Housing Needs: Young People

Matthew Pennycook Excerpts

Thursday 16th April 2026 Westminster Hall

[Andrew George (St Ives) (LD)]

It is a pleasure to serve under your chairmanship, Ms Butler, and I congratulate my hon. Friend the Member for Mid Dunbartonshire (Susan Murray) on her opening remarks.

Other speakers have referred to the issues and difficulties that young people today are experiencing. They are not facing a storm but enduring a prolonged storm, and I fear that unless there are further changes to Government policy, they will have to continue to endure that storm.

I declare an interest as a former chief executive of a registered provider of housing—a housing association, or at least a community land trust—and I now sit as a volunteer on the board of Cornwall Community Land Trust. That organisation, along with many others, is also facing a perfect storm. In part, that is the result of the so-called “benefits of Brexit”, in that we have taken back control of the colour of our passports but lost control of construction inflation in this country—in part, thanks to Brexit. As a result, a large number of homes are shovel-ready, but work is unable to start on site as a result of the simple fact of Brexit.

One of the biggest pressures being faced by young people in our area is a planning system that was changed on 12 December last year through changes to the national planning policy framework. That resulted in the introduction of new standard housing methods, which the Minister is clearly well aware of. I agree with the values that the Labour Government are trying to advance: to try to address the desperate housing needs across this country. I am of course professionally and politically very committed to achieving that aim. However, the changes have actually proven to be counterproductive.

In Cornwall, we now have to deliver 4,421 homes every year instead of the previous target of 2,600, and we must show that we have a five-year land supply. However, it is simply impossible to do that overnight, as local authorities around the country are well aware. Consequently, we are no longer able to defend the exception sites that we had wanted to deliver around the edges of all of our communities in Cornwall. Indeed, there have been appeals on permissions previously granted for affordable homes that are now being converted to allow for smaller numbers, and for unaffordable homes. There, the changes have been proven to be counter- productive.

The Minister knows full well that in Cornwall we are not nimbys. Our housing stock has grown faster than that of almost anywhere else in the country; we have almost tripled our housing stock in the last 60 years. Yet, the housing problems of local people have got significantly worse. We need to look much more widely at the way in which the planning system works.

As far as rural exception sites are concerned, the rural exception should not be an exception; it should be the rural norm. Our whole approach to delivering homes on the edges of our communities means that applicants must demonstrate that they will meet need rather than greed. The whole planning system is tipped entirely in a direction that is opposite to the one that I think we in this Chamber today would like policy to go.

Young people have to compete in a market in which—the Minister knows this because I have raised it several times—the tax system is tipped heavily in favour of second residences. A person with a second home can flip their property from council tax to business rates, apply for small business rate relief and then pay nothing at all. That has to be subsidised by the rest of us through the tax system. In the last 10 years in Cornwall alone, in excess of half a billion pounds of taxpayers’ money has gone into the pockets of wealthy second-home owners. We should put that money into first homes for young people. The situation is inequitable and I am surprised that a Labour Government are not prepared to challenge and change that simple fact in order to properly address the issue.

[The Minister for Housing and Planning (Matthew Pennycook)]

We have.

[Andrew George]

The Minister objects. I am sorry but the small business rate relief is still available. The tax loopholes available are still there. Perhaps the Minister can put me right on that, if he wishes.

The right hon. Member for Islington North (Jeremy Corbyn) is right that we need rent controls as well as the Renters’ Rights Act. As well as the stick for private landlords, we should offer them a carrot: tax incentives should be available to landlords who provide decent homes and lower rents. There is a lot that we can do. Young people need to see that we set housing targets based on need rather than greed, that we are able to turn exception sites into the rural norm, and that we enable the intermediate market with, yes, rent to buy but also rent to discount sale. We have established that model in Cornwall and it could be used much more widely to help young people.

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[The Minister for Housing and Planning (Matthew Pennycook)]

It is a pleasure to serve with you in the Chair, Ms Butler. I congratulate the hon. Members for Mid Dunbartonshire (Susan Murray) and for Taunton and Wellington (Gideon Amos) on securing this important debate. I also thank all hon. Members who have participated for their thoughtful contributions.

It has been a very wide-ranging debate, as I assumed it would be from the title. It has covered a range of issues including—from memory—empty homes, short-term lets, building materials costs, rural exemption sites, care leavers, housing allocations, social housing and housing association regulation. I will not be able to cover all of those points, but I will try my best to cover as many as possible. I am more than happy to follow up with individual Members on specific points, as well as to meet the Liberal Democrat Front Benchers and wider team, which I enjoy doing on occasion as their spokes- person, the hon. Member for Taunton and Wellington, will know.

As the House is acutely aware, England remains in the grip of an acute and entrenched housing crisis. Over a number of decades, the combination of a sharp reduction in the nation’s social housing stock and rapid house price inflation, partly driven by increased demand for housing as an investment product, have squeezed both social renting and home ownership. For many years, an expanding private rented sector absorbed some of the resulting pressure, but post-2015 changes in tax treatment have seen the rate of rental sector growth slow. The result is a crisis of housing availability, affordability and quality that is blighting the lives of people of all ages. However, the youngest are among the hardest hit.

House prices have more than doubled since 1997 compared with incomes, locking an entire generation out of home ownership. We have traded a number of statistics, but the one that stands out to me is that first-time buyer numbers fell to a 10-year low in 2023, and that those under 30 are now less than half as likely to own a home as they were in 1990. That gap has created a stark divide between those who can draw on family support and those who cannot, as the hon. Member for Mid Dunbartonshire mentioned in her opening remarks. That has concentrated housing wealth in ever fewer hands, entrenched social division and disadvantage and seen too many young people delaying life choices, including growing a family. It has also led to them paying more for less security. At the same time, increasing numbers of young people are spending longer in the private rented sector and facing high costs, insecurity and inconsistent standards because alternatives are out of reach.

England’s housing crisis has many causes. We have debated them over many months in this House as the Government have taken forward a number of our reforms. Chief among them is a failure over many decades to build enough homes of all tenures. For years, housing supply lagged well behind the needs of our population as well as comparative European countries. That is why we have placed so much emphasis over the past 21 months on making the necessary reforms to ensure that we have high and sustainable rates of house building over the coming years. We will get those high and sustainable rates of house building.

I thank the shadow Minister, the hon. Member for Orpington (Gareth Bacon), for detailing the consequences of the decisions that the previous Government took, not least to abolish housing targets. We are seeing them feed through, but there are green shoots. Housing starts are up 24% on the comparable quarter last year in the latest statistical release.

With a view to ensuring that housing need is met in full, our reforms include the biggest overhaul of the planning system in decades, as well as the largest boost in social and affordable housing investment in a generation through our 10-year, £39 billion social and affordable homes programme. Of that, 60% will be allocated towards social rented homes, reflecting the Government’s prioritisation of that form of tenure.

The Liberal Democrat spokesman often calls for 150,000 homes a year. I would love to see his grant-rate calculations to back up the claim that he can get that for £6 billion a year. That is a wild underestimation. Perhaps he will share those calculations with me on some future occasion when we meet to discuss this issue.

Alongside increasing supply, we are taking action to support young people who aspire to home ownership. We have acted to widen access to mortgages. Following the Prime Minister’s call to action last year, the Financial Conduct Authority clarified its rules on affordability testing. As a result, most lenders now allow borrowers to borrow about 10% more than they could have at the start of last year. On top of that, the Bank of England has eased its loan-to-income rules, enabling tens of thousands of additional first-time buyers to get on the ladder.

The Chancellor of the Exchequer has also delivered on our manifesto commitment to launch a permanent mortgage guarantee scheme, supporting the availability of high loan-to-value mortgages for buyers with deposits as small as 5%. That is an important backstop, particularly when there is volatility in the mortgage market, as we are currently seeing in response to the conflict in the middle east, which I will address more fully in a moment.

We have also taken steps—this is why I slightly took issue with the hon. Member for St Ives (Andrew George)—to rebalance the market in favour of first-time buyers, including through higher stamp duty rates on additional dwellings, council tax premiums on second homes, reforms to the taxation of property income and, as he knows, the abolition of the furnished holiday lets tax regime, which has removed tax incentives that previously existed for owners of short-term lets over long-term landlords. I know that he has—

[Andrew George]

rose—

[Matthew Pennycook]

I will not give way, because we are continuing a very long exchange that we have had over many months. I know he has other proposals on taxation that he would like to see happen, but I am just making the point that it is slightly unfair to say that the Government have taken no action in this regard and have not gripped that issue. We have made serious reforms to rebalance that.

[Andrew George]

Will the Minister give way none the less?

[Matthew Pennycook]

Go on, then.

[Andrew George]

I am not saying that the Government have done nothing, but the changes to furnished holiday lets and double council tax, for example, were actually introduced by the previous Government. The Minister has simply implemented them, which is welcome. I was simply talking about the massive, gaping tax loophole involving industrial levels of flipping second homes to take advantage of the opportunity to apply for small business rate relief and pay nothing at all. That is simply favouring thousands of very wealthy people on their second properties. Surely a Labour Government have to close that one.

--- Later in debate ---

[Matthew Pennycook]

The hon. Gentleman has made that point before, and he knows that I am well aware of the issue. We continue to keep under review measures relating to taxation, as well as looking at, as he knows, the additional powers that we might give local authorities to help them deal with particularly acute concentrations of both short-term lets and second homes. As I say, we have had this debate over many months on both the pros and cons of licensing regimes and planning control powers in that regard. It is an issue that we keep under close review.

We also have a number of Government-backed offers to directly help first-time buyers. That obviously includes shared ownership, which we continue to support while improving the model to strengthen long-term affordability, transparency and fairness for buyers. The lifetime ISA continues to be available to help aspiring buyers save towards a deposit, and the Treasury will shortly consult on a new first-time buyer product to replace the lifetime ISA and remove the need for a withdrawal charge.

As a result of all those measures, we have begun to see early improvements. First-time buyer mortgage numbers increased to over 329,000 in 2024, a 16% increase on the previous year.

As I have said, we are clear-eyed about the pressures arising in the mortgage market from instability in the middle east. Our assessment is that mortgage availability remains strong. Conditions are not comparable to late 2022, and first-time buyers should still be able to get on the housing ladder, particularly with support from brokers to find competitive options. However, uncertainty about interest rates may slow the improvement that we have been seeing in first-time buyer numbers, and we will continue to monitor the situation closely.

I should briefly turn to the home buying and selling process, because helping young people into home ownership is not only about raising a deposit or securing a mortgage. Transactions currently take nearly five months to complete on average, and around one in three falls through, leaving first-time buyers out of pocket and too often back at square one. That is why we are committed to reforming the process to make it quicker, cheaper and more transparent. As hon. Members are aware, we consulted on a package of reforms to do that, including ensuring that key information is available up front before an offer is made, improving the quality and accountability of property professionals, and introducing binding contracts to reduce the wasted costs and heartache that come when a transaction collapses.

I want to touch briefly on other areas of focus, because supply is not the only thing we have focused on. As hon. Members have said, we are on the verge of transforming the private rented sector through the implementation of our Renters’ Rights Act. The right hon. Member for Islington North (Jeremy Corbyn) mentioned when that Act “finally comes into effect”, and he does not have long to wait. From 1 May, the first phase of our reforms will give renters greater stability and security, stronger protections against unreasonable rent increases and an end to exploitative practices such as rental bidding wars and excessive demands for rent in advance.

We are also progressing the reforms necessary to bring the feudal leasehold system to an end, so that the dream of home ownership is made real for millions of young leasehold homeowners across the country. Again, I say to the Liberal Democrat spokesman that I would love to know what he means by “abolition”. Is it now the position of the Liberal Democrats that they would end approximately 5 million leases overnight and do what established commonhold associations across the country fear? The Liberal Democrats have to explain what they mean, rather than just throwing out terminology that does not correspond to a really difficult and challenging transition, which we are overseeing, away from the broken leasehold system and towards that commonhold future. We are progressing those reforms, switching on the powers that are already on the statute book and, as the hon. Member knows, progressing our draft Commonhold and Leasehold Reform Bill.

Our overall aim is expanded housing choice and availability, and improved security and affordability across tenures.

[Jeremy Corbyn]

Before the Minister sits down, could he say anything about his Department’s approach to the large housing associations? I increasingly hear stories in my area—as the Minister probably does in his—that they are selling off properties when there is a change of tenancy to give themselves a capital asset, and they are then spending it somewhere else. It ends up with a process of social cleansing in the central parts of all our big cities.

[Matthew Pennycook]

I am aware of the point that the right hon. Member raises. To respond to his wider point about oversight, like all affordable providers of social housing, housing associations are held to the standards overseen by the regulator following the very welcome introduction of the Social Housing (Regulation) Act 2023 under the previous Government. The regulator has the powers necessary to ensure that individual providers, such as the ones he mentions, are held to those regulatory standards. If he wants to follow up with some of the specific constituency cases he has mentioned, I am more than happy to respond.

This debate underlines a point that the Government accept without qualification and that I have heard from lots of hon. Members outside this Chamber: that the housing market has to work better for young people. That means: increasing supply, especially of social and affordable housing; supporting first-time buyers; fixing a home buying process that is too slow and uncertain; transforming the private rented sector so that it provides security and decency; and bringing the feudal leasehold system to an end by making commonhold the default tenure and improving the leasehold model so that existing leaseholders can more cheaply and easily enfranchise and convert to commonhold—which I hope they will do in very large numbers.

[Andrew George]

I believe the Minister has until 10 past 3 if he wishes. He has not addressed the issue I raised regarding the counterproductive impact of the changes to the national planning policy framework, particularly for edge-of-community rural exception sites. A wholesale change of planning is happening. Those sites were originally going to be affordable-led, and now developers can put in planning applications to ensure that those sites are entirely unaffordable because of the Government’s policy on five-year land supply.

--- Later in debate ---

[Matthew Pennycook]

In all candour, I am not entirely sure that I follow the hon. Gentleman’s point. However, he will know from the recent consultation on a revised national planning policy framework that we propose to strengthen national policy in respect of rural exception sites. I know, given his keen interest in the subject, that he will have responded to the consultation. We are currently analysing the feedback with a view to determining final policy in due course.

There are no quick fixes to any of this, and we are committed to the long-term decisions needed to ensure that young people can access secure, decent and affordable homes, and with them, the opportunity to build stable lives and strong communities. I thank hon. Members for their contributions this afternoon.