioned whether our Right to Buy scheme, which supports those in social housing who want to go on to purchase housing, is the right measure. I think that it is, because of the reasons I have just given about the importance to people of owning a home.
It is important that we continue to build new houses. In this spending review period alone, with £19.5 billion of public and private funding, our affordable homes programme is on track to deliver 170,000 new affordable homes between 2011 and 2015. The noble Lord, Lord Stoneham, asked for an update: half way through, 84,000 households have already moved into new affordable homes. In the next spending period, we are looking to build a further 165,000 such homes. So there is real effort and impetus in that area. We are also making a great effort to release public sector land so that it is available for new build.
Noble Lords raised questions about garden cities. Our approach is about supporting local areas to develop large-scale schemes while making sure that they are driven by local areas. We have a fund to support that and there is some evidence of action in that area, which I do not have time to offer in detail.
Noble Lords covered various matters to which I have not responded. However, there are points I would like to make because there is quite a lot of action that is worth sharing more widely. I will write to noble Lords and put a copy of that letter in the Library.
My noble friend Lord Borwick had two innovative ideas, including one of trebling the new homes bonus for a third of the scheme, which I will take back to colleagues at the department. As to his suggestions on stamp duty, I know I was promoted a couple of weeks ago but I did not get as far as becoming Chancellor of the Exchequer, so I hope he will forgive me if I do not comment on that proposal. However, I will of course make sure that my right honourable friend the Chancellor is aware of what he said today, and will follow up any further questions in writing.