Self-build and Custom Housebuilding Bill — Second Reading

Part of the debate – in the House of Lords at 3:26 pm on 6th February 2015.

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Photo of Lord Best Lord Best Chair, Communications and Digital Committee, Chair, Communications and Digital Committee 3:26 pm, 6th February 2015

My Lords, I am grateful to noble Lords for their presence on this late Friday afternoon to consider this Private Member’s Bill, which comes to us from the other place. I congratulate the Member for South Norfolk, Richard Bacon, on bringing this Bill forward. He has been a passionate supporter of self-build and custom housebuilding, which this Bill seeks to promote. He has played a pivotal role as chairman of the All-Party Parliamentary Group on Self-Build, Custom-Build and Independent Housebuilding in connecting Westminster with this fledgling industry.

The Bill, which passed, happily, through all its stages in the other place and comes to this House unamended, is intended to boost the number of homes which people create for themselves as an alternative to buying properties off the shelf, already fully fitted out. The participation of the future occupier may range from close engagement in the whole process on a greenfield site, through to taking on an empty shell—a concrete box, with no bathroom, unplastered walls and only the drainage and electricity laid on—and kitting it out to their own specification. Whatever the format, this co-production process is likely to involve a partnership between the customer and a builder, developer, housing association or a specialist firm, such as Inhabit, which has given me helpful information for this debate.

This way of producing new homes contrasts with the usual model in the UK, where a small number of volume housebuilders, such as Barratt and Taylor Wimpey, build the vast majority of homes. The nation needs the skills of these major players to help us generate the significant number of extra homes required each year. However, the housebuilding industry, prior to the banking crisis and the credit crunch, also comprised many smaller builders working at the local level. To increase present output from some 150,000 homes a year to at least 200,000, it is imperative that we bring back these SME builders. These are the organisations best equipped to take on awkward, smaller sites which do not suit the big national firms. Custom housebuilding could be hugely significant in creating the opportunities for additional supply over and above the efforts of the handful of huge housebuilding companies. Self-build and custom housebuilding not only generates an alternative and additional source of supply, it also brings variety, diversity of design and innovative practice into the industry. Surveys indicate substantial appetite for engagement in the housebuilding process by its future occupiers, and very high levels of satisfaction for those who solve their housing needs through this route.

It is revealing to note that the UK differs from its European neighbours and from the USA, Australia and elsewhere in its low levels of self-build and custom-built homes. While they have accounted for 5% to 10% of completed housing in the UK over the past decade, they have comprised more than 50% of all new homes in Germany, France, Sweden, Italy, Belgium, Ireland, Austria, Switzerland and others. We are clearly missing out on a significant stream of extra and much appreciated new homes. It is worth adding that this approach to building new homes also saves the future occupiers up to 25% on the cost of the equivalent home on the open market. Savings can come from the input of actual labour by the self-builders or from shopping around for goods and services. I heard of the purchaser of a basic shell who bought all the kitchen units second-hand on eBay, saving a small fortune in the process. There are fantastic examples of groups of people working together to create the homes they want, often through the vehicle of a community land trust, and indeed including affordable rental accommodation in the mix of homes.

I am glad to report that the Bill had strong cross-party support in the other place. In introducing the legislation, Richard Bacon pointed to the serious issue of underprovision of housing that has not been solved for a generation. He said:

“I contend that if we open up choice and empowerment to the customer—I mean ‘customer’ in the broadest sense, including those in the market for affordable rental properties—we will start to make a significant difference”. —[Hansard, Commons, 24/10/14; col. 1167.]

For the Opposition, Emma Reynolds, the shadow Housing Minister, expressed her party’s backing for the Bill, saying that it would increase choice and quality in the market and promote self-build to a “wider range of people”. Brandon Lewis, the Minister for Housing and Planning, said that the Government strongly believe that custom and self-build housing can play a crucial role,

“in securing greater diversity and helping to deliver the homes people actually want”.—[ Official Report , Commons, 24/10/14; col. 1181.]

Turning to the details of the Bill, the legislation aims to engage all relevant local authorities with this route to new housing. It would require the authority to establish, maintain and promote a register of persons, whether individuals or associations of individuals, who wish to acquire serviced plots of land in the authority’s area to build or commission their own homes. While there are some great examples of local authorities supporting initiatives of this kind in their areas, the requirement will raise the profile of self-build and custom housebuilding in every area. The Bill will then require local authorities to have regard to the demand for custom and self-build on the new register when the council carries out its plan making, housing, regeneration and land disposal functions. Through the creation of the register and the requirement on authorities to have regard to it, the Bill addresses the key problem of land supply for the growth of this emerging sector. It makes self-builders and custom builders more visible when local authorities are allocating land for housing in their local plans, regenerating their areas and disposing of surplus public land.

It does not, I am glad to say, impose any significant cost on local authorities, with the Government funding any net cost burden, which is estimated at up to £5 million a year, across the whole of local government. I have also been very pleased to see the Government bring forward a repayable loan fund to assist projects by providing on-site infrastructure; that is, funding the services and utilities for these homes. Some £150 million was set aside last June and this fund is being administered by the Homes and Communities Agency.

I think that noble Lords will be heartened, as I was, to hear about examples of support for custom and self-build by vanguard local authorities such as Cherwell District Council, which is developing some ex-MoD land to include custom-built projects where owners design their homes and employ local contractors to build them. Stoke-on-Trent City Council has created new access, drainage and utility service connections to make a development site “shovel-ready” for buyers to build their dream homes on six plots. Another of the so-called vanguard authorities, Teignbridge District Council, is including a specific custom-build policy in its adopted local plan to require a proportion of self- build plots in all large developments. Oldham Council is working with a community build group to develop 37 homes on land previously in the council’s ownership, and so on. My hope is that the Bill will stimulate similar engagement by all relevant councils up and down the country.

I know that your Lordships’ Delegated Powers and Regulatory Reform Committee has criticised the drafting of the Bill in two places. I completely understand the points being made. I feel sure that the Minister will wish to comment on these criticisms; namely, that the definition of a “serviced plot of land” in Clause 5 ought to be in the Bill, not in regulations; and that guidance about the register in Clause 3(1) and (2) ought itself to be laid in draft before Parliament and subject to parliamentary scrutiny. I would just make the comment that there seems to be some rather exceptional justification for the approach taken by the Bill. The definition of a serviced plot has to take on board the views arising from the extensive and welcome consultation process just recently concluded and ought to await the feedback from the 11 vanguard local authorities that are due to report in the spring. The definition is likely to benefit from the refinements which that evidence should provide; for example, it is not yet clear whether a derelict building ripe for conversion could fall within the definition. The agreed definition will then go through the negative resolution procedure in both Houses of Parliament.

In relation to the guidance from central to local government, I know that the idea is to have a full consultation period with all interested parties before any guidance is formulated. I am sure that copies of the draft guidance will be deposited in our Library and that of the other place. But it is also envisaged that the guidance will then evolve over a year or two, with variations in that guidance for the relevant authorities, which are as different as the City of London and very rural national parks. It would be difficult, I can see, to satisfy requirements for statutory consultation taking a minimum of 12 weeks each time for each part of this emerging guidance. I am sure that the Minister will be able to add to this and I hope your Lordships will agree that the circumstances justify the way forward taken by the Bill.

In conclusion, this is a modest Bill that will not overnight change the way we create new homes, nor make sufficient difference to the chronic shortage of homes in so many parts of the country. But what it could do—and I believe it will—is start a process which, bit by bit, could prove of fundamental importance in raising the quality and quantity of much-needed new homes. I underline my indebtedness to Richard Bacon MP for his invaluable commitment to self-build and custom housebuilding, and for bringing this potentially very significant Bill forward. I strongly commend it to your Lordships’ House. I beg to move.