Housing and Planning Bill (First sitting)

Helen Hayes Excerpts

Tuesday 10th November 2015 Public Bill Committees

[Seema Kennedy (South Ribble) (Con)]

I draw Members’ attention to my declaration in the Register of Members’ Financial Interests.

[Helen Hayes (Dulwich and West Norwood) (Lab)]

Chairman, I would like the Committee to note that I am a councillor in the London Borough of Southwark and that I employ a councillor in my parliamentary team.

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[Chris Philp]

Q 3 Finally, are the CPO powers in the Bill adequate for the purposes of the Mayor of London and the GLA for things to go further?

Richard Blakeway: We welcome the Government’s focus on CPO, but we would like them to go further. We would like to see two things. The first is a general CPO power for the GLA around regeneration. At the moment, our CPO powers are separated, depending on which part of the GLA group you look at. The GLA itself has CPO for housing; Transport for London has CPO for transport. We would like that to be interchangeable.

Secondly, we would like to see the ability for us to devolve our CPO powers to members of the GLA family. For example, where we have established mayoral development corporations—something which was enabled through the Localism Act—we would like to see the ability for us to devolve those CPO powers. For example, the Old Oak Common mayoral development corporation could exercise CPO.

[Helen Hayes (Dulwich and West Norwood) (Lab)]

Q 4 What do you think will be the impact of the starter homes clause on the provision of affordable housing in London?

Richard Blakeway: The GLA welcomes the introduction of starter homes and the Government’s focus on promoting home ownership. A number of things relating to starter homes will be in the regulations. For us to undertake a full assessment of the impact, we will have to see the regulations first. The first important point to make is that starter homes are not a substitute for all affordable housing. They are another affordable housing product. While there will be a quota that has to be delivered on site, we would still expect the London plan policy, which seeks to maximise affordable housing and therefore other affordable housing products, to apply once the quota has been sought.

The second important point is that we already have quite a well-established intermediate market in the capital. In particular, we have a significant number of shared ownership properties coming forward. Since this Mayor was elected, we have helped 52,000 Londoners purchase through intermediate products, predominately shared ownership, and we have a target to help a quarter of a million Londoners over the next decade. It is really important that starter homes complement existing products such as that, rather than substitute for them. The two have to work alongside each other, not least because they will probably target people with different incomes.

[Helen Hayes]

Q 5 As you know, the cap price for starter homes in London is £450,000. Could you say a little about for whom you think a starter home at £450,000 in London will be affordable? Are you content that the cap is appropriate?

Richard Blakeway: Clearly, starter homes will have to be valued in the normal way. There should not be any suggestion that this will inflate prices in any sense. We would expect a range of homes to be delivered at a range of prices. We strongly support the comments that the Prime Minister made when he said that he hoped that in London he would see a number of starter homes come forward in the £150,000 to £200,000 price bracket. It is also important to recognise what happens in the open market at the moment. Typically, according to Council of Mortgage Lenders data, we are seeing first-time buyers purchase at about the £280,000 or £290,000 price mark. That is typically what happens in the open market at the moment. From our perspective, it is very important that a range of starter homes are delivered at different prices. It is also important that there is still space for the equivalent number of other intermediate products—particularly shared ownership—to be delivered on schemes.

[Helen Hayes]

Q 6 Finally, are you concerned that starter home development will be free from the community infrastructure levy and section 106 contributions?

Richard Blakeway: As we understand it, so-called exemption sites are free from the community infrastructure levy. Our expectation, however—our strategic land assessment has done a tremendous amount of work to identify brownfield opportunities—is that there are probably not many exemption sites in London where that would apply. Where it applies otherwise—clearly, starter homes should apply to all significant sites—affordable housing is already exempt from CIL, and it is just another affordable housing product.

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

Q 7 May I press you on the impact of the starter homes clauses on more innovative models of affordable and intermediate housing? I am thinking, for example, of Pocket housing, which the Mayor has been very supportive of, and where eligibility is secured in perpetuity through a section 106 agreement. Do you think those clauses will have an impact on those types of models and their ability to expand across the capital?

Richard Blakeway: I emphasise the point again that starter homes are not a substitute for affordable housing and are not intended to be a substitute for all intermediate products. We would like to see both working alongside each other, and we would like to see products such as Pocket. The GLA is delivering a long-term investment partnership. I am sure Pocket would say that many of the people it helps to house are within the general expectation for starter homes—they are below the age of 40, for example, and within the price bracket to which the house-price cap applies. It is very important that starter homes work in London. They are a really important addition to help people achieve their aspiration to own a home, but they have to work alongside other intermediate products.

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[Seema Kennedy]

Q 29 So as a concept you think it is a good idea. Do you also think that it helps communities to have ownership of these things, because there will be something very visible for them to see and feed into?

Martin Tett: I think you have asked a slightly different question. Brownfield sites—previously developed sites—are normally more acceptable to local communities. In terms of the development hierarchy, it is nearly always the area that local communities would support first, rather than going into greenfield or green belt sites.

As for local communities, that is a different issue to do with the infrastructure surrounding them and that is where people look. I go back to my previous observation about ensuring, for example, that any development does not lead to undue pressure in terms of road congestion, pressure at junctions, doctors’ surgeries and so on. That is a separate issue that goes back to section 106 and CIL obligations, which most local authorities look to housing developers to provide.

[Helen Hayes]

Q 30 From your understanding from your respective boroughs and work undertaken across the LGA, do you believe the sale of higher-value council homes can cover the costs of both the right-to-buy scheme and the levels of replacement of both the housing association homes lost to the rental sector and the loss of those council homes? Is that a realistic scenario?

Sir Steve Bullock: The difficulty in giving you a definitive answer to that is that it depends on how you implement the scheme. The definition of high value will be crucial to this. The initial work done on this, certainly from the London perspective, does indicate that there would be an outflow of funds from London to the rest of the country, which we are deeply concerned about. We are clear that we would need to know more before we could give you a hard and fast answer on this.

Philippa Roe: I completely agree with what Steve has said, and I would certainly endorse what Rick Blakeway said about trying to keep as much money as possible within London, where the greatest housing crisis is, so it seems sensible to keep the money there.

One thing that has been mooted is that, instead of the money being put in a pot for literally every high-value council house sold, the boroughs should be given a fund—a sum of money that they have to find, however—which is then supposed to be driven by the council house sales. One concern we have in Westminster about that is that obviously we have some very high-value properties, but our churn rate is very low. Up until very recently we gave tenancies for life and they could even be inherited. A sub-market-value rental property in central London is an extremely valuable asset. People do not give them up easily, so our churn rate is incredibly low. I would call for recognition of that if any targets are set, particularly for central London boroughs. I do not think ours is the only one to face that issue.

Martin Tett: Taking a wider perspective than just London, one of the ambiguities I mentioned earlier, as my colleagues have said, is about the definition of high value. How would you define that in different parts of the country? High value in London may be different from high value in Buckinghamshire, which may be different from high value in Doncaster or Teesside. There is ambiguity at the moment on that. In addition, what is the definition of a vacant property? If you have a tenancy exchange, is that property vacant or an occupied property in transition?

So we need to work through some of those ambiguities and negotiate with the Government. The other issue we have is how the model actually works. How do you predict for a particular year how much money is required for the RSL discount, which means you know effectively how much you have to charge to local authorities as a levy? That in turn dictates how much they have to sell. We are not clear yet on the details of how that will operate. Again, we are happy to negotiate that with the Government.

Phil Glanville: We need to see some clear exemptions around the value of new properties that are being built. Councils such as Hackney and Islington, Camden and Southwark have ambitions to build new affordable housing on their own land in London in order to meet that housing need. If that is taken into account when they become void, building any new home in the centre of London is likely to see those homes included within any cap or formula. Although there could be flexibility on exempting them, if their value is still included in the formula, the effect is the same: you would have to sell more of your existing stock.

It is worth saying when we are talking about high-value properties in London that Hackney is still the 11th most deprived borough in the country and the wards on the City fringe are some of the most deprived in Hackney. On Rightmove today I saw properties there that are worth £450,000. That is for a two-bedroom flat in a block that was built in the 1930s and ’40s; it is not a street property in Kensington, Islington or Stoke Newington. That is the effect that the overheated London market is having on our council stock. These are still very humble family properties on council estates in London; that is not the definition of places where poorer people should not live, which is what I think was the genesis of the policy in the Policy Exchange report.

[Helen Hayes]

Q 31 Given some of the uncertainties that you have all outlined, do you think too much is being left to regulations when it should be in the Bill?

Phil Glanville: Yes.

Philippa Roe: I would say no, because the Bill is going through now, this is complex, and if we tried to rush it through too quickly now there might be unintended consequences. I would like to see proper time given for the regulations to be introduced, picking up on those unintended consequences.

Martin Tett: I agree with Councillor Roe about unintended consequences. If you try to shoehorn everything into the Bill, there is a danger of locking in things on which you might need flexibility later. The LGA is keen to sit down with the Government, understand some of the intentions behind the Bill and try to work through the best solutions that lead to the best outcomes for not just the Government’s policies but local councils and their housing responsibilities.

Sir Steve Bullock: Going forward, the Bill is interesting in the way it proposes to create that space. I suspect that that means that if we are going to be in an ongoing process of negotiation beyond the Bill becoming an Act, local and central Government need to step up their games to demonstrate how they will make that work and how we can have sufficient transparency to provide the reassurances that people will want.

[Mr Jackson]

I was rather remiss earlier for not declaring another interest that might not be in the Register of Members’ Financial Interests: I am a vice-president of the LGA, so that is on the record. That brings me neatly to Councillor Tett.

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[Matthew Pennycook]

Q 63 Following on from that, there are lots of areas of the Bill where we await further regulations and statutory instruments. What would be the sector’s reaction if the Government did not deliver on commitments given under that voluntary deal?

David Orr: I have been asked this question on a number of occasions and my answer is always the same: this is a voluntary deal. If the Government, for whatever reason, fail to meet the commitments that they have agreed to under the deal, the deal falls. If we fail to meet the commitments that we have agreed to under the voluntary deal, the deal falls. I have no expectation that that is going to happen—I think that the core principles that we wrote into the deal will be the basis on which it operates, but if not the deal will fall.

[Helen Hayes]

Q 64 Some of the housing associations that recently appeared before the Select Committee on Communities and Local Government indicated that they thought the likely impact of this Bill would be fewer homes delivered by housing associations for social and other forms of affordable rent. I wanted to ask both of you, first, what you think the net impact of the Bill will be on housing associations’ delivery of social and other affordable forms of homes for rent and, secondly, whether you fear developers deserting housing associations in favour of delivering starter homes themselves?

Sinéad Butters: Our members have raised significant concerns about the potential erosion of social rented housing as a result of a combination of impacts. That combination includes the pay-to-stay option, the starter homes initiative and, depending on what is replaced under right to buy, the erosion of social housing under right to buy. What I would like to make absolutely clear is that our members collaborated with the Government on the home ownership options and see home ownership as one part of something—it is not “either/or”, it is an “and” for our members.

The impact on the future for social rented housing prompts the question, where will the poorest live? If there is nowhere for poor people to live in future, one might imagine that poverty is decreasing, yet I do not see that. It is a very real question. We would ask for the flexibility to have local solutions in the areas where we work closely with local authorities to determine what is needed in that area, including a range of social rented housing, home ownership options, market rent and sale. Our members would embrace the opportunity to work locally to make sure that what the community needs is what the community gets.

David Orr: The Bill itself is a relatively small part of a combined package. If we are going to build a whole lot of new homes we need land first and foremost. Anything that this Bill can do to help to release land for new home building would be helpful. Like Sinéad, I have anxieties about the competing priorities in the space where section 106 presently operates. It has been a useful mechanism for delivering affordable homes for rent and for shared ownership, and a useful mechanism for volume developers to front-end the cash for their developments. If all these things are squeezed out by starter homes, the impact is likely to be a reduction in the overall supply. If we are able, as Sinéad has said, to have an environment where we see significant growth in new home building across all tenures—some for market sale, market rent, social rent, shared ownership, starter homes—that is where we need to be. We need to have this mixed-tenure package. The new homes that we build need to be across all tenures.

With regard specifically to the ability to provide social rent, I think that the Government have made it clear that they do not consider social rent to be their top priority. It remains the top priority for housing associations. The spending review will obviously be an important component, depending on what money, if any, is available to support that. Right to buy, certainly in some markets, has the potential to liberate assets that would then be turned to cash and could be used to build social rented homes. That will vary according to the different markets in different parts of the country. There is a range of factors that will influence this, but I am anxious about starter homes appearing in the section 106 space and crowding everything else out.

[Kevin Hollinrake]

Q 65 I also sat through the Select Committee hearing, and listened to the evidence from the housing associations. I took the absolutely opposite view, so perhaps we should review the evidence together.

In an article on your website, Mr Orr, under the heading, “More homes to rent (and buy)”, you state that,

“our offer to the government will see an increase in the number of…homes built, which has the potential to ease pressure in all parts of the market, including the rental market.”

Do you still stand by that in the overall context of this agreement?

David Orr: I completely stand by that being the offer that housing associations want to be able to deliver. We published a document called “An ambition to deliver” and I commend it to you, because it is a very strong statement of ambition about getting—at some point in the future—to a position where we are able to build perhaps 120,000 homes a year, half for sale and half for rent, half market value and half subsidised. That is exactly that: making a contribution across all parts of the market. We are completely committed to doing that. Ideally we would want to be working with Government—whichever Government—and local government to work in partnership to deliver that kind of package.

The most fundamental thing that will make a difference is access to land, both publicly and privately owned land. If you look at the pattern of provision, we have failed dismally to build the number of new homes that we need, particularly in rural England, and part of the reason is that we just say, “There’s no land.” We have kind of given up. We need to stop giving up because there is plenty of land that we could build on. Measures that speed up planning are helpful. Measures that give priority to the expectation of delivery of new homes are helpful. Accessing land is the thing without which the rest will not really work.