Housing and Planning Bill (Second sitting)

Matthew Pennycook Excerpts

Tuesday 10th November 2015 Public Bill Committees

[Mr Bacon]

Q 104 Mr Berry, do you think it would be helpful if space standards were turned into building regulations, so that there was a minimum to which builders had to adhere?

Brian Berry: Not necessarily, because we do not want extra layers of regulatory requirements on SMEs who are already struggling in terms of access to the market. I understand the concern you raise, because people have talked about space standards and the fact that houses are getting smaller. That probably reflects the state of the housing market in this country, though, where we are struggling to deliver the number of homes that are required because of certain barriers that need to be addressed. There are other issues, therefore—one of which is to get more SMEs back into the market, which might overcome this and deliver the homes that are required in terms of supply and demand.

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

Q 105 I have two questions, if I may. First, many people who are likely to access starter homes are likely to be in a position to buy in any case. Do you think the Bill as it stands will widen the pool of potential home buyers?

Brian Berry: I would have thought that it would. We know that 86% of people in this country aspire to owning their own home. Owner-occupation levels have dropped over the last 10 years. We support owner-occupation and this is a means to encourage more people to get on the housing ladder. We feel that this is another leg up for people, when prices are moving year on year. Yes, I conclude that it is positive.

[Matthew Pennycook]

Q 106 In terms of general supply and building, can you explain why you think this will deliver additional homes? Will it do anything to deliver and build out the 200,000-plus permissions that already exist?

Andrew Whitaker: Certainly it will create a different market. That will therefore increase the overall supply of houses, because you are targeting a different market. As Mr Berry says, you are focusing on specific areas of the market and that will open it up to new people. We would be concerned if all you were doing was robbing Peter to pay Paul. We would stress that this must open up new markets.

In terms of building out the existing permissions, that is a far more difficult picture. We do not envisage a lot of people going back round the planning system to put starter homes in their existing planning permissions. We see this probably as going forward. In terms of building out the permissions that people have already got, that is normally subject to the market rate for that particular area. Therefore, if you follow the logic of my first statement that we would want to see this hit different markets, then yes, it will mean that people can build out permissions going forward at a faster rate, because they will be targeting more sectors of the market.

Ian Fletcher: My view would be that we cannot look at the Bill in isolation from wider Government policy on housing. I think that starter homes may get existing players to build more homes. However, when you are looking at extending capacity of the house building sector as a whole, things like build to rent, which we are promoting, are doing that.

Your second point was around—

[The Chair]

You have both forgotten, so we will move on instead.

--- Later in debate ---

[Mr Jones]

Q 171 In relation to this point about reclassification, Mr Pinder and Mrs Chalkley, you mentioned that you would rather see the right to buy firmly in legislation and the whole thing legislated for. Do you not think that that would pose a significant risk of the ONS continuing to classify as they have done?

Sue Chalkley: My understanding is that in deciding the ONS takes into account whether there is a certain level of Government control, regulation and legislation, so I am not sure whether it would have made a lot of difference whether it was in one or the other; it is still Government control and that is what they take into account. That is my understanding.

Tim Pinder: As far as we are concerned, just to be clear, we absolutely accept the democratic vote of the sector. Our position was that our board was not comfortable accepting the voluntary deal but we respected that the majority of the sector did and at that point, therefore, we were happy to accept the voluntary deal rather than legislative provision.

[Matthew Pennycook]

Q 172 Some 1.3 million housing association tenants expect, I think, on the basis of this Bill, the right to acquire or buy their own home. I would assume that you would not be able to cope with that level of take-up; I wondered what level of demand you think you can cope with annually, say next year. Are you concerned that there are not any measures in the Bill to help you to cope with the demand of people accessing that right?

David Montague: Our estimate is that 10% of our tenants will be eligible and will be able to afford the right to buy. That estimate is supported by the National Housing Federation, which also estimates that 35% of housing association tenants in the midlands and the north will be eligible and able to afford the right to buy. We expect our 10% to exercise their right to buy over probably a five- to 10-year period and we think that we can manage that level of demand. The average L&Q tenant has an income of £13,000, so even with a discount of £100,000, the vast majority of L&Q tenants will not be able to exercise their right to buy.

Sue Chalkley: We have some older stock in suburban areas but the vast majority of our schemes are in 250 rural villages. I know that this sounds really counterintuitive but we have had hardly any inquiries—fewer than five—from our tenants. Twice a year I do chief executive’s free-phone day, when people can ring me about anything. On my previous free-phone day in August, I only had one inquiry. I really do not know how you interpret that, but we do not have a sense that we will be overwhelmed.

Tim Pinder: Nor do we. We are a stock transfer housing association, so any tenant that was a tenant of Macclesfield Borough Council in 2006 retained their right to buy when they transferred across to us. Obviously that number has diminished each year as new tenants move in, but we have always managed to cope with the demand from that group. The new tenants who will be entitled to this right to buy do not represent such a significant challenge for us, so we are quite confident. I was interested to read the Minister’s comments about the potential for phasing in right to buy. We would be interested to understand whether that is a geography-based phase-in or whether it is about particular groups of tenants. How would that work? I am not so sure that we need that to manage the demand but gaining an understanding of those proposals would be welcome.

[The Chair]

The Minister has been called away to a meeting with the Secretary of State but I know that the officials are present and they will no doubt take note of the fact that you would like information, and provide it for you.

[Matthew Pennycook]

Q 173 Do you think there is a risk, if this is phased in or if you are not able to meet all the demand, that housing association tenants who want to purchase their own homes may feel let down?

Tim Pinder: They may well do. I do not know what lay behind the initiative to think about phasing in. One of the issues must be a concern about whether the amount of high-value properties in the local authority sector, which are designated as funding the discounts to housing associations, will be sufficient to allow the demand that you are identifying may well be out there to be met. For us, one of the issues is that we are aware of a very strong lobby from London-based local authorities to ring-fence any of the proceeds from its high-value properties. If that is successful, it prevents that money from heading north to where we are, where most local authorities have transferred the housing stock. The ability for local authorities in our neck of the woods—the north-west of England—to dispose of high-value stock if it was there is very limited because they are no longer stock-owning local authorities. That is my suggestion for what might lay behind the phasing in.

[Matthew Pennycook]

Q 174 Just picking up on the logic of what you just said, can I take from that that you think that like-for-like replacements in the local area where the forced sales will happen is unlikely?

Tim Pinder: No, when we say like for like, we are confident that we can replace at least one for one.

[Matthew Pennycook]

Q 175 With the same 10-year entitled spending?

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

[Dr Blackman-Woods]

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

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